The Communiqué Amending the VAT General Implementation Communiqué (No: 46) was published in Official Gazette No. 32150 of 1 April 2023.
The explanations given in General Communiqué No. 46 are as follows.
1) Taxpayers in areas declared to be in force majeure who wish to leave force majeure status
Article 1 of the Communiqué repealed the last sentence of the final paragraph of section (I/C-2.1.3.1.) of the VAT General Implementation Communiqué, entitled “Nature of partial withholding and purchasers who will apply withholding”, and added the following sentences to that paragraph. Accordingly, in transactions within the withholding regime, where taxpayers in areas declared to be in force majeure wish to leave force majeure status and apply to the administration to that effect, withholding will be applied under the general rules. On the other hand, where both the selling taxpayer and the purchasing taxpayer party to the transaction are within the scope of force majeure, withholding will continue to be applied under the general rules on those purchases.
Newly added sentences: “Where purchasing taxpayers wish to leave force majeure status and, as a result of the application they make to the administration, that status is ended, withholding shall be applied under the general rules from the date on which force majeure status ceases. On the other hand, where both the selling taxpayer and the purchasing taxpayer party to the transaction are within the scope of force majeure, withholding shall continue to be applied under the general rules on those purchases.”
Repealed sentence: “Provided that, where the selling taxpayer party to the transaction is also within the scope of force majeure, withholding shall continue to be applied under the general rules on those purchases.”
In summary, withholding will not be applied only where the seller is within the scope of force majeure and the purchaser is not. VAT withholding will be applied in all other cases.
2) Cash and offset refund claims of taxpayers with a full certification engagement arising from service transactions subject to withholding may be met with a sworn-in CPA report
Under section (I/C-2.1.5.2.1.) of the VAT General Implementation Communiqué, entitled “Offset refund claims”, offset claims not exceeding TRY 10,000 by taxpayers seeking to offset VAT refunds relating to cleaning, garden and grounds maintenance services; modification, maintenance and repair services for machinery, equipment, fixtures and vehicles; all kinds of catering and event services; study, plan-project, consultancy, audit and similar services; subcontracted textile and clothing work, subcontracted shoe and bag stitching work and intermediation services relating to subcontracted work; construction supervision services; transport services; all kinds of printing and publishing services; commercial advertising services; labour supply services; and customer-finding/transfer services provided to tourist shops, are met without a tax inspection report, sworn-in CPA report or collateral. Offset refund claims of TRY 10,000 and above are met on the basis of a tax inspection report.
Article 3 of the Communiqué added the following paragraph after the eighth paragraph of section (I/C-2.1.5.2.1.) of the same Communiqué, entitled “Offset refund claims”.
Newly added paragraph: “Provided that, where the taxpayer has a full certification engagement signed within the deadline in the year in which the transaction giving rise to the refund entitlement was carried out, offset refund claims may be met with a sworn-in CPA report.”
Similarly, Article 4 of the Communiqué added the following paragraph after the third paragraph of section (I/C-2.1.5.2.2.) of the same Communiqué, entitled “Cash refund claims”.
“Provided that, where the taxpayer has a full certification engagement signed within the deadline in the year in which the transaction giving rise to the refund entitlement was carried out, cash refund claims may be met with a sworn-in CPA report, or collateral provided for the full amount of the refund claim may be released with a sworn-in CPA report.”
Accordingly, the cash and offset refund claims of taxpayers with a full certification engagement signed within the deadline, arising from service transactions subject to withholding, may be met with a sworn-in CPA report.
3) Taxpayers with a full certification engagement in respect of whom there are adverse findings of false document use
Article 7 of the Communiqué added the following paragraph after the fifth paragraph of section (IV/E-3.5.) of the same Communiqué, entitled “Those in respect of whom there is a finding of false document use”. Accordingly, where there are adverse findings of false document use in respect of taxpayers with a full certification engagement signed within the deadline, those taxpayers will not be brought within the special procedures on the ground of a false document use finding if the purchase amounts shown on the documents do not exceed 5% of their total purchases in the same period; however, this has no effect on the invitation to explain for preliminary findings under paragraph (b) of Article 370 of Law No. 213 and on the special procedures to be applied in consequence.
Newly added paragraph: “Where taxpayers have a full certification engagement signed within the deadline in the calendar year covering the period in respect of which there is an adverse finding of false document use, those taxpayers shall not be brought within the special procedures on the ground of a false document use finding if the purchase amounts shown on the documents found to be false do not exceed 5% of their total purchases in the same period. Provided that this has no effect on the invitation to explain for preliminary findings under paragraph (b) of Article 370 of Law No. 213 and on the special procedures to be applied in consequence.”
4) Taxpayers with a full certification engagement in respect of whom there is a finding of the use of documents misleading in content
Article 8 of the Communiqué added the following paragraph after the first paragraph of section (IV/E-4.5.) of the same Communiqué, entitled “Those in respect of whom there is a finding of the use of documents misleading in content”. Accordingly, where taxpayers have a full certification engagement signed within the deadline in the calendar year covering the period in respect of which there is an adverse finding of the use of documents misleading in content, those taxpayers will not be brought within the special procedures on that ground if the purchase amounts shown on the documents found to be misleading do not exceed 5% of their total purchases in the same period; however, this has no effect on the invitation to explain for preliminary findings under paragraph (b) of Article 370 of Law No. 213 and on the special procedures to be applied in consequence.
Newly added paragraph: “Where taxpayers have a full certification engagement signed within the deadline in the calendar year covering the period in respect of which there is an adverse finding of the use of documents misleading in content, those taxpayers shall not be brought within the special procedures on the ground of a finding of the use of documents misleading in content if the purchase amounts shown on the documents found to be misleading do not exceed 5% of their total purchases in the same period. Provided that this has no effect on the invitation to explain for preliminary findings under paragraph (b) of Article 370 of Law No. 213 and on the special procedures to be applied in consequence.”
5) Taxpayers subject to the special procedures who increase their VAT
Article 9 of the Communiqué added the following section, together with its heading, after section (IV/E-15.) of the same Communiqué. Accordingly, taxpayers subject to the special procedures who increase their VAT under Law No. 7440 for all of the periods in which they were active in the 2018, 2019, 2020, 2021 and 2022 calendar years will be removed from the special procedures from the date on which they pay the increase amounts in full.
Newly added section: “16. Position under the special procedures of those increasing their VAT under Law No. 7440 of 9 March 2023 on the Restructuring of Certain Receivables and Amendments to Certain Laws
Taxpayers subject to the special procedures in respect of the December 2022 and earlier taxation periods because of an adverse report on the use of false documents or documents misleading in content, or because of adverse findings of the use of false documents or documents misleading in content, failure to file returns, inability to be found at their address, or failure to produce books and records, who increase their VAT under Article 5 and temporary Article 1 of Law No. 7440 for all of the periods in which they were active in the 2018, 2019, 2020, 2021 and 2022 calendar years (where activity commenced in one of those years, the increase must be made for the year in which activity commenced and the subsequent years; where activity ceased, for the year in which it ceased and the preceding years), shall be removed from the special procedures from the date on which they pay the increase amounts in full.
In addition, taxpayers using the instalment option who provide collateral in the form of a bank letter of guarantee (which must contain no restrictive condition), an insurance company surety bond (which must contain no restrictive condition), government bonds or treasury bills for the full amount calculated plus 10% of one instalment shall be returned to the general procedures without waiting for all the instalments to be paid. Where taxpayers providing collateral in this way fail to pay their instalments under that Law, the unpaid instalments become due and the remaining debt is collected by realising the collateral.
For the return to the general procedures of those who benefited from the increase under Law No. 7326 for 2018, 2019 and 2020 (where activity commenced in one of those years, for the year in which activity commenced and the subsequent year), a further increase for those years is not required, provided the conditions for benefiting have not been breached.
Taxpayers removed from the special procedures by increasing their VAT under Article 5 and temporary Article 1 of Law No. 7440 for all of the periods in which they were active in the 2018, 2019, 2020, 2021 and 2022 calendar years shall not be brought back within the special procedures for the years covered by the increase on the grounds of the adverse matters set out above.
Taxpayers who increased their VAT although not subject to the special procedures shall not be brought within the special procedures on the basis of findings concerning adverse matters relating to the taxpayers from whom they made purchases in the years covered by the increase. However, where a finding of false document use is made in respect of those taxpayers for the years covered by the increase, and where, without prejudice to the provisions of section (IV/E-5) of the Communiqué, an assessment would have to be made in a year not covered by the increase as a result of the correction relating to VAT carried forward to the following period, the correction shall be made even if the taxpayer is not brought within the special procedures.
Increasing VAT does not return to the general procedures those in respect of whom the special procedures are applied for reasons other than those set out above. Likewise, increasing VAT does not prevent those who should be subject to the special procedures for reasons other than those set out above from being made subject to them.
In the refund claims of taxpayers removed from, or not brought within, the special procedures on the basis of a VAT increase under Article 5 and temporary Article 1 of Law No. 7440, where it is established that they made purchases from taxpayers in respect of whom there are adverse matters, the provisions of section (IV/E-11) of the Communiqué will of course apply.
Under subparagraph (b) of the ninth paragraph of Article 5 of Law No. 7440, where those in respect of whom, as at the date that article entered into force, a tax inspection is continuing on the basis of the acts set out in paragraph (b) of Article 359 of Law No. 213 — destroying books, records and documents, destroying pages of books and replacing them with other sheets or with none, or issuing documents or copies wholly or partly falsely — or of the acts set out in paragraph (ç) of that article, increase their VAT within the period and in the manner prescribed by that Law, the accrual procedures relating to the increases made for all of the periods covered by the Law must be held pending until that tax inspection is completed. For taxpayers in that position who have increased their VAT for all of the periods in which they were active in the 2018, 2019, 2020, 2021 and 2022 calendar years, the return to the general procedures is effected, where the tax inspection is not concluded within the period stated in the relevant article or where the existence of those acts is not established in the inspection carried out and the other conditions set out in the article are met, upon payment of the taxes calculated as a result of the tax increase or, where the instalment option is used, upon the provision of collateral as set out above.”
6) Minimum amount for which a refund may be claimed
Presidential Decree No. 6775, published in the Official Gazette of 28 January 2023, set at TRY 2,000 the minimum amount for which taxpayers may claim a refund in respect of transactions giving rise to a refund entitlement.
In relation to that provision, Article 6 of the Communiqué added the following section, entitled “1.7. Minimum amount for which a refund may be claimed”, to section (IV/A-1.6.) of the same Communiqué.
“1.7. Minimum amount for which a refund may be claimed
Presidential Decree No. 6775 of 27 January 2023 set at TRY 2,000, to apply to transactions carried out from 1 February 2023, the minimum amount for which taxpayers may claim a refund in respect of transactions giving rise to a refund entitlement. That amount is not deducted from the amount claimed by the taxpayer.
Accordingly, taxpayers will declare the refund in the returns for the relevant periods and claim a refund for those amounts, including for taxation periods in which the refund claimed in respect of transactions giving rise to a refund entitlement is below TRY 2,000. However, tax offices will not consider refund claims below TRY 2,000 in that taxation period but will consider them together with the refund claims of subsequent taxation periods.
Where a taxpayer has refund claims arising from different transactions giving rise to a refund entitlement in the same taxation period, the refund amounts for that period are taken into account together in determining the amount for which a refund may be claimed. Where the total refund claimed exceeds the minimum refund amount of TRY 2,000, the taxpayer’s refund claim for that period is considered. Where the total refund claimed remains below the minimum refund amount, the taxpayer’s refund claim for that period cannot be considered, but may be considered together with the refund claims of subsequent periods. In that case the total refund amount, including the refund claimed in the following taxation period, must of course exceed the minimum refund amount of TRY 2,000.
Example 1: Taxpayer (A)’s total VAT refund claim for the May 2023 taxation period is TRY 2,700, consisting of TRY 1,200 for labour supply services under the partial withholding regime and TRY 1,500 for supplies covered by an investment incentive certificate. Since the refund claimed of TRY 2,700 for the May 2023 taxation period exceeds the minimum refund amount of TRY 2,000, the taxpayer’s refund claims may be considered by the tax office and refunded.
Example 2: Taxpayer (A)’s refund claims arising from labour supply services under the partial withholding regime are TRY 700, TRY 1,000, TRY 200 and TRY 500 for the March, April, May and June 2023 taxation periods respectively, and there are no other transactions giving rise to a refund entitlement in those periods. Since the refund claims for the March, April and May 2023 taxation periods are below the minimum amount of TRY 2,000, the tax office will not consider the taxpayer’s refund claims for those periods. Following the taxpayer’s refund claim for the June 2023 taxation period, the total refund claimed of TRY 2,400 may be considered by the tax office and refunded.
Since those benefiting from the exemption are not registered for VAT, a refund may be claimed without regard to the minimum refund amount in the following cases: under Article 11/1-b of Law No. 3065, the refund, on a reciprocal basis, of VAT paid by those without a residence, workplace, registered office or place of management in Türkiye on goods and services purchased in connection with their transport activities and on goods and services purchased for their participation in fairs and exhibitions; the refund of VAT paid by foreign producers without a residence, workplace, registered office or place of management in Türkiye on goods and services purchased or imported within the filming permit period granted for the production of cinematographic works; under Article 15 of Law No. 3065, on a reciprocal basis, the refund of VAT paid by tax-exempt members of diplomatic missions and consulates in Türkiye and of international organisations; and under temporary Article 26 of Law No. 3065, the refund of VAT paid by members serving in the executive cadres of international organisations and of the programmes, funds, representative offices and specialised agencies attached to them.”
7) Exemption for supplies and services in connection with the 2023 UEFA Champions League final
Article 5 of the Communiqué replaced the expression “2019 UEFA Super Cup and 2021 UEFA Champions League final matches” in the heading of section (II/E-10.) of the same Communiqué with “2023 UEFA Champions League final match”, and the expression “the 2019 Union of European Football Associations (UEFA) Super Cup final and 2021 UEFA Champions League final matches” in the first paragraph of that section with “the 2023 Union of European Football Associations (UEFA) Champions League final match”.
Provision has thereby been made for the exemption granted for the 2019 UEFA Super Cup and the 2021 UEFA Champions League final to apply, under the new calendar, to the 2023 UEFA Champions League final.
8) VAT withholding on PTT A.Ş.’s labour supply services
Article 2 of the Communiqué added the following paragraph at the end of section (I/C-2.1.3.2.5.2.) of the same Communiqué, entitled “Purchasers who will apply withholding and the withholding rate – Scope”. The Communiqué thereby provides that certain services purchased by PTT A.Ş. for the performance of postal operations are subject to VAT withholding as labour supply services.
Newly added paragraph: “Purchases of services by PTT A.Ş. for the performance of postal operations — such as the collection, loading, sorting, dispatch and processing of items; the acceptance of items at the address, their packaging, and measurement, weighing and recording operations; the group/route sorting of all registered/unregistered items to be delivered, their loading onto and unloading from delivery vehicles; the delivery of items; the collection of charges on cash-on-delivery items and the remittance of those charges to the administration; and the recording of items delivered or undelivered in the delivery area or at the workplace — shall be subject to withholding under this section.”