Will the Turkish company benefiting from the service pay VAT-2 and withholding tax for the VAT-free invoice issued by a tourism company in Turkey to a Turkish company participating in a fair abroad?
No, VAT-2 and withholding tax are applied to certain services provided to taxpayers in Turkey by companies abroad. Since the tourism company is in Turkey and issues an e-invoice or e-archive invoice, the domestic customer benefiting from the service will not pay VAT-2 and withholding tax because they benefit from the service abroad.
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Exemption text regarding VAT in the VAT General Application Communiqué;
Since the services such as food and beverage, accommodation, transportation, guidance, travel, health, etc. provided abroad to participants in tours organized abroad by travel agencies resident in Turkey are provided abroad and the passengers benefit from these services abroad, these services are not subject to VAT in Turkey. However, services provided domestically to participants in the tour organization are subject to VAT.
Therefore, provided that the service fees purchased from abroad regarding the tour activity are documented within the framework of Tax Procedure Law No. 213, VAT is not applied to the expenses and amounts shown in the documents related to these services.
The entire amount constituting the service fee is shown in the invoice to be issued by the travel agency to the customers. However, VAT is calculated on the amount remaining after the service fees provided abroad are deducted.
On the other hand, if the amount of passenger transportation abroad is invoiced separately or if the amount constituting the transportation fee is shown separately in the invoice to be issued, this amount is exempt from VAT in accordance with Article 14 of Law No. 3065.
Example: (A) The total amount of the amounts obtained by the travel agency due to the tour activities organized in April/2013 is 50,000 TL. The expenses related to the services such as accommodation, food and beverage, and guidance purchased by the company from abroad for its customers during this trip are documented with documents in accordance with Tax Procedure Law No. 213. The total of such expenses is 15,000 TL, and the total of the ticket prices for transportation is 20,000 TL. In this transaction,
15,000 + 20,000 = 35,000 TL is not subject to VAT.
VAT is calculated on 50,000 – 35,000 = 15,000 TL.
However, in order to perform this transaction, the company must show the amount of expenses incurred abroad and the transportation fee separately in the invoices it will issue to its customers, and calculate tax on the remaining amount.
Source: VALUE ADDED TAX GENERAL APPLICATION NOTIFICATION
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