Value Added Tax General Implementation Communiqué Amended.
With the Communiqué No. 47 published in the Official Gazette dated 07.09.2023 and numbered 32302, the Value Added Tax (VAT) General Implementation Communiqué has been amended.
With the Communiqué in question
– Exemption for Deliveries and Services Provided for the Construction of Houses Related to the Housing Donations of Professional Organizations Qualified as Public Institutions within the Scope of the Protocol Signed with AFAD,
– Abolition of the Exemption for Gain on Sale of Immovable Property,
– VAT Rate for Financial Leases,
– Arrangements have been made on the subjects of the Works Started Before the Effectiveness of the VAT General Implementation Communiqué on the Exemptions Introduced by the Project Implementation and the Works Still Continuing. Information regarding these regulations is given below:
1. Exemption for Deliveries and Services Provided for the Construction of Houses Regarding the Housing Donations of Professional Organizations Qualified as Public Institutions within the Scope of the Protocol Signed with AFAD
With the provisional article 44 added to the VAT Law with the Law No. 7456, the deliveries and services made to professional organizations in the nature of public institutions due to the construction of the houses to be donated to the disaster victims within the scope of the protocol signed with the Disaster and Emergency Management Presidency in the places accepted as disaster zones affecting general life due to the earthquakes that occurred on 6.2.2023 were exempted from value added tax until 31.12.2024.
The procedures and principles regarding the application of this exemption are set out below:
– Within the scope of the exemption; due to the construction of the houses to be donated to the disaster victims within the scope of the protocol signed with the Disaster and Emergency Management Presidency (AFAD) in the places accepted as disaster zones affecting general life due to the earthquakes that occurred on 6.2.2023 professional organizations with the status of public institutiondeliveries and services are included.
– Purchases of goods and services related to the construction of non-residential buildings (such as workplaces, factories, shopping centers, mosques, parks, schools, hospitals, social facilities) and the renovation, maintenance and repair of existing residences are not covered by the exemption.
– In order to benefit from the exemption, professional organizations in the nature of public institutions must sign a donation protocol with AFAD.
– The exemption covers the purchase of goods and services for the construction of housing, and goods and services related to infrastructure works, roads within the site, retaining wall, curtain wall, perimeter wall and similar goods and services related to the construction of houses located together are considered within the scope of the exception. Goods and service purchases related to the construction of playgrounds, landscaping, pools, pergolas, camellias, sports fields and the like are not considered within the scope of the exemption.
– In addition, kitchen cabinets, bathroom cabinets and cloakrooms, panel radiators, combi boilers, shower cabinets, bathtubs and similar items that cannot be dismantled and moved by the owners of the dwellings are within the scope of the exemption. Furniture, white goods, curtains, chandeliers, televisions and similar items are not covered by the exemption.
– It is not possible to apply exemption within the scope of this article for the purchase of goods and services related to the houses built by AFAD using the donations made in cash to AFAD.
– In order for the exemption to be applied, it is necessary to obtain an exemption certificate containing the list of goods and services according to the project to be prepared.
–Professional organizations in the nature of public institutions wishing to benefit from the exemption must provide a copy of the exemption certificate, signed and stamped, to the seller who delivers goods and performs services. In the event that the exemption is applied without this letter, the tax, penalty, increase and interest forfeited taxpayers performing the delivery or service and the recipient to whom the delivery or service is madeis also jointly and severally liable.
– The refund request of the seller taxpayer is finalized on the basis of this exemption certificate, by searching for other documents required for the refund.
2. Abolition of the Exemption for Gain on Sale of Immovable Property
Pursuant to Article 17/4-r of the VAT Law, the VAT exemption applied to the sale of immovable properties held in the assets of corporations for two years was abolished by Article 7 of Law No. 7456. However, with the provisional article 43 added to the VAT Law, the exemption will continue to be applied for the immovable properties that were taken into assets before 15.07.2023, the effective date of the article.
With the Communiqué No.47, changes regarding the exemption application have been included in the VAT General Implementation Communiqué.
3. VAT Rate for Financial Leases
Pursuant to the second paragraph of Article 1 of Decree No. 2007/13033, in financial leasing transactions, except for the transactions listed in rows 8, 16 and 17 of section (B) of the list (I) annexed to the Decree, VAT rate to which the goods subject to the transaction are subjectis being implemented.
In the section numbered III/B-2.2. of the VAT General Implementation Communiqué, “VAT rates regarding the deliveries or leasing of goods subject to financial leasing contracts are the rates valid on the date of the contract, and there will be no change in these rates during the contract.” This phrase was removed with Communiqué No. 47.
Accordingly, in the leasing of goods whose VAT rate has changed by the financial leasing company, transactions will be made at the VAT rate applicable in the leasing period, regardless of the date of the financial leasing agreement.
4. Works Started Before the Effectiveness of the VAT General Implementation Communiqué Regarding the Exemptions Introduced by the Project Implementation and Still Continuing
With the Communiqué No.47, it has been deemed appropriate for those who have brought project implementation with the VAT General Implementation Communiqué, but who carry out transactions other than the project implementation carried out by obtaining an exemption certificate before the effective date of the Communiqué or by applying the tax first and then returning it, to obtain an exemption certificate according to this Communiqué within the scope of the project implementation as of 1/1/2024.
The relevant Communiqué is available here
Sincerely,
BİLGENER
