Status of VAT Base Increase within the Scope of Law No. 7440 against Special Principles
With the publication of Communique No. 46 in the Official Gazette dated 01.04.2023, Section IV/E-16 has been added to the General Application Communique on Value Added Tax (VAT).
This regulation provides explanations regarding the status of taxpayers who have made VAT base adjustments under Law No. 7440 and their situation in relation to special rules.
VAT Base Adjustment and Exit from Special Rules
For tax periods of December 2022 and earlier, for taxpayers with the following negative determinations:
- Report of using fake documents or misleading documents in terms of content,
- Use of fake documents or misleading documents in terms of content,
- Failure to submit a tax return,
- Not being found at the registered address,
- Failure to provide books and documents
and therefore subject to special rules, taxpayers who have made VAT adjustments under Articles 5 and temporary Article 1 of Law No. 7440 for the years 2018, 2019, 2020, 2021, and 2022 (if the business started during any of these years, the adjustment must be made for the year the business was started and subsequent years; if the business was discontinued, the adjustment must be made for the year the business was discontinued and prior years), and who have paid the entire adjustment amount, will be removed from the scope of special rules from the date of payment.
Taxpayers who have made VAT adjustments for the years 2018, 2019, 2020, 2021, and 2022 in accordance with Articles 5 and temporary Article 1 of Law No. 7440 and are removed from the scope of special rules, will not be subject to special rules again for those years due to the negative determinations listed above.
Taxpayers who are not under special rules but have made VAT adjustments will not be included in special rules due to negative determinations related to the suppliers they purchased from in the years they made the adjustments. However, if a negative determination regarding the use of fake documents is made for the years in which adjustments were made, the correction process regarding the VAT carried over to the subsequent period will be carried out, and if a tax assessment is required in a year where no adjustment was made, the taxpayer will be subject to a correction procedure even if they are not placed under special rules.
Payment Terms
Taxpayers benefiting from the installment payment option must provide the following guarantees for the entire calculated amount or for 10% of the amount for one installment:
- Bank guarantee letter (must not contain any restrictive conditions),
- Insurance company surety bond (must not contain any restrictive conditions),
- Government bonds or treasury bills
If the guarantee is provided in these forms, the return to general rules will be ensured without waiting for the full payment of installments.
If taxpayers who have provided such guarantees fail to pay the installments, the unpaid installments will become due, and the remaining debt will be collected by converting the guarantee into cash.
VAT Base Adjustment Under Law No. 7326
For taxpayers who benefited from the VAT adjustment under Law No. 7326 for the years 2018, 2019, and 2020 (if the business started during any of these years, the adjustment must be made for the year the business was started and subsequent years), the condition for making the adjustment again is not required for their return to general rules, provided that the conditions for benefiting from the adjustment have not been violated.
Other Reasons for Inclusion in Special Rules
If taxpayers are included under special rules for reasons other than those mentioned above, their VAT adjustment will not ensure their return to general rules. Similarly, VAT adjustment made by taxpayers who should be under special rules for reasons other than those mentioned above will not prevent them from being placed under special rules.
Status of Refund Requests
For taxpayers who have been removed from the scope of special rules or who are not included in the scope of special rules due to VAT adjustments under Articles 5 and temporary Article 1 of Law No. 7440, if a negative determination is made regarding their purchases, the provisions in Section (IV/E-11) of the Communique will apply.
Status of Ongoing Tax Inspections
In accordance with paragraph (b) of the ninth paragraph of Article 5 of Law No. 7440, as of the date the article comes into effect, if there are ongoing tax inspections regarding taxpayers based on actions listed in Article 359(b) of Law No. 213, such as destroying books and records, replacing book pages, or preparing fake documents, tax adjustments must be made as per the law, and the tax assessment will be suspended until the tax inspection is completed.
For taxpayers in this situation who have made VAT adjustments for the years 2018, 2019, 2020, 2021, and 2022, their return to general rules will be ensured if the tax inspection is not completed within the specified period or if no evidence of the actions listed above is found in the inspection. In cases where the adjustment is made, the tax payment or guarantee provision will be applied as described above.
You can access the relevant Communique here.
Sincerely,
BİLGENER
