04.06.2021/39
Amendments to the VAT General Implementation Communiqué
Various amendments were made to the VAT General Practices Communiqué with the “Communiqué Amending the Value Added Tax General Implementation Communiqué” Serial No. 36 published by the Ministry of Treasury and Finance in the Official Gazette on 03.06.2021.
Entities Included in the Scope of Designated Recipients
The line “- Public institutions and organizations established by law, other than those listed above,” in subparagraph (b) of the third paragraph of the section (I/C-2.1.3.3.1.) of the Value Added Tax General Implementation Communiqué has been changed as “- Public institutions and organizations established by law or Presidential Decree, other than those listed above,” and the line “- Insurance and reinsurance companies,” has been changed as “- Insurance, reinsurance and pension companies,”.
Thus, public institutions and organizations and pension companies established by Presidential Decree are included in the scope of designated recipients that will apply partial withholding tax.
This decision will enter into force as of 01.07.2021.
No Withholding Tax on Health Services Provided to SSI
The phrase “public institutions and organizations established by law,” in the section (I/C-2.1.3.2.13.) of the Value Added Tax General Implementation Communiqué (I/C-2.1.3.2.13.) has been changed as “public institutions and organizations established by law or Presidential Decree,” the phrase “insurance and reinsurance companies,” has been changed as “insurance, reinsurance and pension companies,” and the following parenthetical provision has been added to come after the phrase “in their performance” in the same section.
“(except for health services provided by health service providers and invoiced to the Social Security Institution)”
Thus, it has been decided not to apply VAT withholding on health services provided by health service providers and invoiced to the Social Security Institution.
This decision will enter into force as of 01.07.2021.
Raising the Lower Limit for Partial Withholding Tax
The phrase “1.000 TL” in the third paragraph of the section (I/C-2.1.3.4.1.) of the Value Added Tax General Implementation Communiqué has been changed as “2.000 TL”.
Thus, the lower limit of 1.000 TL including VAT to be applied in deliveries and services to which partial withholding will be applied has been increased to 2.000 TL.
This decision will enter into force as of 01.07.2021.
Correction in Transactions Where Non-VAT Taxpayers Apply Withholding Tax
The following section has been added to the end of the section (I/C-2.1.4.4.1.) of the Value Added Tax General Implementation Communiqué
“Correction in transactions where buyers who are not VAT taxpayers other than public administrations within the scope of the general budget apply withholding is carried out as follows.
A document (invoice, receipt, etc.) is issued by the buyer for refund purposes by separately showing the transaction price and the VAT portion not withheld. The amounts shown in the said document are recorded by the buyer and the seller in accordance with the legislation to show the relevant refund transaction. Based on the certification that the correction is made in this way, the withheld VAT related to the transaction is returned to the buyer who pays this tax by declaring it to the tax office.
On the other hand, after the seller’s refund request arising from the withholding application is finalized, if it is necessary to make a correction as mentioned above regarding the transaction that reveals the VAT refund, it is acted as follows:
-In the taxation period in which the need for correction arises, if the taxpayer, who makes the correction as stated above, applies in writing to the tax office after making the correction in the relevant declaration and returns the amount previously refunded, this amount is recovered from the taxpayer without applying default interest and tax loss penalty.
-If the taxpayer does not make the correction in this way, the VAT returned due to withholding is sought from the taxpayer together with the tax loss penalty by applying default interest from the period in which the change occurred to the period in which the correction was made.”
Thus, explanations have been made on how the correction procedures will be applied in the transactions where VAT is applied withholding by buyers who are not VAT taxpayers other than public administrations within the scope of the general budget.
This decision entered into force as of 03.06.2021, the date of publication of the communiqué.
VAT Exemption Application in Purchases of National Security Organizations
The first sentence of the second paragraph of the second paragraph of the Value Added Tax General Implementation Communiqué (II/B-7.2.1.) section has been amended as follows
“National security organizations wishing to procure goods and services within the scope of the exemption shall obtain a notification of conformity from the Revenue Administration that the goods and services in question are within the scope of the exemption. Upon the positive opinion received, the national security institutions shall provide the contractor issuing the invoice with a document in which the stamp and signature of the authorized unit supervisor in (Annex: 11A) shall be applied in order to document the transaction made within the scope of the exception.”
The first sentence of the fourth paragraph of the fourth paragraph of the Value Added Tax General Implementation Communiqué (II/B-7.2.2.) section has been amended as follows.
“The national security organization examines this list in terms of whether it consists of goods and services to be consumed for the production of the final goods or services and makes the necessary changes. In addition, it shall obtain a declaration of conformity from the Revenue Administration that the final goods or services and the goods and services in the said list are within the scope of the exemption. Upon the positive opinion received, the national security organization shall approve the list in the form in (Annex: 11B).”
Thus, the application of VAT exemption for defense deliveries of national security institutions within the scope of 13/f of the VAT Law has been changed.
These decisions will enter into force as of 01.07.2021.
VAT Exemption on Coloring and Activity Books
The phrase “, coloring and activity books with International Standard Book Number (ISBN)” was added to come after the phrase “legislation set books” in the fourth paragraph of the fourth paragraph of the Value Added Tax General Implementation Communiqué (II/B-17.1.) section, and the phrase “Coloring books, books” in the fifth paragraph was changed to “Book”.
Thus, coloring and activity books with International Standard Book Number (ISBN) are included in the scope of the exemption under Article 13/n of the VAT Law.
This decision entered into force as of 03.06.2021, the date of publication of the communiqué.
Real Estate Investment Funds and Real Estate Investment Trusts’ Application of Special Tax Base for Second Hand Real Estate Deliveries
The following sentence has been added to the end of the fifth paragraph of the section (III/A-4.9.) of the Value Added Tax General Implementation Communiqué.
“Real estate investment funds and real estate investment trusts operating within the scope of Law No. 6362 are deemed to be among the taxpayers engaged in real estate trade without seeking an authorization certificate.”
Thus, real estate investment funds and real estate investment trusts have gained the right to apply the special base form in Article 23/f of the VAT Law, even if they do not have an authorization certificate under the Regulation on Real Estate Trade.
This decision entered into force as of 03.06.2021, the date of publication of the communiqué.
Deduction of VAT of Expenses Subject to Financing Expense Restriction
The following paragraphs have been added to come after the second paragraph of subparagraph “(ç)” in the section (III/C-2.1.) of the Value Added Tax General Implementation Communiqué.
“However, the regulation that the deduction of some of the expenses and cost elements in the subparagraph 9 of the first paragraph of Article 41 of the Income Tax Law No. 193 and the subparagraph (i) of the first paragraph of Article 11 of the Corporate Tax Law No. 5520 is not accepted is not in line with the provision of Article 30/d of the Law No. 3065. The inability to deduct the VAT incurred for these expenses directly related to the activity of the enterprise also contradicts the basic principle of VAT, which is that the taxes incurred for business-related expenses should not remain on the taxpayer.
Within the framework of the authorization granted by Article 29/5 of the Law No. 3065, it has been deemed appropriate not to apply the provision of Article 30/d of the Law No. 3065 regarding the part that is not accepted to be deducted from the expense and cost elements within the scope of subparagraph 9 of the first paragraph of Article 41 of the Income Tax Law No. 193 and subparagraph (i) of the first paragraph of Article 11 of the Corporate Tax Law No. 5520.”
With the paragraphs added after the second paragraph of subparagraph (ç) of this section, it is explained that the VAT corresponding to the expenses subject to the financing expense restriction can be deducted.
This decision entered into force as of 03.06.2021, the date of publication of the communiqué.
Taxpayers who have the right of return for more than one transaction do not use their right of return in some of them
The following paragraph has been added to come after the fourth paragraph of the section (IV/D-1.) of the Value Added Tax General Implementation Communiqué.
“However, it is possible for taxpayers who have the right of return in more than one subject or transaction type in the same taxation period not to use their right of return for some of them.”
Thus, with this explanation, it is possible for taxpayers who have the right of return in more than one subject or type of transaction in the same taxation period not to use their right of return for some of them.
This decision entered into force as of 03.06.2021, the date of publication of the communiqué.
You can access the relevant communiqué here.
Sincerely,
