The proposal for "The Law Concerning Certain Changes to The Value Added Tax Law and Certain Statutory Decrees" (the "Proposal") has been brought before the Turkish Grand National Assembly for review.
The Proposal includes important changes intended to support investments, production activities and exports, expedite tax returns, facilitate tax compliance by small and medium sized enterprises and encourage their contribution to the economy (the "Amendments").
The Amendments will allow for small businesses that keep their books according to the operation accounting method to declare a fixed amount of VAT each month and an extended payment period of 2 months following such declaration.
The Amendments will introduce various VAT exemptions, including on machinery and equipment purchases for R&D and innovation and design purposes, a full VAT exemption for any storage and terminal services in customs bonded areas. Additionally, the Amendments will provide for conversion of personal partnerships into equity companies to be held be exempt from VAT.
The Amendments also foresee changes as to VAT refunds in export operations. Currently, only the VAT that is incurred in relation to goods being exported are refundable. With the proposed Amendments, VAT incurred on any transactions within Turkey will also be eligible for refunds.
Finally, the Amendments include an option for group companies to be treated as a group for VAT purposes. Accordingly, companies which form a group will have the option of giving a joint VAT declaration for all eligible members of its group.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
