Value Added Tax in Turkey, commonly referred to as VAT, is a consumption tax that is imposed on products at every point of sale where value has been added. It is an integral part of many countries' taxation systems and is designed to be paid by the seller, who then includes it in the purchase price. In Turkey, VAT exemption applications are limited to brand new property investment projects, and only individuals who have not been residing in the country for the past six months are exempt from this tax.
When it comes to properties, there are three typesof VAT rates that apply, namely 1%, 10% and 20%, depending on the specific property.Property developers or projects are often tasked with obtaining an officialdocument that allows them to sell the property without including VAT.This document, known as the VAT exemption document in Turkey, and isissued by the Government Tax Office, and its acquisition requires certainspecific documents from different authorities.
To successfully apply for VAT exemption inTurkey, the property developer or project must first obtain an officialentry and exit letter to Turkey issued by the General Directorate of Security.Additionally, a letter stating the non-residency status of the individual inTurkey must be obtained from the Immigration Office. Finally, an officialaddress proof document from the applicant's country's authority is required.These three documents, once obtained, are then prepared and submitted to theGovernment Tax Office for examination.
The Government Tax Office carefully reviews allthe submitted documents and assesses their sufficiency and accuracy. If all theinformation and documents are deemed appropriate, the office issues the VATexemption document, which enables the property developer or project toproceed with the sale transaction. With this document in hand, the developer orproject can choose to exclude the VAT amount from the purchase price or refundthe VAT amount from the already made purchase payment.
It is important to note that the process ofobtaining the VAT exemption document in Turkey usually takes about sevento ten days, assuming all the necessary documents are provided promptly andaccurately. Property developers or projects should ensure that they have allthe required information and documentation ready to expedite the process andprevent any unnecessary delays.
In conclusion, VAT plays a significant role in thetaxation system in Turkey. While VAT exemption applications are limited tobrand new property investment projects, individuals who have not been residingin the country for at least six months are exempt from this tax. Theacquisition of the VAT exemption document requires specific documentsfrom various authorities, and once obtained, it allows the property developeror project to proceed with the sale transaction by either excluding the VATfrom the purchase price or refunding the VAT amount from the already madepurchase payment.
