Problems relating to Trade and Investment on Turkey

14. Taxation Systems
Issue	Issue details	Requests	Reference

(1) Complex Taxation System

- An enterprise in Turkey has been compelled to pay a huge amount of additional tax levy, penalty and arrearage after tax audit for several times. Nebulous taxation system, the total denial of vouchers, documentary evidence, etc. in each case has aggravated, by a large margin, the budgeted profit and loss of its operation.
- GOT collects High Rates of Tax in the names of Special Consumption Tax (SCT), Resource Utilisation Support Fund (KKDF in Turkey), etc. on dubious grounds.

- It is requested that GOT takes steps to:
-- clarify both the tax laws and their implementation, and simultaneously
-- identify clearly the responsibility for the tax audit and the contents of the Tax Report.
- It is requested that GOT repeals or reduces the Tax Rates.

- Tax Procedures Law other
- General Tax Laws

(2) Unreasonable Treatment over Stamp Tax

- Stamp tax levied at the fixed rate of 0.948% impacts P&L of business operation.
- Stamp duty on contract is expensive.
- Apart from the Stamp Duty Act, under Notarisation Act, during notarisation process contracts, etc. collection of stamp duty levy is allowed at notary public's office in Turkey. Stamp duty levy is imposed on (1) stamp duty prepaid documents and (2) documents ratified in overseas (normally not subject to Turkish stamp duty), resulting in double tax levy. It is a substantial risk for tax consequences when bidding for government procurement tender.
- Due to the ambiguity of the documents subject to stamp duty, MFS in Turkey faces the risk of stamp duty levy on documents signed overseas on projects destined to overseas.

- It is requested that GOT repeals the fix rate levy rule (replacing it with the fix amount).
- It is requested that got relaxes the measures either by reduction of the tax rate or repela of the tax itself.
- It is requested that GOT takes step to repeal the stamp tax levy provisions under the Notarisation Act.
- It is requested that GOT clearly identifies the documents, which are subject to stamp duty levy

(3) High Domestic Tax Rates

- Tax Rates are high: Tuner Tax (16% on imports), Luxury Tax (6.7% on Television Receivers, 20% on Car-Audio, and Portable Music Player). These High Tax Rates obstruct products diffusion. They serve as breeding ground for illicit sales.

- It is requested that GOT repeals the high tax rates as soon as possible.

(4) Disapproval of Credit Note

- GOT disapproves issuance of Credit Note for correction of the Invoice Amount, or Sales Returns so that the recipient of the goods or the party returning the goods must issue invoice separately. It complicates the accounts, requiring a complex procedure.

- It is requested that GOT streamlines the Taxation System.

(5) Compulsion on use of Sequential Numbering upon Invoices

- GOT compels the use of sequential numbering on all invoices that an enterprise issues, inclusive of print errors whose numbers must be retained until the book is closed at the fiscal term end. Moreover, all print errors must be reported within 2-weeks to the competent taxation authorities. It complicates the operation.

- It is requested that GOT streamlines the Taxation System.

(6) RUSF Tax Levy on Import and External Fund Procurement

- Accompanied by the credit extension tax levied on import with credit extension is called resource utilization support fund (RUSF) in English and KKDF in Turkish. Upon import of products into Turkey, in the absence of proof of payment for cost of goods upon customs clearance, 6% additional tax is levied over the declared amount. While this additional tax is levied in the EU member states that have ratified the customs union, in effect, it is additional customs duty.
- RUSF tax levy is an additional tax in substance, levied on fund procurement as well, so that it can also aggravate cash flow:
-- 6% levied on the unpaid portion of CIF price upon customs clearance inn Turkey, and
-- 3% levied upon externally procured fund.

- It is requested that GOT repeals this tax scheme, or at least reduces the burden of the additional levy.
- It is requested that GOT repeals the RUSF tax levy.

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