Communiqué No. 52 Amending the VAT General Implementation Communiqué, published in Official Gazette No. 32708 of 31 October 2024, introduced changes on a wide range of matters.
The Communiqué Amending the Value Added Tax General Implementation Communiqué (No: 52), published in Official Gazette No. 32708 of 31 October 2024, introduced changes on a wide range of matters, which are set out below.
- Self-employment receipts to be issued following court or enforcement proceedings:
A change has been made in line with the rules in Income Tax General Communiqué No. 311 concerning attorney fees awarded against the opposing party by courts or enforcement and bankruptcy offices, which belong to lawyers and must be included in self-employment income, bringing the Communiqué into line with practice.
Accordingly, where attorney fees awarded against the opposing party by courts or enforcement and bankruptcy offices, belonging to lawyers and required to be included in self-employment income, are paid to the lawyer by the losing party directly or through the enforcement and bankruptcy offices, the self-employment receipt must be issued in the name of the losing party.
- Threshold for VAT refunds without a tax inspection report, sworn-in CPA report or collateral:
The threshold of TRY 10,000 for meeting all refund claims arising from transactions giving rise to a VAT refund entitlement without a tax inspection report, sworn-in CPA report or collateral has been set at TRY 50,000.
- Services outside the scope of full withholding:
It has been amended so that study, plan-project, consultancy and audit services are not treated as within the scope of the optional full withholding regime. Partial withholding will apply to transactions of this kind.
- Provisions on the exemption under Article 13/a of the VAT Law:
In the light of the circulars issued, the opinions given and the court decisions concerning the exemption for deliveries of sea, air and rail transport vehicles to taxpayers whose activity is the leasing or operation of such vehicles, for deliveries and services relating to the manufacture and construction, modification, repair and maintenance of those vehicles, and for deliveries and services relating to the manufacture and construction of sea transport vehicles supplied to taxpayers whose activity is such construction, the explanations in the Communiqué have been amended to ensure uniformity of application and tax fairness.
The purpose of the exemption in Article 13/a of Law No. 3065 is to encourage the development of the country’s maritime and air commercial fleet and to make it capable of withstanding foreign competition. The vehicles and facilities within the scope of the exemption in pursuit of that purpose are set out below.
Sea transport vehicles suitable for carrying cargo and/or passengers include tankers, dry bulk carriers, container ships, Ro-Ro vessels, cruise-type passenger ships, ferries, sea buses and fishing vessels, together with their main engines. Floating facilities and craft are also within the scope of the exemption. Deliveries of hulls defined as vessels under construction are likewise exempt from VAT on this basis.
Marine craft not intended for carrying cargo and used for activities such as leisure, entertainment, sport and amateur fishing, falling within the definition of private boats and private yachts under the relevant legislation, with a hull length of up to 24 metres, are not within the scope of sea transport vehicles benefiting from the exemption. Where the hull length of such craft exceeds 24 metres, the exemption may be used on their acquisition by persons engaged in leasing or otherwise operating them, whereas it clearly cannot be used on acquisition for private use.
Craft such as jet skis, parasailing boats, speedboats, sailing boats and inflatable boats cannot be treated as within the scope of the exemption. Fish farms, aquaculture production facilities and similar installations that are not floating facilities likewise cannot be treated as within the scope of the exemption.
In addition, marine service craft such as dredgers, firefighting vessels, pilot boats, mooring boats and oil recovery vessels are not within the scope of the exemption.
Air transport vehicles suitable for carrying cargo and/or passengers include aeroplanes and helicopters, together with their main engines.
Aircraft with no passenger carrying capacity apart from the cockpit, aeroplanes and helicopters used for training, spraying and firefighting purposes, powered paragliders, balloons, gliders and devices known as simulators are not within the scope of the exemption.
Rail transport vehicles suitable for carrying cargo and/or passengers include trains, locomotives and wagons, together with their main engines.
Example: The exemption cannot be applied to the delivery of a vessel to a taxpayer engaged in architectural activity. The taxpayer subsequently leasing out the vessel after acquisition is likewise not sufficient for the conditions of the exemption to be satisfied.
The exemption applies to purchases of goods and services by persons engaged in manufacture and construction, in connection with the manufacture and construction of sea transport vehicles suitable for carrying cargo and/or passengers and of floating facilities and craft.
The exemption does not apply to purchases of goods and services relating to the manufacture and construction of marine craft not intended for carrying cargo and used for activities such as leisure, entertainment, sport and amateur fishing, falling within the definition of private boats and private yachts under the relevant legislation, with a hull length of up to 24 metres. The exemption may, however, be applied to purchases of goods and services relating to the manufacture and construction of such craft with a hull length exceeding 24 metres; since it is not clear at the manufacturing stage whether these craft are intended for commercial or private use, that has no bearing on the application of the exemption. On the delivery of such craft manufactured and constructed under the exemption, the exemption may be applied if the condition is met that the purchaser’s activity is the leasing or various forms of operation of such craft.
Example: The purchases of goods and services relating to the manufacture and construction of a boat with a hull length of 40 metres in its shipbuilding permit, built by a shipyard operator, are exempt from VAT.
Where a boat built under the exemption is sold for private use, the exemption does not apply to that delivery and VAT is calculated. The fact that this delivery is taxable does not mean that the purchases of goods and services relating to its manufacture and construction are also taxable.
- Provisions on the exemption under Article 13/b of the VAT Law:
Since Article 17 of Law No. 7524 amended Article 13/b of Law No. 3065 to provide that craft used for activities such as leisure, entertainment, sport and amateur fishing, and private boats and yachts, are not treated as sea transport vehicles, the explanations in the Communiqué on the exemption for services provided at ports and airports for sea and air transport vehicles have been brought into line with Law No. 3065.
Article 13/b of Law No. 3065, as amended by Law No. 7524, provides that services rendered at ports and airports for sea and air transport vehicles are exempt from VAT, excluding craft used for activities such as leisure, entertainment, sport and amateur fishing and private boats and yachts.
The rationale of Article 13/b of Law No. 3065 states that the aim is to encourage the development of the country’s maritime and air commercial fleet and to make it capable of withstanding foreign competition.
Accordingly, for the exemption in Article 13/b of Law No. 3065 to apply, the service must be:
- rendered at places designated as ports and airports,
- rendered for sea transport vehicles and air transport vehicles suitable for carrying cargo and/or passengers.
- Areas within the scope of the exemption:
For the exemption to apply, the service must be rendered at places designated as ports and airports.
Places designated as ports mean natural or artificial maritime locations whose boundaries are determined by the administration, having sufficient water depth for vessels to berth and wait, with quays, piers, buoy anchorages and approach areas large enough for them to load and discharge cargo and passengers or to lie and shelter in safety, together with closed and open storage areas, waste reception facilities, buildings and structures used for administrative and service purposes or parts of them, places where access to all of these sections is controlled, all other structures, and sections covering used or vacant areas.
Places designated as airports mean places whose boundaries are determined by the administration, on land or water, including the buildings, facilities and equipment within them, prepared for the take-off, landing and ground manoeuvres of air transport vehicles and having facilities suitable for meeting the maintenance and other needs of such vehicles and for loading and unloading cargo and passengers; they also cover air navigation stations and air navigation facilities established to operate as an extension of the airport for the purpose of providing air navigation services.
- Vehicles within the scope of the exemption:
The exemption in Article 13/b of Law No. 3065 covers:
– sea transport vehicles suitable for carrying cargo,
– sea transport vehicles suitable for carrying passengers with a hull length exceeding 24 metres that are not intended for private use,
– air transport vehicles suitable for carrying cargo and/or passengers.
Under the amendment made to Article 13/b of Law No. 3065 by Law No. 7524, craft used for activities such as leisure, entertainment, sport and amateur fishing and private boats and yachts are not accepted as sea transport vehicles, so services rendered to such craft at ports are not within the scope of the exemption.
Under subparagraph (d) of the first paragraph of Article 4 of the Regulation on the Equipment of Private Boats and the Qualifications of Persons to Operate Private Boats, published in Official Gazette No. 32077 of 18 January 2023, private boats are defined as boats used exclusively for activities such as leisure, entertainment, sport and amateur fishing without commercial purpose, with a hull length of between 2.5 metres (inclusive) and 24 metres (inclusive) when measured according to the national standard, registered in the mooring register or the ship register and holding a mooring register certificate or ship registry certificate.
Accordingly, services rendered to craft such as marine vessels not intended for carrying cargo and used for activities such as leisure, entertainment, sport and amateur fishing, falling within the definition of private boats and private yachts with a hull length of up to 24 metres, as well as jet skis, parasailing boats and speedboats, are not within the scope of the exemption.
For craft with a hull length exceeding 24 metres, the exemption may be used depending on whether the activity is the leasing or various forms of operation of those craft. It clearly cannot be used for marine craft intended for private use, regardless of any other characteristic.
- Services within the scope of the exemption:
The exemption covers services rendered at places designated as ports and airports to sea transport vehicles and air transport vehicles suitable for carrying cargo and/or passengers and to their cargo and passengers, including loading and discharge, pilotage, towage, mooring and the parking of aircraft and vessels, as well as services such as cleaning and security relating to navigation for those vehicles, and the transfer of cargo from ship to shore, shore to ship, ship to ship or similar floating means, crane services, locking and lashing and unlocking and unlashing services, supervision services, hatch cover opening/closing services, vessel occupancy and unauthorised occupancy services, ship transfer, collection of ships’ waste, and the transit forwarding of containers arriving at the port.
However, services such as food, beverages, accommodation, safekeeping, vehicle hire, car parking and immovable property (business premises) leasing provided to those arriving on such vehicles, together with in-container lashing/unlashing services, storage, terminal services, container stuffing/unstuffing, full container inspection, container inspection/sampling, container repair, container cleaning (washing and drying), container transport services, container weighing services, in-container transfer services, the supply of electricity to containers and the international ship and port facility security service (ISPS) are not within the scope of the exemption.
The exemption covers services only; deliveries of goods are not within its scope. In addition to the type of service within the scope of the exemption, the invoice must also show for which sea transport vehicles or air transport vehicles it was rendered.
- Provisions on transactions of institutions providing public and municipal services under Article 13/d of the VAT Law:
Since municipalities, special provincial administrations, investment monitoring and coordination departments, professional organisations having the character of public institutions, state universities, state hospitals and similar institutions do not carry on commercial activity because they provide public and municipal services, it is not possible to issue a VAT exemption certificate under Article 13/d of Law No. 3065 in the name of those institutions on the basis of investment incentive certificates issued to them.
On the other hand, where those institutions establish a commercial enterprise in respect of the transaction covered by the investment incentive certificate, register that enterprise separately for VAT, record the machinery and equipment and the software and intangible rights acquired under the certificate in the balance sheet or assets of the commercial enterprise, and notify the tax office within the period for filing the VAT return for the period in which the purchase took place, an exemption certificate may be issued in the name of the commercial enterprise.
The commercial enterprise must calculate VAT on the invoices it issues to its customers, including the institution of which it forms part, for the leasing or operation of the machinery, equipment and vehicles listed in the annex to the investment incentive certificate, and must declare that VAT in the No. 1 VAT return. Where no consideration has been set for the service the commercial enterprise provides to the institution of which it forms part, VAT will of course be calculated on the arm’s length value determined under Article 27 of Law No. 3065.
- Provisions on goods for the use of the disabled:
Because the scope of the national security goods in subparagraph (3) of Article 167 of the Customs Law and of the goods for the use of the disabled in sub-subparagraph (a) of subparagraph (12) of that article was broader than the exemption in Law No. 3065, which encouraged the importation of those goods and discouraged their domestic purchase, Article 18 of Law No. 7524 aligned the treatment of the importation and the domestic delivery of those goods.
- Provisions on temporary Article 45 of the VAT Law:
Under temporary Article 45 added to Law No. 3065 by Article 23 of Law No. 7524, it is provided that, in places accepted as disaster areas affecting general life because of the earthquakes of 6 February 2023, deliveries and services made from 1 January 2024 to foreign state institutions and organisations in respect of the construction of immovable property such as dwellings, business premises, schools, student dormitories, hospitals, places of worship, culture and arts centres and libraries to be donated to general budget public administrations under protocols signed between general budget public administrations and foreign state institutions and organisations, and the delivery to foreign state institutions and organisations of dwellings to be donated to general budget public administrations under such protocols in those same places, will apply until 31 December 2025.
Taxes incurred in respect of deliveries and services made on this basis are deducted from the tax calculated on taxable transactions. Taxes that cannot be relieved through deduction will be refunded, under Article 32 of the VAT Law, on the request of the taxpayer transacting within the scope of the exemption.
The exemption covers deliveries of goods and supplies of services to foreign state institutions and organisations for the construction of immovable property such as dwellings, business premises, schools, student dormitories, hospitals, places of worship, culture and arts centres and libraries; purchases of goods and services relating to infrastructure works, internal site roads, retaining walls, screen walls, boundary walls and similar works for the construction of such property are also treated as within the exemption.
Purchases of goods and services relating to the construction of children’s playgrounds, garden landscaping, swimming pools, pergolas, gazebos, sports areas and similar are not treated as within the exemption.
In addition, items forming an integral part of the immovable property within the exemption, such as kitchen units, bathroom units and vanity units that cannot be dismantled and moved, panel radiators, combi boilers, shower cabins, bathtubs and similar, are within the exemption. Furniture, white goods, curtains, light fittings, televisions and similar items are not treated as within the exemption.
The exemption covers the delivery to foreign state institutions and organisations, until 31 December 2025, of dwellings to be donated by those institutions and organisations to general budget public administrations. The delivery to foreign state institutions and organisations of immovable property that is not residential, such as business premises, schools, student dormitories, hospitals, places of worship, culture and arts centres and libraries, is not within the exemption.
The free-of-charge delivery to general budget public administrations of immovable property such as dwellings, business premises, schools, student dormitories, hospitals, places of worship, culture and arts centres and libraries built by foreign state institutions and organisations, and of dwellings procured by those institutions and organisations, will of course be exempt from VAT under Article 17/2-b of Law No. 3065.
- Provisions on carried-forward VAT:
Under the amendment made by Article 19 of Law No. 7524 to subparagraph (c) of paragraph (4) of Article 17 of Law No. 3065, the use as deductible VAT by the acquiring company of carried-forward VAT amounts held by taxpayers that cease business, are demerged or are dissolved has been made subject to a tax inspection, and the relevant section of the Communiqué has been amended accordingly.
For carried-forward VAT amounts to be taken into the deduction accounts, the new business or company formed as a result of the transfer, demerger or change of legal form must first apply by petition to the tax office to which it is registered, requesting a tax inspection on the matter. That request is promptly forwarded by the tax office to the relevant audit unit authorised to carry out inspections.
The deductible VAT amount approved in the report drawn up following the tax inspection may be deducted by the new business or company in the return for the period covering the date on which the report enters the tax office records.
Example: (A) Ltd. was transferred to (B) Inc. on 20 August 2024. As at the transfer date, (A) Ltd.’s carried-forward VAT amounted to TRY 10,000,000. In order to take that carried-forward VAT into its deduction accounts, (B) Inc. applied to its tax office on 2 September 2024 requesting an inspection.
The tax inspection report on the matter entered the tax office records on 15 January 2025, and the conclusion of the report approved TRY 7,000,000 of carried-forward VAT for inclusion in (B) Inc.’s deduction account. (B) Inc. may deduct that amount in the VAT return for the 2025/01 period.
- Taxpayers whose VAT refund claims will be met following an inspection:
Since the amendment made by Article 21 of Law No. 7524 to Article 36 of Law No. 3065 provides that, as a rule, refund claims arising from transactions giving rise to a refund entitlement are to be met in accordance with the conclusions of a tax inspection report, the explanations in the Communiqué have been brought into line with Law No. 3065.
The refund claims of the following taxpayers, in respect of whom there is a report or finding containing evidence or presumptions that the documents they issued or used do not reflect the true position, or who are connected with such taxpayers, are met in accordance with the conclusions of a tax inspection report:
- taxpayers falling within Article 153/A of Law No. 213,
- taxpayers in respect of whom there is an “adverse report” or “adverse finding” concerning the issuing or use of false documents or documents misleading in content, including taxpayers participating in the act of issuing such documents,
- the shareholders and legal representatives, in the period to which the report relates, of taxpayers in respect of whom there is an “adverse report” or “adverse finding” concerning the issuing of false documents or documents misleading in content, taxpayers established by or in which those persons are shareholders, and taxpayers of which they are legal representatives,
- taxpayers in respect of whom there is a finding of failure to file returns, failure to produce books and records, or inability to be found at their address,
- taxpayers purchasing goods and/or services directly from taxpayers in respect of whom there is an “adverse report” or “adverse finding”.
The provisions of this section do not apply to the public institutions and organisations listed in the schedules annexed to Law No. 5018, special provincial administrations, villages, municipalities and the unions they form, revolving fund organisations, public institutions and organisations established by law, retirement and assistance funds established by law, and taxpayers 51% or more of whose capital belongs to those listed above.
Where collateral determined according to the nature of the adverse reports and findings is provided, the refund claims of those taxpayers are met, but the collateral is released in accordance with the conclusions of the tax inspection report.
The documents referred to in this section are the documents specified in the relevant sections of the Communiqué that form the basis of the refund (excluding sworn-in CPA reports and tax inspection reports). These are invoices and similar documents showing VAT, together with the other documents required for the refund according to the nature of the transaction giving rise to the refund entitlement (such as customs declarations, exemption certificates, investment incentive certificates and precious metal exploration licences). Findings that documents other than these were issued or used as false documents or documents misleading in content do not cause the taxpayer’s position to be assessed within the scope of adverse reports and findings. The fact that such documents fall within the documents that must be issued, retained and produced under Law No. 213 does not prevent this treatment.
For example, where order letters and proforma invoices are inconsistent with the final invoices or customs declarations, the ground that a false document or a document misleading in content was issued or used does not require action under this section unless it is established that the final invoices or customs declarations were issued contrary to the true position. Likewise, the issuing of an insurance policy, producer receipt or delivery note contrary to the true position, and their use, does not in itself require action under this section.
Apart from cases where a VAT deduction is permitted, the issuing contrary to the true position, and the use, of payment recording device receipts and expense vouchers required to be issued under Law No. 213 fall within the same scope.
- Provisions on VAT refunds under the Reduced Collateral Application System and the Accelerated Refund System certificates:
The thresholds for applying for Reduced Collateral Application System and Accelerated Refund System certificates have been updated by reference to the revaluation rates.
The amounts relating to the following conditions for benefiting from the Reduced Collateral Application System have been updated:
According to the balance sheet annexed to the most recent annual corporate or personal income tax return filed with the tax office before the application date, at least:
- total assets: raised from TRY 40,000,000 to TRY 100,000,000,
- total tangible fixed assets: raised from TRY 10,000,000 to TRY 25,000,000,
- equity: raised from TRY 20,000,000 to TRY 50,000,000; net sales: raised from TRY 50,000,000 to TRY 125,000,000.
The amounts relating to the following conditions for benefiting from the Accelerated Refund System have been updated:
- total assets: raised from TRY 200,000,000 to TRY 500,000,000,
- total tangible fixed assets: raised from TRY 50,000,000 to TRY 125,000,000,
- equity: raised from TRY 100,000,000 to TRY 250,000,000,
- net sales: raised from TRY 250,000,000 to TRY 625,000,000.