27.10.2022/68
Important Changes Made in the VAT General Application Communique
The 43rd Serial Communique on Changes to the Value Added Tax (VAT) General Application Communique was published in the Official Gazette No. 31994 dated 25.10.2022.
The changes made with this Communique are summarized below:
1. The Time of Deduction for Amounts Declared with the 2nd VAT Declaration as Withholding Agent Has Been Determined.
In transactions subject to withholding, the withheld tax is declared and paid by the buyer with the 2nd VAT Declaration. The VAT declared on the 2nd VAT declaration cannot be deducted. However, if the buyer has VAT liability and will use the transaction for which withholding is applied as a deductible item, the VAT can be deducted on the 1st VAT Declaration.
As a result of the change, the withheld amounts can now be deducted on the 1st VAT Declaration within the same month as the declaration for withholding made within the legal deadline. The part declared after the legal deadline as a responsible person can be deducted on the 1st VAT Declaration for the period in which the payment related to this declaration is made.
This regulation came into force as of 25.10.2022.
2. Withholding Tax Rate Increased for Deliveries of Iron/Steel and Alloy Products, and Withholding Tax Also Applied to Deliveries by Companies Traded on Borsa Istanbul A.Ş.
With the change made in section (I/C-2.1.3.3.8.1.) of the Communique, the withholding tax rate, which was previously 4/10, has been changed to 5/10.
Additionally, withholding tax will also be applied to the delivery of iron/steel and alloy products by companies whose shares are traded on Borsa Istanbul A.Ş.
This regulation will come into effect on 01.11.2022.
3. VAT Refund Claims for Deliveries of Discounted Food Products in the January-June Period Can Be Requested Within the Relevant Year.
Based on the authority granted by Article 28 of Law No. 3065, VAT amounts that are not refunded through deduction for deliveries and services subject to reduced rates can be refunded, provided that the portion exceeding the specified limit is offset against the debts mentioned in section (III/B-3.2.2.) of the Communique, subject to being requested in the following year.
With the 43rd Serial Communique, it has been decided that VAT refunds for food products subject to a 1% VAT rate in the first half of the year (January-June) will be refunded in cash, with the earliest request being in the June period of the relevant year and the latest in the November period of the same year.
This regulation will come into effect on 01.11.2022.
4. Explanation Regarding the Foreign Exchange Differences Arising from Refunds for Transactions Subject to Full Exemption Has Been Added to the Communique Text.
The 43rd Serial Communique provides an explanation regarding the foreign exchange differences arising in favor of taxpayers after the completion of transactions within the full exemption scope.
Accordingly, if a foreign exchange difference arises in favor of the taxpayer due to purchases of goods and services, VAT must be calculated and declared in the period in which the foreign exchange difference occurred. If the foreign exchange difference occurs before the refund process is completed, the amount will be deducted from the refund account. If it cannot be refunded, this amount can be included in the deduction accounts for the period in which the foreign exchange difference occurred.
This regulation came into force as of 25.10.2022.
5. Regulation on Accepting Insurance Guarantee Bonds as Collateral Has Been Made.
With the Law No. 7417 published in the Official Gazette No. 31887 on 05.07.2022, a change was made in Article 10, paragraph 2 of the Law No. 6183 on the Collection Procedure of Public Receivables, allowing insurance companies to issue unconditional and indefinite guarantee bonds under suretyship insurance to be accepted as collateral.
In line with this provision, changes have been made to the VAT General Application Communique to implement the practice.
This regulation will come into effect on 01.11.2022.
You can access the relevant Communique here.
Best regards,
BİLGENER
