2. Export of Services
According to Article (11/1-a) of Law No. 3065, services provided for customers abroad are exempt from tax.
2.1. Scope of Exemption
In order for a service to be exempt from VAT within the scope of Article (11/1-a) of Law No. 3065, according to Article (12/2) of the same Law;
– The service must be provided for a customer abroad,
– The service must be utilized abroad,
The fact that the service is provided for a customer abroad is documented with an invoice or similar document issued in the name of the customer abroad.
The purpose of using the service abroad is that the service provided in Turkey for the customer abroad is related to the customer’s business, transactions and activities abroad; it is not related to their activities in Turkey.
Since the goods and services that companies abroad will send to Turkey are consumed in Turkey, consultancy, brokerage, supervision, customer finding, market research, etc. services provided to these companies in Turkey for the goods and services in question are not considered within the scope of service export exemption and are subject to VAT. In this case, in determining the benefit criterion, the service provided must be directly related to the imported goods.
Services provided for goods imported by foreign companies from Turkey (exported by Turkey) are considered within the scope of service export.
Modification, maintenance, and repair services provided to foreign-flagged ships and aircraft that do not have the right to transport within Turkey are exempt from VAT within the scope of service export.
Services provided from Turkey to free zones are not considered within the scope of service export.
2.2. Documentation and Declaration of Exemption
The exception regarding service export is documented with a service invoice issued to the customer abroad. A list showing photocopies or printouts of service invoices approved by company officials is provided. These documents must be submitted as an attachment to a petition within the declaration period in the period in which the exemption is declared. It is not mandatory to provide the payment document for the service (a document proving that the amount was brought to Turkey, bank receipt, etc.) for the declaration of the exemption.
The export exemption is declared with the VAT Declaration No. 1 for the taxation period in which the service was performed. The declaration is made by using the transaction type line number 302 in the “Transactions Included in the Scope of Full Exemption” table in the “Exemptions-Other Transactions Giving Right to Refund” tab of the declaration for the period in which the service performed for the customer abroad was completed/performed.
The service fee is entered in the “Delivery and Service Amount” column of this line. The VAT amount calculated by taking into account the explanations in Section (IV/A) of the Communiqué, which is included in this service, is written in the “Incurred VAT” column. If no refund is requested, “0” is written in the “Incurred VAT” field.
The refund of VAT incurred for transactions declared in this manner and not compensated through deduction is not fulfilled before the service fee arrives in Turkey in foreign currency. However, in service exports shown in Turkish Lira on the invoice, refunds can also be made based on documents proving that the fee was brought to Turkey in Turkish Lira.10
However, in modification, maintenance and repair services of foreign flagged ships that do not have the right to transport within Turkey, 50% of the VAT incurred due to the service within the scope of the exception and not compensated through deduction is refunded without the need for a document proving that the service fee was brought to Turkey. The remaining portion of the VAT to be refunded is refunded at the rate that half of the transaction fee was brought to Turkey.
2.3. Refund
The following documents are required for refund requests arising from service export:
– Standard refund request petition
– Service invoice or list
– Payment document (a document proving that the price was brought to Turkey, bank receipt, etc.)
– List of VAT to be deducted for the period in which the service export was declared
– List of VAT incurred
– Calculation Table of VAT Requested to be Refunded
2.3.1. Refund by Setoff
Taxpayers’ refund requests arising from service export and not exceeding 10,000 TL are fulfilled without requiring an inspection report, Certified Public Accountant report, or collateral. If the refund request exceeds 10,000 TL, the refund of the exceeding part is fulfilled according to the tax inspection report or Certified Public Accountant certification report. If a collateral is provided, the taxpayer’s refund request is fulfilled and the collateral is resolved according to the results of the tax inspection report or Certified Public Accountant report.
2.3.2. Cash Refund
Regardless of the amount, taxpayers’ cash refund requests arising from service exports are fulfilled according to the tax audit report or CPA report13. If a guarantee is given, the taxpayer’s refund request is fulfilled and the guarantee is resolved according to the results of the tax audit report or CPA report.
Source:https://www.gib.gov.tr/fileadmin/mevzuatek/kdvgeneluygulamatebligi/kdvgeneluygulamatebligi_2a.pdf
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