2012 fiscalis revenue administration vat department ankara 1 vat system in turkey
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2012 Fiscalis Revenue Administration VAT Department Ankara
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VAT SYSTEM in TURKEY
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SCOPEI-INTRODUCTION
1-Brief History2- Legal Framework3-General Characteristics4-General Overview
II. TAXATION1- Taxable Transactions2-Territory3.Taxable Persons4.Taxatıon 4.Taxatıon 5.VAT Registratıon,
Records, VAT Return, Taxable Period And Payment
III- EXEMPTIONS, CREDIT MECHANISM, TAX REFUND
1- ExemptionsA- Type of ExemptionsB- Export ExemptionC- Import
2- Credit Mechanism3- Tax Refund
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I-INTRODUCTION
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1-Brief History
The beginning of the studies on Value Added Tax (VAT) in Turkey goes back to 1970.
The law entered into force on January 1st , 1985.
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2- Legal Framework
VAT Law No.3065
63 Article+28 Temporary Law
116 General Comminique, 60 Circular Note
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3-General Characteristics
VAT ; general consumption tax covers all goods and services aplied to all stages from producer to
consumer calculated on transaction value with
related rate
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General Characteristics
has credit mechanism.
is spread but non cumulative and based on self control system.
is objective and transparent tax
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4-General Overview
The Turkish tax system levies value added tax on the supply and the importation of goods and services.
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General Overview(October 2011)
TOTAL COLLECTION of VAT
78.640.676 (thousand TL) (33.000.000 Thousand Euro)
PERSANTAGE of ALL TAX REVENUE
30,99%
ACTIVE TAXPAYER 2.293.765
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II. TAXATION
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1- Taxable Transactions
In line with OECD and EU Directives
The supply of goods and services, importation of goods and services
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2-Territory
commercial
industrial
agricultural
or independent activities
within Turkey
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and
when goods or services are imported into Turkey
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SUPPLY
The transfer of the right of disposition on a property by the seller to the purchaser.
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SERVICES Everything except goods
After defining service, VAT Law of Turkey counts some examples of service; -making, -cleaning, -processing, -safekeeping, -creating, -preparing, -manufacturing -evaluating, -repairing, -leasing.
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IMPORTATION Any importation
of goods or services into Turkey is a taxable transaction.
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3.Taxable PersonsA- General
Defined in the VAT Law.
Engaged in taxable transactions, irrespective of their legal status or nature and their position with regard to other taxes.
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B-VAT Responsibility and Reverse Charge VAT
In the event that the taxpayer
is not resident,
or does not have a place of business in Turkey, a legal head office or place of management in Turkey,
or in other cases deemed necessary,
having or undocumented goods or purchasing undocumented services
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REVERSE CHARGE IMPLEMENTATION
FULL REVERSE CHARGE
IMPLEMENTATION
PARTIAL REVERSE CHARGE
IMPLEMENTATION
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a) Full Reverse Charge Implementation
Whole tax is declared and paid by the person in charge.
services provided from abroad and benefited in Turkey,
copyright earnings,
renting and advertising services provided by taxpayers who are not VAT taxpayers
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b) Partial Reverse Charge Implementation
Only certain part of the tax (such as 1/3, 1/2, 2/3, 9/10) is declared and paid by person in charge
Toll-manufacturing transactions in textile and ready wear sector
Delivery of scraps and waste
Purchase of services such as construction works, cleaning and security by certain organizations such as public institutions and banks,
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4.Taxation 4.Taxation AA.Chargeable Event.Chargeable Event
When does VAT become chargeable?
General rule Special rules
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B.Taxable Base
On what VAT is calculated?
Total value of the consideration received, not including the VAT itself.
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If consideration does not exist or unknown or is in a form other than money, the taxable base is the market value.
Market value is the average price
payable in the market for similar goods and services and is determined with reference to the Tax Procedural Law.
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a) Items Included in Tax Base;
transport, loading and unloading expenses made by the sellers,
cost of packaging, insurance, commission and similar
expenses,
the elements such as taxes, duties, charges, shares and contributions to the funds,
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miscellaneous incomes such as due date difference, price
difference interest and premium
all benefits, services and assets provided under service or similar names,
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b) Items Excluded from Taxable Base
VAT itself
any discounts
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Special Types of Taxable Bases
VAT law; defines special taxable bases
gives authorisation to Ministry of Finance
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C-Tax Rates
According to Law 10%
The Council of Ministers is authorised; To increase this rate up to 4 times,
reduce it down to 1%, To specify different tax rates for various
goods and services and retail phase for some of the goods.
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CURRENT
VAT
RATES
GENERAL RATE
18 %
REDUCED VAT
RATES
1 %
8 %
Currently three VAT rates are applied
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the standard rate is 18%;
the reduced rate is 1% for
-particular agricultural products, -newspapers and magazines,-supply of residential housing (under 150 m2 )
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the reduced rate is 8% for ;
food products (except alcoholic beverages), cinema, theatre, opera and ballet tickets, private educational services, books and similar publications, certain medical equipment and medical products, medicines, textile and confection products and tourism services, services given by restaurants, bakeries and etc. (except
alcoholic beverage services), services given to senior citizens, the handicapped and orphans, agricultural machinery and heavy construction equipment and
leasing of them,
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5.VAT REGISTRATION, RECORDS, VAT RETURN, TAXABLE PERIOD AND PAYMENT
RegistrationAny person or entity engaged
in an activity within the scope of the VAT Law must notify the local tax office where his place of business is located.
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Records
Taxpayers must keep records in such a way to enable the computation and checking of VAT.
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Taxable Period and Submission of VAT Returns
Monthly taxable periods for all taxpayers
For international transportation and transit transportation, the taxable period is defined as the quarterly period.
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taxpayers who closed down business shall be submitted and paid in the monthly procedure.
taxpayers who will leave country shall submit VAT return and shall pay VAT within 15 days before their departure date.
Even if the taxpayers do not have any transactions subject to VAT during the taxation period, they shall submit VAT return.
Submission of VAT Returns
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Electronic Return
The taxpayers of Personal Income Tax and Corporation Tax who have commercial, agricultural and professional activities, are obliged to send their VAT Returns via internet.
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Payment
submit returns within 24 days following the end of each taxable period.
payments are made 2 days after submission of VAT returns
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THANK YOU
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III-EXEMPTIONS, CREDIT MECHANISM,
TAX REFUND
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1-EXEMPTIONSA) TYPE of EXEMPTIONS:
a) FULL EXEMPTIONS
With right of deduction and refund
b) PARTIAL EXEMPTIONS
With right of deductionWithout right of deduction
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a)FULL EXEMPTIONSExamples
Exportation Supply of sea, air, and railway vehicles Services provided to sea and air transportation
vehicles construction, modernization and extensions of seaports and airports
National security expenses Transit and international transportation Diplomatic exemptions
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b)PARTIAL EXEMPTIONSExamples
-With Right of Deduction; transitions, transfering,
transformation, division transactions of enterprises
participation shares and sales of immovables of corporations
Non-deductible tax in these exemptions is not refunded.
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- Without Right of Deduction: importation cultural and educational purposes social purposes delivery of goods and services to small
business immovables rental banking and insurance transactions
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B-EXPORT EXEMPTION Fully Exempt from VATFully Exempt from VAT
Apply zero rateApply zero rate
VAT amount incurred in earlier stages is VAT amount incurred in earlier stages is fully refundedfully refunded
Subject to be confirmed or approved by Subject to be confirmed or approved by some official or unofficial documentssome official or unofficial documents
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Export deliveries (from Turkey to another country) Export deliveries (from Turkey to another country)
(Export of Goods)(Export of Goods)
Services related to export deliveries (Export of Service)Services related to export deliveries (Export of Service)
Services for customers abroad (Export of Service)Services for customers abroad (Export of Service)
According to Article 11 in VAT Law, Following According to Article 11 in VAT Law, Following Transactions are Exempt from VAT as an ExportTransactions are Exempt from VAT as an Export
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Roaming services provided in Turkey to foreign customers by GSM operators
Delivery of goods to be carried in the personal luggage of non-resident travellers
Delivery of goods and provision of services to foreign transporters and foreigners participating in fairs and exhibitions
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It can be in different forms It can be in different forms
Classic form:Classic form: Export through Customs to abroadExport through Customs to abroad
Conditional Delivery of Export:Conditional Delivery of Export: Conditional sale from Conditional sale from
manufacturer to exporter in order that exporter should manufacturer to exporter in order that exporter should
export that goods within 3 monthsexport that goods within 3 months
Luggage Trade:Luggage Trade: Delivery in Turkey then carrying to abroadDelivery in Turkey then carrying to abroad
Refund at Customs:Refund at Customs: Buy some goods with VAT and then Buy some goods with VAT and then
take VAT amount back while leavingtake VAT amount back while leaving
a)EXPORT of GOODS
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a)EXPORT of GOODS
SELLEREXPORTER
CU
STOMS
DELIVERY OF GOODS
VAT
GOODS
VAT EXEMPTIONS
FREE TRADE ZONE
OR
ABROAD
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Exemption at pre-export stageExemption at pre-export stage While exporter buying goods from manufacturer, While exporter buying goods from manufacturer,
doesn’t pay VAT, but has to export goods within doesn’t pay VAT, but has to export goods within 3 months3 months
Manufacturer calculates and writes VAT on Manufacturer calculates and writes VAT on invoice, and then declare, but doesn’t pay it,invoice, and then declare, but doesn’t pay it,
Delivery is completely linked to export purposeDelivery is completely linked to export purpose VAT is deferred and after export, cancelledVAT is deferred and after export, cancelled If export does not occur, VAT is not cancelled. If export does not occur, VAT is not cancelled.
Exporter has to pay this amount to state.Exporter has to pay this amount to state.
b)CONDITIONAL DELIVERY of EXPORT
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b) CONDITIONAL DELIVERY of EXPORT
MANUFACTURER EXPORTER
CUSTOMS
Final Goods
Deferment-cancellation(optional)
Final Goods
exportation of goods (within 3 months)
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c)EXPORT of SERVICE
Services provided to the customers abroad Conditions;
Services should be provided in Turkey to a customer abroad
Invoices or similar documents should be issued in the name of the customer abroad
Service charge should be brought into Turkey in foreign currency.
Services should be consumed abroad
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C) IMPORT
Importation of the goods and services delivery and performance of which are tax exempted within the country, are also exempted from VAT.
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D) RENOUNCEMENT FROM EXEMPTION :
Taxpayers carrying out transactions exempted from VAT : By filing an application to the local tax
administration, By specifying exempted transactions,
can demand the transactions to be taxed.
Those taxpayers can not renounce from their tax liabilities up to 3 years.
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2-CREDIT MECHANISM
SCOPE: Taxpayers deduct input VAT that is shown on the
invoices or other relevant documents related to supplies made to them
from output VAT that is calculated on their
supply on monthly basis.
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THE CREDIT MECHANISM if output VAT exceeds input VAT in the
related month, difference is paid to the tax office.
if input VAT exceeds output VAT the difference is carried forward in order to offset from future VAT collections.
There is no time limitation for this system.
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THE CREDIT MECHANISM 2- Conditions For Tax Deduction
In order to deduct charged VAT from calculated VAT; charged VAT should be; Related to purchases and expenses related to
business activities, Shown also in invoices and similar documents, Recorded in legal books, Related calendar year shall not be exceeded, There shall be no provisions in law preventing
deduction.
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THE CREDIT MECHANISM
In cases where the total amount of input VAT exceeds output VAT, the difference is not returned to the taxpayer but transferred to the subsequent periods. This amount is not refunded.
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THE CREDIT MECHANISM
3-Non-deductible VAT Automobiles (except “rent-a-car” companies)
Missing and stolen stocks (excluding those lost due to fire in places of compelling reason declared by Ministry of Finance).
VAT on non-deductible expenses.
Expenses that are not accepted in PersonalIncome Tax Law and Corporate Income Tax Law.
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3- TAX REFUND
Refund is only possible for some transactions that are stated in the Law and related legislation.
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TAX REFUND
Transactions entitling refund right; Full exemptions, Reduced rate, Partial reverse charge application, International agreements, Excess and unnecessary tax is paid.
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TAX REFUND Tax refund from transactions which
entitle refund right is done at the request of taxpayer; In cash,
and As a set- off against tax and SSI (Social
Security Institution) premium debt, Refund system is arranged in order to
encourage payment on account.
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Latest Developments in the Indirect Taxation
VAT risk analysis system (VATRAS) allows Revenue Administration;
To analyse risk profiles of all VAT taxpayers in the country,
To detect taxpayers who have higher possibility of issuing fake invoice on monthly basis,
To inquire VAT refund lists which are available on electronic database automatically,
To verify the taxpayers’ data with the suppliers, To automatically validate guarantee letters, To examine critically informality of declared revenue.
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ANALYSING THE LISTS WITH THE AUTOMATED VAT REFUND SYSTEM
List of List of SuppliersSuppliers
List of List of Custom Custom DeclarationsDeclarationsVAT ReturnVAT Return
Claimant
CENTRAL DATABASE
Application of Refund
Claim
VAT Refund Control Report
Tax Office
List of List of Export Export InvoicesInvoices
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Statistical data on Risk Analysis Project of VAT Refund for the period of January 2010-October 2011 is shown below:
Latest Developments in Latest Developments in the Indirect Taxationthe Indirect Taxation
Number of analysed refund request 340.689
Amount of corrected VAT refund after risk analysis 755.654.140 TL(304.699.250 €)
Amount of increased VAT tax base after risk analysis
1.485.842.501TL(599.130.040 €)
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THANK YOU
Revenue Expert: Filiz BULGURCU