Turkiye removes right to deduct import VAT calculated due to certain trade policy measures

With the publication of Presidential Decree no. 7846 in the Official Gazette dated 24.11.2023 and no. 32379, the right to deduct the VAT calculated on imports due to trade policy measures has been abolished in Turkiye.

As per Article 21 of VAT Code no. 3065, the VAT base for imports consists of:

• Customs value of goods
  
  
• All taxes and duties paid on imports
  
  
• Other expenses and payments made until the registration date of the customs declaration that are not taxed, as well as payments such as price differences and exchange-rate differences calculated on the cost of the goods

Trade policy measures on imports for certain goods increase the customs value of those goods and thus increase the VAT base. This results in additional VAT being declared on import transactions, as increased customs value or VAT base is declared due to "surveillance in imports,"3 anti-dumping duty or additional financial liability.

The new Presidential Decree has now abolished the right to deduct the VAT paid on the increased value declared in the customs declarations of the goods subject to surveillance in imports.

Additionally, VAT will not be deductible if paid within the scope of customs duties and/or additional financial obligations imposed as protection measures, anti-dumping duties and countervailing duties applied in accordance with the legislation on preventing unfair competition in imports. Also no longer deductible are various taxes, duties, fees and shares arising from these amounts and included in the VAT base.

For additional information with respect to this Alert, please contact the following:

Kuzey Yeminli Mali Müsavirlik A.S., Istanbul
 

• Sercan Bahadir, Global Trade and Indirect Taxes Leader
  
  
• Yakup Gunes
   

Ernst & Young LLP (United States), Turkish Tax Desk, New York
 

• Gamze Durgun

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.