29.05.2021
If the cost of each transaction, within the scope of partial withholding application does not exceed 1.000 TL, including VAT, the calculated VAT will not be subject to withholding. If the limit is exceeded, withholding will be applied in full amount.
In order to avoid the obligation of VAT withholding in transactions exceeding the determined amount, the price cannot be divided into parts, and withholding will be made in case this limit is exceeded, taking into account the sum of the costs of the same transaction.
If it is determined that the price is divided into parts by issuing more than one invoice, in order to avoid the obligation of withholding, necessary actions will be taken by the tax offices by considering whether the total of the purchases, which are understood to be integral, exceed the above-mentioned limit.
Accordingly;
– For services that are contracted for a period of 1 year, but can be provided in parts as of monthly taxation periods, the price including VAT in the invoice issued for the monthly service provided will be taken into account in the lower limit calculation.
– Services provided within the framework of weekly, monthly and annual maintenance contracts for machinery, equipment, fixtures and vehicles of an organization subject to the Law No. 5018, will be evaluated in terms of the portion presented in each maintenance period. Repair, maintenance and fixing services that occur in line with the demands and needs of the organization and are not periodic will not be subject to withholding as long as they do not exceed 1.000 TL including VAT.
In the event that repair, maintenance and fixing services are performed to various machinery, equipment, fixtures and vehicles of the responsible organization on the same day, the cost will be considered as a total, not for each vehicle, and will be subject to withholding if it exceeds 1.000 TL.
– If a contract is drawn up for a certain amount of products for the whole year, but a contract for outsourcing is issued for the product delivered daily, weekly or monthly during the year, the service fee including VAT in each contract service invoice will be taken into account in the calculation of the lower limit of withholding. However, if it is determined that more than one invoice is issued by dividing the amount into parts, necessary actions will be taken. VAT calculated on the deliveries and services within the scope of partial withholding application of those listed in the Communiqué (I/C-2.1.3.1/b) (excluding the deliveries and services made by professional sports clubs (including those which are incorporated)) will not be subject to withholding, regardless of the status of the recipients.
Source: Revenue Administration of Turkey – Translated by: Karen Audit
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 Karen Audit 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.
