Communiqué Amending the VAT General Implementation Communiqué (Serial No: 41)
“Communiqué (Serial No: 41) Amending the Value Added Tax General Implementation Communiqué” was published in the Official Gazette dated April 21, 2022 and numbered 31816.
The important provisions of the Communiqué are summarized below:
1. Optional Full Withholding Tax:
With the amendment, taxpayers will be able to make VAT withholding regardless of whether they have withholding responsibility in the determined purchases they make from the seller taxpayers with whom they have agreed for one year by organizing a written contract.
Optional full withholding shall be applied to the services listed in section (I/C-2.1.3.2.) and goods deliveries listed in section (I/C-2.1.3.3.3.) of the Communiqué, regardless of whether the buyers are responsible for withholding. However, according to the section (I/C-2.1.3.2.13.) of the Communiqué, optional full withholding will not be made in the service purchases of public character organizations, banks, insurance, reinsurance companies, pension and aid funds, development agencies other than the specified services and the goods purchases of the State Supply Office specified in the section (I/C-2.1.3.3.7.).
It will not be possible to abandon this practice before the one-year period expires. If it is desired to continue the practice in the years following the end of the one-year period, the contract will need to be renewed for the same period.
VAT can be refunded to the seller, limited to the VAT subject to optional full withholding. In the fulfillment of the refund requests, it will be sought that the VAT declared and accrued by the buyer with the VAT Declaration No.2 has been paid.
The regulation will be implemented as of May 1, 2022.
2. VAT Withholding on the Delivery of Iron-Steel Products:
4/10 VAT withholding has been introduced in the delivery of iron and steel products.
With the regulation, no withholding tax will be applied on the deliveries of iron-steel and alloy products made by importers and the first delivery of the products produced exclusively from ore by the producers, and no withholding tax will be applied on the transfers after these stages.
All kinds of long (rod, rebar, profile, coil iron, wire rod, wire rod, wire, rope, wire mesh, pipe, lama etc.) or flat (plate, hot rolled flat products, cold rolled flat products and coated flat products etc.) iron-steel and alloy products made of iron-steel and alloys produced from ore, scrap or other raw materials are included in the scope of withholding. Withholding will not be applied on the deliveries of iron-steel and alloys (door, door handle, angle iron, screw, nut, screw socket, dowel, lock, nail, flange, tongs, elbow, hook, hinge, spring, ball, bearing, chain, etc.).
The regulation will be implemented as of May 1, 2022.
3. Refund according to the Export Price in the Export of Goods by Manufacturers:
Manufacturers who directly export the goods they manufacture, regardless of the sector, will be able to request a refund limited to the VAT amount carried forward up to 10% of the export price, regardless of the VAT amount they are burdened with in relation to export deliveries.
It is not mandatory to benefit from the arrangement. If they wish, manufacturer-exporter taxpayers will be able to claim their export refunds by calculating the VAT incurred. Taxpayers will be able to request a 10% refund with this application on a period basis, or they will be able to request a refund with the code 301 in the VAT declaration by calculating the VAT incurred.
The cash refund requests of the manufacturers within the scope of this section, which do not exceed TL 10.000, will be fulfilled without seeking a tax inspection report, CPA report and collateral. This limit will be applied as 100.000 TL for taxpayers who have a CPA Full Certification Agreement issued in due time.
The regulation will be implemented as of May 1, 2022.
4. Housing and Land Deliveries:
In the Communiqué, the definition of “net area”, which is taken as a basis in determining the VAT rates in housing deliveries, is added to the VAT General Implementation Communiqué and the practice is clarified. Accordingly, the net area of the independent section will be calculated according to the “Planned Areas Zoning Regulation” of the Ministry of Environment, Urbanization and Climate Change.
1% VAT rate for the net area up to 150 m2 of the residences built within the framework of transformation projects in places designated as reserve building areas and risky areas within the scope of the Law on the Transformation of Areas Under Disaster Risk dated 16/5/2012 and numbered 6306 and in places where risky structures are located,
Municipalities, special provincial administrations, Housing Development Administration and the enterprises in which they have 51% or more shares or voting rights in the management of the land plots (including the sections reserved for social facilities) designed for housing by municipalities, special provincial administrations, Housing Development Administration and the enterprises in which they have 51% or more shares or voting rights in the management, 1% VAT rate for the part of the net area corresponding to residences under 150 m2,
VAT rate of 8% for the net area up to 150 m2 and 18% for the exceeding part (in the previous regulation, if the net area exceeds 150 m2, VAT rate of 18% was applied for the entire area, not for the exceeding part),
VAT rate of 8% instead of 18% for land and land deliveries
determined.
In addition, it has been ruled that the provisions abolished or amended in Articles 1 and 4 will continue to be applied for the houses built within the scope of the projects for which building permits were obtained or tendered by public institutions and organizations and their affiliates before the effective date of the Presidential Decree No. 5359 (1 April 2022).
5. Explanations on VAT Rate Change in Second Hand Motor Land Vehicle Trade:
With the Presidential Decree dated 28/3/2022 and numbered 5359, it was decided to apply the VAT rate as 18% for the deliveries of passenger cars made by taxpayers engaged in the second-hand motor vehicle trade by applying a special tax base.
With this Communiqué, since the passenger cars purchased by taxpayers engaged in the second-hand motor land vehicle trade by applying a special tax base from another authorized dealer cannot be considered as passenger cars purchased by applying the 18% VAT rate, VAT at the rate of 1% will be calculated over the entire sales price in the delivery of these vehicles.
The relevant Communiqué is available here.
Sincerely,
BİLGENER
