The Exemption Period for New Machinery and Equipment Deliveries to VAT Taxpayers Holding Industrial Registry Certificate has been Extended
With Article 31 of Law No. 7103, Temporary Article 39 was added to the VAT Law (KDVK), which stipulates the following exemptions:
- Starting from 01.05.2018, new machines and equipment delivered to VAT taxpayers holding an industrial registry certificate under the Industrial Registry Law No. 6948 for exclusive use in the manufacturing industry are exempt from VAT.
- In the technology development zones and specialized technology development zones under Law No. 4691, in R&D and design centers under Law No. 5746, and in research laboratories under Law No. 6550, new machines and equipment delivered exclusively for R&D, innovation, and design activities are exempt from VAT.
These transactions are temporarily exempt from VAT.
With the Presidential Decree No. 6583 published in the Official Gazette No. 32050 on 21.12.2022, the exemption period for machine and equipment deliveries specified in the Temporary Article 39 of the VAT Law has been extended until 31.12.2024.
On the other hand, with the addition of paragraph 13/1-m to the law (added by Law No. 7104), new machines and equipment delivered for exclusive use in R&D, innovation, and design activities in technology development zones, specialized technology development zones, R&D and design centers, and research laboratories are permanently exempt from VAT.
Thus, the exemption for deliveries of new machines and equipment will apply only to VAT taxpayers holding an industrial registry certificate under Law No. 6948, for exclusive use in the manufacturing industry.
The Presidential Decree applies only to these deliveries. The list of machines and equipment that are subject to the exemption is defined in the annex of the Council of Ministers Decision No. 2018/11674 dated 30.04.2018. No exemption is applied to deliveries of machines and equipment not listed in this annex.
Only new machines and equipment are eligible for this exemption, meaning the delivered items must be unused. Additionally, machine parts, accessories, and components are not included in the exemption.
For deliveries made under this exemption, the VAT paid on related purchases can be deducted from VAT payable on taxable transactions. If the VAT cannot be offset through deduction, it can be refunded upon request of the taxpayer who performed the exempted transactions according to Article 32 of the VAT Law.
You can access the relevant Presidential Decree here.
You can access the Council of Ministers Decision here.
Best regards,
BİLGENER
