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Turkey Amends Certain Rules for the Application of VAT — Orbitax Tax News & Alerts

Turkey's Revenue Administration has announced the publication of General Communiqué No. 36 on 3 June 2021, which includes various amendments regarding the application of VAT. One of the amendments is an additional clarification in relation to transaction expenses that are disallowed under the interest deduction limitation rules. The clarification provides that where the deduction limitation applies for such expenses, this does not limit the right of taxpayers to claim (deduct) input VAT incurred in relation to such expenses to offset VAT accrued for other transactions.

Another important amendment is a change regarding claims for refunds of input tax. This includes that where taxpayers are entitled to a refund of input tax for more than one type of transaction in the same period, they may opt to claim a refund for some transactions but not others. Previously, refund claims generally had to be made for input tax for all transactions.

Lastly, the threshold for partial VAT withholding is increased from TRL 1,000 to TRL 2,000. The threshold change applies from 1 July 2021, while the measures above apply from the date the General Communiqué No. 36 was published (i.e., 3 June 2021).