VAT PAID UNDER SURVEILLANCE CANNOT BE DEDUCTED

Summary:

“(1) Pursuant to the relevant legislation on the implementation of surveillance in imports, the right to deduct VAT paid on unsubstantiated amounts declared in customs declarations relating to goods subject to surveillance, as well as on all taxes, duties, charges and shares arising therefrom and included in the VAT base, has been abolished.

(2) The right to deduct VAT paid on customs duties and/or additional financial obligations imposed as safeguard measures pursuant to the relevant legislation on the implementation of safeguard measures in imports, anti-dumping and countervailing duties imposed under the relevant legislation on the prevention of unfair competition in imports, as well as on all taxes, duties, charges and shares arising from such amounts and included in the VAT base, has been abolished.”
 

The relevant Official Gazette clarified that, for imports carried out as of January 31, 2026, VAT arising due to import surveillance may no longer be deducted.
 

ARTICLE 5- The following section has been added after section (III/C-2.5.) of the same Communiqué:
 

“2.6. Deduction of VAT Paid Under the Relevant Legislation on the Implementation of Import Surveillance, Safeguard Measures and the Prevention of Unfair Competition in Imports

In the Decision annexed to Presidential Decree No. 7846 dated 23/11/2023, published in the Official Gazette dated 24/11/2023 and numbered 32379:

“(1) Pursuant to the relevant legislation on the implementation of surveillance in imports, the right to deduct VAT paid on unsubstantiated amounts declared in customs declarations relating to goods subject to surveillance, as well as on all taxes, duties, charges and shares arising therefrom and included in the VAT base, has been abolished.

(2) The right to deduct VAT paid on customs duties and/or additional financial obligations imposed as safeguard measures pursuant to the relevant legislation on the implementation of safeguard measures in imports, anti-dumping and countervailing duties imposed under the relevant legislation on the prevention of unfair competition in imports, as well as on all taxes, duties, charges and shares arising from such amounts and included in the VAT base, has been abolished.”

Such provision has been stipulated.

2.6.1. General Explanation

Under Presidential Decree No. 7846, it is not possible to deduct VAT paid on increases in the VAT base of imported goods arising from import surveillance, safeguard measures in imports, and the prevention of unfair competition in imports, together with all taxes, duties, charges and shares related to such increase amounts.

However, VAT paid on amounts included in the VAT base of imported goods, other than those arising from the aforementioned practices, together with all related taxes, duties, charges and shares, may still be deducted.

Example: (A) Inc. imports product (Z) within the scope of import surveillance, where the CIF value is TRY 4,000,000 and the surveillance value is TRY 10,000,000. In relation to the imported product, customs duty (CD) at 10%, additional customs duty (ACD) at 15%, and VAT at 20% have been paid. The unsubstantiated amount arising from the surveillance application was declared in the customs declaration as an overseas expense. Accordingly, the amounts of non-deductible VAT and deductible VAT under the import surveillance application shall be calculated as follows:

2.6.2. Determination of Whether VAT Not Eligible for Deduction Under Presidential Decree No. 7846 Has Been Claimed as Input VAT

Under Presidential Decree No. 7846:

- Unsubstantiated amounts declared in customs declarations relating to goods subject to surveillance pursuant to the relevant legislation on the implementation of surveillance in imports,

- Customs duties and/or additional financial obligations imposed as safeguard measures pursuant to the relevant legislation on the implementation of safeguard measures in imports,

- Anti-dumping and countervailing duties imposed under the relevant legislation on the prevention of unfair competition in imports,

and VAT paid on all taxes, duties, charges and shares arising from such amounts and included in the VAT base cannot be deducted.

Within this scope, taxpayers engaged in imports:

- For imports where the import value, calculated on a six-month basis within a calendar year, does not exceed the amount specified in subparagraph (a) of the first paragraph of Article 3 of General Communiqué No. 46 under the Law on Certified Public Accountancy, Sworn-in Certified Public Accountancy and Independent Accountancy Financial Advisory, shall notify their tax office by the end of the month following the relevant six-month period as to whether the VAT relating to such imports has been correctly deducted in the VAT return for the period in which the transaction was carried out under the aforementioned Decree.

- If the import value exceeds the specified amount on a six-month basis within the calendar year, whether the VAT paid due to such practices has been correctly treated as deductible input VAT under the aforementioned Decree must be evidenced by a Special Purpose Sworn-in CPA Report to be submitted by the end of the month following the relevant six-month period. However, where the taxpayer has a full certification agreement duly executed within the relevant year of importation and the report to be prepared includes an explanation as to whether the VAT paid in respect of imports carried out within the scope of Presidential Decree No. 7846 has been treated as deductible input VAT, submission of a Special Purpose Sworn-in CPA Report shall not be required.”

Official Gazette