Within the scope of the Omnibus Bill No. 2/3464 discussed at the Turkish Grand National Assembly (TBMM) Plan and Budget Committee, it was decided to extend the validity period of Provisional Article 17 of the VAT Law No. 3065 which allows VAT-free domestic purchases under the Inward Processing Regime (IPR) from 31 December 2025 to 31 December 2030.
The regulation approved by the Committee aims to eliminate the adverse consequences that would arise if the period were not extended, under which exporters and manufacturer-exporters would be required to pay VAT upfront on raw materials, semi-finished products, and auxiliary materials procured from the domestic market within the scope of Inward Processing Certificates (IPC). It was noted that the upfront VAT burden would disrupt companies’ cash flow, increase production costs, and place additional pressure on export prices posing a significant financing burden, operational uncertainty, and sectoral risk for businesses utilizing IPCs.
With the regulation, the continuation of the VAT deferral cancellation mechanism applied to domestic purchases under IPCs is secured, preventing an increase in VAT related financing pressure on exporters. Accordingly, the burden on cash flow is reduced, potential increases in production costs are averted, and factors that could weaken the competitiveness of export prices are eliminated. In addition, the regulation helps prevent sector-wide uncertainties and the risk of a potentially chaotic process.
The regulation is expected to enter into force following its publication in the Official newspaper.
Comments
No comment yet.