Principles and procedures have been published for implementing
tax exemptions related to financial assistance granted for the 2014
– 2020 period within the European Union's pre-accession
financial assistance package to Turkey. Accordingly, Union
Contractors operating within the scope of the financial assistance
program can receive tax exemptions, provided certain conditions are
The Framework Agreement Between the Republic of Turkey
represented by the Government of the Republic of Turkey and
European Commission on the Arrangements for Implementation of
European Union Financial Assistance to the Republic of Turkey under
the Instrument for Pre-Accession Assistance ("IPA
II") was signed on 11 February 2015.
Accordingly, the General Communiqué (Rank No: 1)
("Communiqué") related to
Framework Agreement on Instrument For Pre-Accession Assistance (IPA
II) Between Turkey and European Union, was published in Official
Gazette number 29623 on 13 February 2016.
The recent Communiqué covers:
Joint financing of Sectoral
agreements and financing agreements executed between Turkey and the
Agreements executed between Contract
Authorities and Union Contractors.
Contract Authorities are defined as the European Commission and
entities entrusted by European Commission to make use of European
Union financial assistance.
Union Contractors are defined as natural or legal persons
rendering service, supplying goods, executing works and/or running
business under a Union Contract. Union Contractors can be either
financed solely by the European Union or jointly by the European
Union and Turkey.
Union Contracts are defined as any grant or contract which
involves an activity financed by the IPA II (including co-financing
by the beneficiary of IPA II assistance) and which is signed by the
European Commission, IPA II beneficiary or grant beneficiary. Union
Contracts also include sub-grant contracts and delegation
agreements under indirect management.
According to the Communiqué, provided certain
certificates and approvals and conditions are met, Union
Contractors can be exempt from:
Value Added Tax.
Special Consumption Tax.
Income and Corporate Tax.
Inheritance and Transfer Tax.
Special Communication Tax and Motor
Suppliers to Union Contractors can also deduct Value Added Tax
for any goods, service, or work provided.
Please see this
link for the full text of the Communiqué (only available
Information first published in the
MA | Gazette, a fortnightly legal update newsletter produced by
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