Within the scope of the omnibus bill numbered 2/3464 discussed at the Turkish Grand National Assembly’s (TBMM) Plan and Budget Commission, it was decided to extend the validity of Article 17 (Provisional) of the VAT Law No. 3065 which allows VAT-exempt domestic purchases under the Inward Processing Regime (IPR) from December 31, 2025 to December 31, 2030.
The regulation approved by the commission aims to eliminate the negative consequences that would arise if the deadline were not extended, under which exporters and manufacturer-exporters would be required to pay VAT upfront on raw materials, semi-finished goods and auxiliary materials procured from the domestic market under Inward Processing Certificates (IPC). It was noted that an upfront VAT burden would disrupt companies’ cash flow, increase production costs and create additional pressure on export prices, posing a significant financing burden, operational uncertainty and sectoral risk for firms using IPCs.
With the amendment, the continuation of the VAT deferral and exemption mechanism applied to domestic purchases under the IPC framework is secured, preventing an increase in VAT-related financing pressure on exporters. As a result, the burden on cash flow is reduced, potential increases in production costs are avoided, and factors that could weaken the competitiveness of export prices are eliminated. The regulation is also expected to prevent sector-wide uncertainty and a possible chaotic process.
The amendment is expected to enter into force following its publication in the Official Newspaper.
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