Meal Service and Event Organization Services
In section (3.2.4) of VAT General Communiqué No. 117, it is stated that a 5/10 VAT withholding rate will be applied by the buyers for all types of meal service and organization services provided to those listed in section (3.1.2/b) of the Communiqué.
Meal service includes the acquisition of services to meet the food needs of personnel, students, patients, customers, guests, or passengers of the public administrations, institutions, and organizations listed in section (3.1.2/b) of the Communiqué.
Example: For lunch (packed meals) provided to students under the Ministry of National Education’s transportation-based education system, VAT withholding will be applied to payments made to contractors preparing and/or distributing the meals.
If the cost is covered by a source other than the organization’s budget, such as the Social Assistance Foundation, VAT withholding will still apply to the meal acquisition.
The fact that the meal is prepared (cooked) at a location owned by the administration, institution, or organization responsible for withholding or is supplied ready for consumption does not prevent the application of VAT withholding.
For food vouchers (coupons-tickets) marketed by some companies and used to obtain meal services at designated establishments, the VAT calculated on the price of these vouchers will not be subject to withholding. However, if the meal service is provided directly within the institution or organization by the company selling the food vouchers, VAT withholding will apply.
If the meal service is provided at a location (restaurant, dining hall, etc.) and the invoice for the service is issued in the name of the public administration, institution, or organization listed in section (3.1.2/b), the transaction will also be subject to withholding.
Additionally, for meal services provided separately from accommodation services or documented by a separate invoice at hotels, motels, holiday resorts, and similar accommodations, VAT withholding will apply to the meal service. Even if listed on the same invoice, VAT withholding will be applied to the portion separately indicated for the meal service.
Purchases of foodstuffs and other materials for preparing meals by public administrations, institutions, and organizations for their own personnel are not subject to withholding under this section.
The purchase of services such as concerts, fairs, celebrations, parties, cocktails, invitations, congresses, seminars, panels, promotions, and similar activities by public administrations, institutions, and organizations listed in section (3.1.2/b) will be subject to VAT withholding under this section.
Services obtained by the taxpayers providing these event services from the operators of the venues (such as halls, hotels) where the event will be held are not subject to withholding. However, this does not prevent VAT withholding from being applied to the total amount listed on the invoices issued by the event-organizing companies to the administration, institution, or organization.
Example: (A) Organization A.Ş. has an agreement with (B) public institution to organize the institution’s 50th-anniversary celebration. The celebration will be held in another city and will last for two days. (A) has arranged accommodation for the participants with a hotel for the event.
The accommodation, hall rental, and similar services provided by the hotel to (A) will not be subject to withholding. However, the total amount invoiced by (A) to (B) for the celebration will be subject to a 5/10 VAT withholding.
Accordingly, if a company listed on the stock exchange provides meal services as part of representation and hosting activities carried out by its personnel in conjunction with clients or suppliers, and the total service amount, including VAT, exceeds 1,000 TL, the company will apply a 5/10 VAT withholding.
Source: VALUE ADDED TAX CIRCULAR/60
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