The Basis of VAT Refund on Exports
Export, also known as foreign sales, can be defined simply as the sale (delivery) of goods and/or services outside the borders of Turkey. Export is deemed to have been completed on the date of departure of the goods outside the customs line. In accordance with Article 11 of the VAT Law, VAT is not collected from buyers for these deliveries made outside the customs line. However, the VAT incurred during the production or acquisition of these goods remains within the companies. This VAT, which remains as a burden on companies, can be reclaimed by companies in accordance with Article 32 of the VAT Law by submitting information, documents, and reports to the tax offices.
Time of Request and Conditions for Refund
These VATs incurred due to export transactions must be requested as a refund with the VAT return for the month containing the date of exit of the goods from the customs line, referred to as the earliest “actual export date”.
For the refund to be possible, the VAT paid on goods and services purchased for export transactions must be greater than the VAT calculated on taxable transactions.
Scope and Calculation of VAT Incurred
The VAT to be refunded must be calculated for the VAT included in the export transaction.
VAT included in the transaction consists of VAT incurred due to expenses directly or indirectly related to the production, acquisition, preservation, and delivery of goods.
VAT incurred that can be associated with the export transaction giving rise to the right to a refund:
Expenses directly included in the goods
- For goods acquired through production, direct manufacturing expenses such as raw materials, supplies, labor, etc.
- For goods acquired commercially, direct purchase expenses incurred for the purchase of the goods.
- Indirect expenses included in the cost of goods
- For goods produced, general production expenses such as electricity/water,
- For goods produced/commercially acquired, marketing and sales expenses including sales-related expenses (advertising, transportation, etc.) and general administrative expenses including management (office supplies, accounting, cleaning, rent, etc.).
ATİK-related liability
- This consists of the VAT on Depreciable Economic Assets (ATİK) acquired for either production or general administration and used for export.
Calculation principle:
The calculation should be made by taking into account the entire VAT on direct expenses incurred in the production of the goods, general production/general administration, and ATİK, as well as the share attributable to exports.
The aforementioned VAT is calculated by taking into account the order explained above.
How to Obtain a VAT Refund on Exports?
VAT related to export transactions can be claimed in the VAT return for the period in which the export took place. By submitting the following information and documents to the tax office, the requested amounts can be obtained in cash or by offset after the tax office’s control and approval.
Information and documents to be prepared:
- Refund Request Form,
- Sales Invoice List,
- Customs Declaration List,
- VAT Deduction List for the period in which the export was declared,
- List of VAT Incurred,
- VAT Refund Calculation Table.
Although export deliveries are exempt from VAT, accurate determination of VAT incurred during the production/acquisition process, its declaration during the relevant period, and complete document management are critical for a quick and smooth refund process.
In particular, correctly matching the items incurred, allocating general expenses–ATIK, and timing according to the actual export date must be handled with great care.
Note:
- All VAT Refund Requests Any type of refund arising from VAT must be requested by the end of the second year following the refund request period.
- For example, for a taxpayer whose VAT refund is calculated in the January 2024 period and whose VAT refund is also calculated in the July 2024 period, the final application date is December 31, 2026, valid for both periods.
- Consequently, the final application date for taxpayers with VAT refunds related to the 2023 accounting period is December 31, 2025.
- Applications made after these dates are RED and transferred to the treasury.
You can contact the ÖzbekCPA team at contact for assistance with preparing export refund files, liability analyses, creating lists and tables, and managing cash/credit refund processes.
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