Services Exports
With Article 11/1-a of Law No. 3065, services for customers abroad are exempt from tax. According to the relevant article of the law, it must provide the following conditions so that a transaction can be considered as a service export;
1) The service must be made for a customer abroad in Turkey. (In other words, the service for the customer abroad must be related to the customer's business, operations and activities abroad; It should not have anything to do with its activities in Turkey.)
2) The invoice or similar document must be issued on behalf of the customer abroad.
3) The cost of service must be brought to Turkey as currency.
4) The service should be used abroad.
In addition, the customer abroad; its residence, workplace, legal and business center are the recipients abroad and the branches of the domestic company operating independently on its behalf abroad.
Example 1: In Turkey, the taxpayer (X) Engineering Ltd. Şti., under his agreement with a company based in Jordan, drew a textile factory project to be built in Jordan and collected the corresponding price through the Central Bank of TC.
Since all of the above-mentioned requirements have been fulfilled in this project drawing, this service will benefit from the exception of service export and (X) the firm will not calculate VAT on the invoice it will cut.
Example 2: The company (A) operating in Turkey, for a company based in Germany, has mediated the procurement of textile products purchased by this company from Turkey and has received commission fees.
(A) the company, this brokerage service, will be an exception from VAT under the export of services.
Example 3: Located in Turkey and operating as a travel agency (B) A.Ş. provides accommodation, tour arranging and eating-drinking services to a group of tourists sent by a travel agency abroad. (B) In exchange for its service in question, it received TRY 25,000. The travel agency in Turkey used 10,000 TRY of this money in the tourist group's costs such as accommodation in Turkey, eating and drinking. After his expenses, he was left with TRY 15,000.
In this case, (B) has served the foreign travel agency TRY 15,000. Since the foreign travel agent benefits from this service abroad, VAT will not apply to this amount and will be processed as part of the service export.
However, (B) A.Ş.'s services to the tourist group in Turkey, such as eating-drinking, accommodation, are used in Turkey, so these services will be taxed. Thus, VAT will be calculated on the general basis for services such as eating-drinking, accommodation given to the tourist group.
It is also possible for this taxpayer to issue separate invoices for these services, as the invoice for the services he or she provides to the foreign travel agency may show separately the service price that is excluded from the tax and the service price that will be taxed.
Example 4: A foreign company has opened an office in Turkey in order to ensure the marketing of its goods. This office has given the investigation of the demand for the goods it sells to its resident (A) Consulting firm in Turkey in order to determine its marketing goals in full.
The service provided by this Consulting firm to the aforementioned foreign company's office in Turkey will not benefit from the export exception, as it concerns the activities of this office in Turkey.
If the foreign company does not have an office in Turkey, the service in question will not benefit from the export exception.
Example 5: The company (A) which is based in Turkey and is engaged in intermediary activity, is finding customers in Turkey for the goods of a company based in Japan.
Since the service provided by this company is used in Turkey as part of its intermediary activity, it is not possible to evaluate the service in question under the export exception. The fact that the invoice was issued on behalf of the foreign company and the service price was brought to Turkey as currency will not affect this situation.
Example 6: A firm based in the Netherlands imports ore from Turkey. The (A) firm based in Turkey also does the work on behalf of the foreign company, such as providing the mineral ore in question, quality control, transporting the goods to the export port and loading them on ships.
The (A) firm invoices its expenses and commission fee in relation to these services to the foreign company and brings the return to Turkey as currency.
The services that companies abroad receive from Turkey are used abroad in relation to the goods they will import from Turkey. Therefore, this service by the company (A) will be negotiated under the exception of service export.
Example 7: A Turkish firm based in Iraq has asked the Turkish firm (B) to conduct a competency research on the (A) Turkish firm undertaking an irrigation project in Iraq.
(B) the consulting firm invoices its expenditures and commission fee in relation to this service to the foreign company and brings the return to Turkey as currency.
Since (a) the service of the firm will be used abroad, (B) the service of the consulting firm will be evaluated under the exception of the service export.
Example 8: In Turkey the taxpayer (T) İnş. Taah. Ltd. Şti., in accordance with his agreement with the company (X) based in Uzbekistan, leased to this company the business machinery that it supplied either by its own ownership or by lease to be used for the construction of a factory to be built in Uzbekistan.
This rental service is not subject to VAT, as it is not a service made and used in Turkey. It is also not possible to evaluate this transaction, which does not fall under the subject matter of VAT, under the exception.
Example 9: (X) Plumbing Tic. Ltd. agreed with the resident (Y) company in France to build a containment room for each of the 2 fishing vessels ordered by (Y) to the Shipyard in Turkey (Z) with the deepfreeze (shock) room and billed the company (Y) by doing the work in question.
(X), shock to fishing vessels and preservation rooms construction work service will not be calculated VAT on the service invoice, as it is excluded from VAT as part of the service export.
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