VAT exemption for Foreign Investors
VAT is an abbreviation of Value Added Tax. A value added tax (VAT) is a consumption tax that is levied on a product repeatedly at every point of sale at which value has been added.
According to the Turkish Law, people who are not resident in Turkey for last six months(citizens or foreigners) are not taxpayers in Turkey. In addition to that, VAT exemption application can be made only for brand new projects on property investments.
The seller, in principle, pays the good’s VAT and after include it to the purchase price. There are two types of VAT for properties as %1 and %18 depending on a property.
In practice, property developers or projects request an official document to sale the property without VAT. The VAT exemption document issues by the Government Tax Office. There are three document requirementfrom certain authirities for VAT exemption;
- Official entry and out letter to Turkey issued by General Directorate of Security.
- Non-resident in Turkey letter from Immigration Office.
- Official address proof document from applicant’s country’s authority.
Each document issue approximately in 7 days. These three document prepare and submit to the Government Tax Office. The Government Tax Office examines the documents and issues the VAT exemption document if all the information and documents are sufficient.
Once VAT exemption document (issued by the Government Tax Office) provided to the developer or the project, sale transactions could be continued by either excluding VAT from purchase price or refunding VAT amount from made purchase payment.
