From Turkey: Reforms Described in Draft Law that Requires Changes in Turkish VAT Regulations
Nowadays, the draft amendments to VAT law is negotiated in the Turkish National Assembly. This draft law has introduced some significant changes regarding the value-added tax applications.
For the companies who have long manufacturing processes and low inventory turnover or for the investment companies, calculated VAT is generally lower than their paid VAT to suppliers; therefore it takes time to reimburse such VAT through deduction mechanism. In such cases, VAT creates a financial burden on enterprises.
It is aimed to transform the VAT into a structure that does not create a financial burden on the companies, to facilitate the compliance obligations of the small enterprises, to reduce the transaction cost, and to improve the VAT related practices.
The draft law includes provisions regarding:
- Refund of deferred VAT
- Extension of VAT deduction period
- Obtaining Group VAT liability
- Late payment fee for delayed refunds
- Special VAT refund procedure for export activities
- Exemption for R&D equipment
- Deduction of VAT deriving from disguised profit distribution through transfer pricing
- VAT deduction for bad debts
- VAT deduction in perished fixed assets
Some important clauses of the draft law are explained in our bulletin. If you would like to have more information please click here to read the full article.