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VAT Refund and Exemption in Turkey

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VAT Refund and Exemption in Turkey

VAT collected on the building & construction expenses made for Strategic Investments will be rebated provided that the fixed investment amount is over 500 million TL in Turkey.

VAT Refund Example

Supposing that an investment with a total investment amount of 500,000,000 TL supported within the scope of the Strategic Investment Incentive Scheme allocates 20% of the total amount to building/construction expenses, the total building/construction expenses would be 100,000,000 TL.

VAT Refund Amount      = (Building/Construction Expenses) x (VAT Rate for Building/Construction Expenses)

= 100,000,000 TL x 0,18

= 18,000,000 TL

* The VAT rate applicable to building/construction expenses is 18%.

VAT Exemption

Investment machinery and equipment imported and/or locally provided within the scope of the incentive certificate will be VAT exempt.

VAT Exemption Example

If the project is VAT exempt, an investor purchasing local machinery and equipment worth of 10,000,000 TL or imported machinery and equipment worth of 20,000,000 TL, including VAT, will have a saving around 5,400,000 TL.
VAT Exemption Amount= (Total Amount spent for Machinery and Equipment) x (VAT Rate*)

= 30,000,000 TL x 0.18

= 5,400,000 TL**

* 18% VAT rate is applicable to investment machinery and equipment provided within the scope of Investment Incentive Certificate, excluding certain cases stipulated in the VAT Law.
** For operating companies which can offset paid VAT with collected VAT, net contribution of this support is the time value of money.


Source: Ministry of Trade / link: https://www.trade.gov.tr/investment/investment-content
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.


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