As known, under our Newsletter (No.Q2/2015) it was explained
that according to temporary Article 34 of the Value Added Tax
("VAT") Code, deliveries and services provided as of 1
January 2014 to those who perform construction and modernization
works for transit petroleum pipe line projects exempted from VAT
within the framework of the international agreement provisions will
be evaluated as exempt from VAT. The exemption and refund
principles in relation to the construction and modernization of
transit petroleum pipeline projects stated in the temporary Article
34 of the VAT Code were determined by the tax authority through the
Communique on Amendment to the VAT General Application Communique
(Serial No.3) (published in the Official Gazette dated June 27,
2015 and No.29399). Accordingly, in order for the exemption to be
There must be an international
agreement put into effect in accordance with the procedures before
April 07, 2015 when the temporary article 34 of the VAT Code became
This agreement must fall under the
scope of the Law no. 4586 on Transit Passes of Petroleum through
The international agreement must
contain a provision regarding the transit petroleum pipelines to be
constructed and modernized are exempt from VAT.
Deliveries and services which are provided to those performing
construction and modernization of transit petroleum pipelines
fulfilling the abovementioned conditions and in relation to the
construction and modernization are exempt from VAT as of 1 January
The Ministry of Energy and Natural Resources provides a
certificate stating that the transit petroleum pipeline project is
within the scope of this exemption. Only those who have this
certificate could benefit from the exemption. In order to perform
transactions within the scope of the exemption, the exemption
certificate must be submitted to the seller taxpayer who will
perform the delivery or service.
Purchases of goods and services and furniture, soft furnishing
and similar fixtures, and passenger cars, minibuses, buses and
similar vehicles which are in relation to administrative activities
of the certificate owners and construction, instalment and
operation of the administrative buildings, plants and equipment
could not be evaluated within the scope of the exemption.
Regarding the goods and services which are within the scope of
the exemption between January 1 2014 and the date of exemption
certificate but obtained through paying VAT by taxpayers holding
certificates, necessary corrections will be made within the
framework of the explanations made under the section "I/C-1.1
Excessive or Unjust Taxes" of the VAT Application
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.
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