The earthquake, which affected 10 provinces centered in Kahramanmaraş on February 6, 2023, deeply affected Turkey.
Regarding the earthquake disaster, in the provinces of Adana, Adıyaman, Diyarbakır, Gaziantep, Hatay, Kahramanmaraş, Kilis, Malatya, Osmaniye and Şanlıurfa, which were affected by the earthquake, with the Presidential Decision No. 6785 published in the Official Gazette dated 08.02.2023 and numbered 32098, for a period of 3 months from 08.02.2023. state of emergency (OHAL) was declared.
Force majeure was declared by the Revenue Administration of the Ministry of Treasury and Finance. In this context, it was accepted that the taxpayers who had a liability record as of the date of the earthquake in the mentioned provinces were in a state of force majeure between 06.02.2023 and 31.07.2023 (including this date) in terms of the implementation of tax laws due to these liabilities.
CHANGING THE PRINCIPLES REGARDING VAT WITHDRAWAL IN THE STEEL SECTOR HAS BROUGHT THE SECTOR TO A DAMAGE
This situation put the steel industry in difficulty in withholding payments. In line with the VAT withholding transactions in the steel industry, 9% was paid by the buyer and 9% by the seller. However, in the current position, it has come to the agenda that iron and steel sellers should pay 9% withholding and issue an invoice of 18%. Producers and traders, whose burden has increased with VAT withholding, interpret that the buyer must continue to operate in order for their customers to make this sale, and if the buyer is affected by the situation, it is not possible to continue the trade for a while, but there is no financial impact if he is making a purchase. It is very difficult for the seller to lift this load and it affects the steel industry deeply. It was interpreted that different developments to be experienced in other provinces related to the situation may put the producer or trader in a difficult situation to get out of.
Force majeure prolongs declaration, notification and payments. In addition, in terms of withholding liability, the following regulations at the end of the I/C-188.8.131.52 section of the VAT General Implementation Communiqué should be followed.
“According to the Law No. 213, the tax obligations of taxpayers who benefit from force majeure are postponed during the period from the start of the force majeure to the date when it ends. In this context, withholding tax is not applied to the purchases within the scope of partial withholding of taxpayers whose declaration obligations are postponed to a future date, during the period in case of force majeure. (Annex: VAT No. 34 GUT, 5.2.2021) In so far as the seller taxpayer who is a party to the transaction is also within the scope of force majeure, the withholding application continues in the scope of the general provisions in the said purchases.”
Since the second part above was added in 2021, the force majeure withholding application applied due to the pandemic will be different from the force majeure withholding application to be applied today. The only situation where withholding will not be applied due to force majeure within the scope of the latest regulations is the situation where the buyer is in force majeure but the seller is not in force majeure. In the table below, the situation can be seen as follows;
Scope of VAT Withholding on Iron-Steel Products
The scope of the withholding includes the delivery of products made of iron-steel and its alloys.
The subject products are as follows;
These are all kinds of long (bar, rebar, profile, coil iron, wire rod, wire, rope, wire mesh, pipe, flat bar, etc.) or flat (plate, hot rolled flat products, cold rolled flat products and coated flat products, etc.) made of iron-steel and alloys produced from ore, scrap or other raw materials.