Draft VAT Communiqué (Serial No: 41) Announced on the Internet
The important provisions of the draft Communiqué are summarized below:
1. Optional Full Withholding Tax:
With the foreseen 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 issuing a written contract.
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.
2. VAT Withholding on the Delivery of Iron-Steel Products:
It is envisaged to introduce 4/10 VAT withholding in the delivery of iron and steel products.
With the foreseen regulation, no withholding tax will be applied on the deliveries of iron-steel and alloy products made by importers and on 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.
However, if the products made of iron-steel and alloys are produced from scrap, other raw materials or by using scrap, ore and other raw materials together, withholding tax will be applied on the deliveries of these products at all stages, including the delivery of the first producers.
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 its alloys (door, door handle, angle iron, screw, nut, screw socket, dowel, lock, nail, flange, tong, elbow, hook, hinge, spring, ball, bearing, chain, etc.).
3. Refund according to the Export Price in the Export of Goods by Manufacturers:
According to the draft Communiqué, it is envisaged that manufacturers who directly export the goods they produce without any sectoral distinction can request a refund limited to the VAT amount carried forward up to 10% of the export value, regardless of the VAT amount they are burdened with regarding the export deliveries.
The application is voluntary and manufacturers who wish will be able to receive a refund by calculating the VAT incurred within the framework of the current application.
4. Housing and Land Deliveries:
In the Communiqué in draft form, 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.
In addition, the draft Communiqué includes explanations and examples regarding the application of VAT rates on housing and land deliveries amended by the Presidential Decree No. 5359.
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.
According to the draft communiqué, since passenger cars purchased by taxpayers engaged in the second-hand motor vehicle trade from another authorized dealer by applying a special tax base 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 draft Communiqué is available here.
