Draft revising Turkey’s VAT law to bring in key changes, including exemptions for foreigners

ANKARA

A draft law revising Turkey’s 33-year-old value-added tax (VAT) law has been sent to parliament, Finance Minister Naci Ağbal has stated. 

On Feb. 27, Ağbal said the 25-article new draft law will bring about VAT exemptions to philanthropists who build schools, hospitals, dormitories and mosques for charitable reasons, as well as to foreigners receiving health services in Turkey.

The aim of the new draft bill is to support investments, production activities and exports, to facilitate the tax adoptions of small- and medium-sized enterprises (SMEs), to encourage the formal economy and to strengthen taxpayers’ rights, he added.

The most important move in the bill will be the payment of the transferred VAT returns to taxpayers without any major delay, the minister said.

“We are paving the way for VAT … to be rebated to taxpayers in various ways. The Finance Ministry will start to pay VAT returns that have been transferred over recent years to taxpayers by considering budget opportunities,” Ağbal added.

According to the existing VAT law, a company can offset the VAT it pays when making an investment, buying machinery or making any construction spending by using the VAT it collects via sales in coming years. This has created serious VAT burdens on businesses’ financial sheets.

Companies’ VAT return receivables from the state hit 140 billion liras at the end of the first half of 2017.

Ağbal also noted that the draft bill would introduce VAT exemptions to foreigners paying for health services in Turkey, in a bid to support health tourism.