The Council of Ministers issued decision No. 2016/9153, published in the Official Gazette on September 8, 2016, which amends certain tax procedures and rates (“ Decision ”). The Turkish Government aims to increase real property sales by reducing value added tax (“ VAT ”) rates. The Decision reduces the VAT rate on real property unit sales from 18% to 8% until March 31, 2017.
|(1)||Previously, the sales of real property units with a net area of over 150 square meters were subject to 18% VAT.|
|(2)||The sales of real property units with a net area of less than 150 square meters were also subject to 18% VAT under the following conditions:|
|(i)||the real property units|
|a.||were within the borders of metropolitan municipalities such as Istanbul, Ankara, Izmır;|
|b.||were not located in areas determined to be reserve building and risk areas under the Law on Transformation of Disaster Risk Area No. 6306;|
|c.||were constructed or renovated as luxury or first class; and|
|d.||held construction permits obtained after January 1, 2013.|
|(ii)||the real property units’ land unit square meter tax value were equal to or above TRY 1,000.|
According to the Decision, the VAT rate for the sales of real property units defined above under no. (1) and no. (2) was reduced to 8% from 18% until March 31, 2017.
Please contact us if you have questions about how this amendment might affect your company.