24.05.2022/35
The Condition for Payment Has Been Removed in VAT Refunds Arising from Withholding Tax Application
In the VAT General Implementation Communiqué published in the Official Gazette No. 31397 on 16.02.2021, the phrase “it is not required” in the second paragraph of section (I/C-2.1.5.1.) of Article 15 was changed to “it is required.” This regulation entered into force on 01.03.2021.
Previously, it was sufficient for the buyers to have declared the VAT they withheld. However, with this Communiqué, as of 01.03.2021, it is mandatory for the buyers to have paid the VAT they withheld to the tax offices.
However, the relevant regulation has been challenged in court on the grounds of being unlawful.
In the General Letter No. E-64994458-130[5509-815]-63230, dated 13.05.2022, written by the Revenue Administration, it was informed that, in the lawsuit filed for the annulment of the regulation and the suspension of its execution, the decision of the Council of State’s Fourth Chamber dated 01.02.2022 and Case No: 2021/2647 resulted in the suspension of the execution of Article 15 of the Communiqué on Changes to the VAT General Implementation Communiqué (Serial No: 35). Thus, it was stated that the condition for the payment of VAT declared and assessed by the buyer in the 2nd VAT Return would no longer be required from the taxpayer in fulfilling the refund requests arising from the withholding tax application.
According to the same General Letter, regarding refund requests under the withholding tax scope, tax offices will investigate whether the VAT withheld by the buyers has been transferred to the Treasury, and any VAT not transferred to the Treasury will be promptly pursued and collected.
Thus, sellers requesting VAT refunds under the withholding tax will not face problems in their refunds due to buyers who have not paid the VAT withheld to the tax office. In addition, VAT declared under withholding but not paid will be monitored by the Revenue Administration.
Best regards,
BİLGENER
