VAT – Muhasebe News

What are the payment methods of VAT return for e-service providers in Turkey as of 01.01.2020?

MuhasebeNews — Mon, 23 Mar 2020 10:00:51 +0000

According Regulation of Revenue Administration on tax collections to be made through banks as of 01.01.2020, the tax payment of VAT Return for e-service providers can make on the web page using DEBIT cards (Turkish public bank or all foreign banks ) and only foreign bank credit cards or EFT to the following bank account of The Large Taxpayer Tax Office.

Which VAT rate should I apply to my supply of electronic services?

VAT Rates is determined according to Cabinet Decree No:2007/13033 .
• %18
“From 1 January 2019, The rate of VAT ;
-on the sales of newspapers and magazines in electronic environment,
-on the sales of electronic books (e-books) and similar publications magazines in electronic environment,
is determined as 18%, with the decision of the President numbered 475 published in the Official Gazette dated 19/12/2018 and numbered 30630.”

How do I know if my company is required to register with Turkish tax authorities?

You may take our online test and answer a few questions to find out whether your company is subject to registration with Turkish tax authorities.

What types of electronic services are subject to VAT in Turkey?

Non-resident electronic service providers have to declare and pay VAT which is charged on electronic services for consideration to non-VAT registered individuals. Electronic services include online services like streaming music, films, gaming services, domain names, hosting, website and webpage support etc.

How often do I need to report to the Turkish tax authorities?

The VAT return period of taxpayers who registered as “Special VAT Registration for Electronic Service Providers” is monthly. Returns must be submitted electronically through the internet by the 26th day of the month following the end of the return period. VAT return should be made out in Turkish lira. Payment in full must be made by the 26th day of the same month.

Source: Revenue Administration of Turkey / link: https://www.digitalservice.gib.gov.tr/kdv3_side/main.jsp?token=d1078f5e3dc646b78d5d4e5842f21e97feb48d366bc7617458b6679dec12675154a01fccc42292bb04d926bc259dbc75e39dd8e202535fd70a7098396c74a6f7
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.

Non-resident electronic service providers in Turkey have to declare and pay VAT which is charged on electronic services

MuhasebeNews — Mon, 23 Mar 2020 09:00:56 +0000

From 1 January 2018, VAT rules for sales of electronic services for consideration to non-VAT registered individuals by electronic service providers who do not have residence, business place, legal business center and business centre in Turkey changed. Non-resident electronic service providers have to declare and pay VAT which is charged on electronic services to non-VAT registered individuals.

The change doesn’t affect business to business sale, the reverse charge mechanism will continue to be implemented.

For cross border supplies of electronic services there’s no registration threshold, and VAT is charged at the rate on subject to electronic services.

It has been approved that taxpayers who registered as “Special VAT Registration for Electronic Service Providers” should declare their supplies made in 2018/January, February and March, on VAT Return in the first day of April 2018 to 24 th of April 2018.

According to Article 1 of the Law No. 3065 in order for a service to be subject to VAT, it must be performed in Turkey. Article 6/b of the same Law states that if services are performed or their benefits are consumed in Turkey, they are considered to have been performed in Turkey.

Thus, services performed in Turkey by those that have no residence, business place, legal center and business center in Turkey and services performed by them abroad are subject to VAT on condition that benefit is consumed in Turkey.

As a basic rule for such services, taxpayer is the performer of the service however, because the performer has no residence, business place, legal center and business center in Turkey, VAT shall be reverse charged, declared and paid by the party in Turkey that benefited from the service.

In cases where the service is exempt from tax and service is performed and benefit is consumed abroad, no tax shall be reverse charged and declared.

For declaring the VAT with reverse charge mechanism, it is not necessary for the party benefiting from the service in Turkey to be a VAT taxpayer. Those who are not VAT taxpayers shall withhold the VAT in such transactions and declare it with VAT Declaration No. 2 and make the payment.

Below are some examples of services provided from abroad and should be subject to reverse charge:

Architectural project service drawn abroad and sent to Turkey for a shopping mall that will be constructed in Turkey;
Consultancy service provided from abroad for the management of an energy generating station operating in Turkey;
Computer software service provided from abroad to a non-VAT taxpayer government institution that is included in the general budget;
The service of providing information from abroad about legal developments in the world to a non-VAT taxpayer non-government organization

By firms that have no residence, business place, legal center and business center in Turkey.

In cases where services that are in the scope of this section are also in the scope of partial reverse charge application, the rules in this section shall prevail.

Supply of goods that are in the scope of Article 1 of the Law No. 3065 made by those that have no residence, business place, legal center and business center in Turkey shall also be subject to rules in this section.

In cases where supply of goods is exempt from tax, no tax shall be declared by taxpayer or other reverse charge party.

How do we notify the amount of the freight cost stated in the customs declaration, in form B? (In Turkey)

MuhasebeNews — Tue, 17 Mar 2020 12:00:47 +0000

In the import declaration related to our import from Poland in 2019/November, the freight cost included in the VAT base is EUR 2,000. Apart from this company, another company invoiced us in this amount, and we paid the freight cost in cash. However, when we convert the invoice to TL, it equals to 12.863,60 TL.

Will we add the company that invoices the freight cost in the form for Purchase of Goods and Services or will we declare on the VAT base of the company that sent the goods, in the customs declaration form or will we declare on our form for Purchase of Goods and Services?

You need to write the information of the company issuing the freight invoice.

Source: İSMMMO
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.

How can we book the expenses of the vehicles to be rented continuously from the person without tax liability, in the company records?

MuhasebeNews — Tue, 17 Mar 2020 11:00:08 +0000

One of our companies, which is a limited company, wants to rent 5 vehicles registered in the name of the brother of the company partner, who is a pharmacist, by signing a contract on behalf of the company. How should we proceed in terms of VAT, Tax Procedure Law and Corporate Tax? (In Turkey)

If the person who will rent a car performs this job with more than one vehicle, Income Tax liability is constituted. An invoice is issued by calculating 18% VAT.

Can the expenses of the vehicle not registered in the company asset be booked? (In Turkey)

MuhasebeNews — Tue, 11 Feb 2020 09:00:22 +0000

Can the expenses of the vehicle not registered in the company asset be booked? (In Turkey)

Can the expenses of the company passenger car not registered in company assets and VAT of these expenses be deducted?

The expenses of the vehicle not registered in company assets cannot be booked. The VAT cannot be deducted as well.

What is the VAT rate on the invoices for commercial vehicles to be issued by companies that do not sell vehicles? (In Turkey)

MuhasebeNews — Fri, 31 Jan 2020 10:00:06 +0000

What is the VAT rate on the invoices for commercial vehicles to be issued by companies that do not sell vehicles? (In Turkey)

In 2015, the commercial vehicle registered with the expense note will be sold (our customer’s business is not a vehicle purchase or sale). The sale price of the van is TRY 16,250. What is the VAT rate that we need to calculate with added percentage method?

18% VAT will be calculated over the sales price.

Consumption Tax Trends in Turkey – OECD

MuhasebeNews — Wed, 22 Jan 2020 14:00:11 +0000

Consumption Tax Trends in Turkey – OECD

According to the report published by Organization for Economic Co-Operation and Development (OECD), the Turkish standard VAT rate is 18.0%, which is below the OECD average. The average VAT/GST¹ standard rate in the OECD was 19.3% as of 1 January 2019. The previous standard VAT rate in Turkey was 17% in 2000. It changed to the current level in 2001. Turkey applies reduced VAT rates of 1% and 8% to a number of goods and services. VAT was introduced in Turkey in 1985 at a standard rate of 10.0%. Since then the minimum and maximum standard rates have been at 10.0% and 18.0% respectively.

VAT Revenue Ratio

The VAT Revenue Ratio (VRR) for Turkey was 0.40 in 2016, below the OECD average of 0.56. The VRR is a measure of the revenue raising performance of a VAT system. A ratio of 1 would reflect a VAT system that applies a single VAT rate to a comprehensive base of all expenditure on goods and services consumed in an economy – with perfect enforcement of the tax. Relative to the pre-crisis level of 2007 (0.38), the Turkish VRR position has increased by 0.02 percentage points. The Turkish VRR remained stable at 0.40 between 2014 and 2016. The lowest VRR was recorded in the year 2009 at 0.36 and the highest level in 2000 at 0.46.

Source: Organization for Economic Co-Operation and Development (OECD) / link: http://www.oecd.org/tax/consumption/consumption-tax-trends-turkey.pdf
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.

Should we look at vehicle license or list of Customs Tariff Statistics Position to get information about whether the VAT of vehicles can be deducted or not?

MuhasebeNews — Fri, 27 Dec 2019 09:00:10 +0000

Should we look at vehicle license or list of Customs Tariff Statistics Position to get information about whether the VAT of vehicles can be deducted or not?

It is stated that it is a private car in the license of the vehicle which we have bought for our company. The vehicle is included in the commercial vehicles section of 87.04 group in the Customs Tariff Statistics Position List (CTSP). Are we going to deduct VAT according to the license or the section in CTSP list?

18% of the VAT paid on the invoice will be deducted according to Article 29 of VAT Law No. 3065 due to the fact that following vehicles (motor vehicle for transporting goods -tariff position no 87.04) are classified as a van according to the tariff position: Box vehicles with single row seats limited to the driving seat, with no side windows in the section behind the driving compartment such as Citan, Connect, Combo, Partner, Berlingo, Caddy, Vaneo, Fiorino, Bipper, Doblo, Kango, Traffic Express; Box panel vans with no seats and with no windows in the section behind the driving compartment such as Starex, Master, Traffic, Transit, Vito, Viano, Transporter, Caravelle, Transit, Jumpy, Ducato, Boxer; vehicles with only two seats in the front, no seats in the rear, closed rear windows, 3 or 5 doors, a fixed panel or net barrier between the driver’s seat and the rear section such as Palio van, Clio van, Corsa van, Matrix Space.

What is the VAT rate on the sale of second-hand commercial vehicles?

MuhasebeNews — Sat, 14 Dec 2019 09:00:20 +0000

What is the VAT rate on the sale of second-hand commercial vehicles?

The taxpayers who buy and sell second-hand vehicles (which must have authorization certificate) will use the same VAT rate while they buy second-hand vehicles or sell second-hand vehicles from that VAT rate. If they buy with 18%, they sell with the rate of 18%.

Those who do not buy or sell second-hand vehicles, calculate 1% VAT on passenger vehicles and 18% VAT on other vehicles.

VAT Refund and Exemption in Turkey

MuhasebeNews — Thu, 12 Dec 2019 09:00:21 +0000

VAT Refund and Exemption in Turkey

VAT collected on the building & construction expenses made for Strategic Investments will be rebated provided that the fixed investment amount is over 500 million TL in Turkey.

VAT Refund Example

Supposing that an investment with a total investment amount of 500,000,000 TL supported within the scope of the Strategic Investment Incentive Scheme allocates 20% of the total amount to building/construction expenses, the total building/construction expenses would be 100,000,000 TL.

VAT Refund Amount = (Building/Construction Expenses) x (VAT Rate for Building/Construction Expenses)

= 100,000,000 TL x 0,18

= 18,000,000 TL

* The VAT rate applicable to building/construction expenses is 18%.

VAT Exemption

Investment machinery and equipment imported and/or locally provided within the scope of the incentive certificate will be VAT exempt.

VAT Exemption Example

If the project is VAT exempt, an investor purchasing local machinery and equipment worth of 10,000,000 TL or imported machinery and equipment worth of 20,000,000 TL, including VAT, will have a saving around 5,400,000 TL.
VAT Exemption Amount= (Total Amount spent for Machinery and Equipment) x (VAT Rate*)

= 30,000,000 TL x 0.18

= 5,400,000 TL**

* 18% VAT rate is applicable to investment machinery and equipment provided within the scope of Investment Incentive Certificate, excluding certain cases stipulated in the VAT Law.
** For operating companies which can offset paid VAT with collected VAT, net contribution of this support is the time value of money.

Source: Ministry of Trade / link: https://www.trade.gov.tr/investment/investment-content
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.