Companies operating in Turkey occasionally transfer goods imported from abroad to other domestic firms at customs without releasing them into free circulation. This practice, known as Transfer Of Imported Goods At Customs, involves specific procedures and tax implications in Turkey. It is crucial for businesses to comply with the applicable legal framework to avoid potential penalties and ensure smooth customs operations.
Learn how transferring imported goods at customs works in Turkey, including VAT exemptions, reporting duties, and legal compliance under the customs warehouse regime.
Transfer of Imported Goods at Customs and Legal Framework
Goods transferred at customs without entering free circulation are not subject to import and export regime regulations. Therefore, businesses must ensure compliance with customs legislation and tax obligations when carrying out such transactions.
1. Definition of Transit Trade and Customs Warehouse Regime
According to Turkish Customs and Tax regulations, transit trade refers to the sale of goods purchased from abroad or from a bonded warehouse to a company located abroad or to another bonded warehouse. Similarly, if a company receiving goods in a bonded warehouse sells them abroad, this transaction also falls under transit trade.
Additionally, the Customs Warehouse Regime regulates the placement of goods in customs warehouses without being subject to import duties or trade policy measures. Article 333 of the Customs Regulation allows for the transfer of goods stored in bonded warehouses through sales transactions.
2. Transfer of Goods in Bonded Warehouses and Legal Procedure
When goods stored in a customs warehouse are transferred to another company, Article 333 of the Customs Regulation requires the seller to issue a sales invoice in the buyer’s name. According to the regulation, if a new customs procedure or use is not determined within five business days following the invoice issuance, a penalty will be applied.
Tax Implications of the Transfer Process
1. VAT Exemption and Application
Under Article 7/1 of the Turkish Value Added Tax (VAT) Law No. 3065, commercial, agricultural, and professional activities conducted in Turkey are subject to VAT. However, Article 16/1-c of the same law states that transactions involving transit trade, the customs warehouse regime, temporary storage, and free zones are exempt from VAT.
Consequently, goods transferred in bonded warehouses without entering free circulation are not subject to VAT, and there is no VAT liability for these transactions. However, the accounting records and tax declarations must be accurately maintained.
2. Tax Procedural Law and Reporting Obligations
Under Tax Procedural Law (VUK) General Communiqué No. 350, taxpayers keeping their books on a balance sheet basis must report transactions exceeding a specified threshold using the following forms:
- Form Ba (Declaration of Goods and Services Purchased) for purchases.
- Form Bs (Declaration of Goods and Services Sold) for sales.
Further clarifications on this obligation were provided through Communiqués No. 362 and 381, and Communiqué No. 396 mandated that these declarations be submitted on a monthly basis starting from 2010.
Accounting Treatment and Corporate Tax Considerations
Goods transferred under the customs warehouse regime without entering free circulation should be properly accounted for and reported as domestic revenue. The following aspects must be considered:
- Revenue from such transactions should be included in the company’s corporate income.
- It should be declared in the corporate tax return accordingly.
- Tax advantages and accounting processes should be managed correctly.
Conclusion
Learn how transferring imported goods at customs works in Turkey, including VAT exemptions, reporting duties, and legal compliance under the customs warehouse regime.
Transferring imported goods at customs is a strategic business practice, but it must be handled correctly in terms of customs, VAT, and corporate tax obligations.
- Sales transactions under the customs warehouse and transit trade regime are exempt from VAT.
- Failure to complete the necessary customs procedures within five business days may result in penalties.
- Reporting obligations under the Turkish Tax Procedural Law must be fulfilled.
Companies engaged in international trade must strictly adhere to tax and customs obligations to avoid penalties and ensure compliance. Seeking professional support from experts like ÖzbekCPA can help businesses navigate complex tax and customs regulations, minimize financial risks, and optimize operations.For support with Transfer of Imported Goods at Customs and related tax implications in Turkey, feel free to contact us for expert guidance.