Impacts of Amendments to the VAT General Communiqué on International Trade

Introduction

The amendments introduced on 04.09.2025 to the Value Added Tax General Communiqué (Serial No: 55), although seemingly aimed at domestic transactions at first glance, contain numerous provisions that directly or indirectly affect international trade. This article analyzes the implications of these amendments for international trade and investments.

1. VAT Exemption for Defense Industry Projects and Export Advantages

Article 2 of the Communiqué exempts from VAT the delivery of goods and services related to defense industry projects approved by the Presidency of Defense Industries or the Ministry of National Defense. This regulation:

• Provides cost advantages in the production of defense industry products planned for export to international markets.
• Creates a competitive edge in export pricing since contractors are relieved of VAT burden.
• Strengthens the position of Turkey-origin products in interstate defense cooperation projects.

2. VAT Exemption on Vehicle Imports for Public Institutions

With Article 3 of the Communiqué, the newly added section (II/B-18) exempts certain motor vehicles imported or domestically procured by the Ministry of National Defense, Ministry of Interior, Presidency of Defense Industries, and the National Intelligence Organization from VAT. This regulation:

• Creates significant cost savings for public institutions in their foreign procurements.
• Encourages international defense and logistics companies to present more competitive offers when supplying the Turkish market.
• Necessitates the inclusion of special provisions on the use of VAT exemptions in procurement contracts.

This situation impacts tax planning in international projects carried out through public-private partnership models.

3. Inclusion of SCT in VAT Base for Imports Under Guarantee

Article 6 of the Communiqué stipulates that, in imports under guarantee of goods subject to the Special Consumption Tax (SCT), SCT shall also be included in the VAT base. This regulation:

• Obliges importers to pay higher VAT amounts.
• May increase financial burdens during customs procedures.
• However, if VAT variability is possible, financial planning may help balance this burden.

International trading companies will need to reassess their import cost structures.

4. VAT Exemption in TOKİ and Foundation-Owned Real Estate Transfers

Article 5 of the Communiqué introduces VAT exemption for land/real estate transfers by TOKİ (Housing Development Administration), the Urban Transformation Presidency, and foundation-owned properties. This regulation:

• Offers an attractive environment for foreign funds and companies interested in real estate investment in Turkey.
• Simplifies tax planning in international real estate partnerships.

It should be noted that the exemption is limited to land and plot transfers only.

5. VAT Refunds for Depreciable Economic Assets in International Transportation

Article 7 of the Communiqué details the procedures and principles regarding VAT refunds arising from the use of Depreciable Economic Assets (DEA). Especially for international logistics companies, this regulation:

• Requires VAT refund planning to be made periodically and proportionally.
• Necessitates detailed calculations and submission of supporting documents for refund claims.

Conclusion and Recommendations

This amendment to the Communiqué is not merely a domestic legal arrangement but carries provisions that directly impact international trade and investment activities. Companies, both domestic and foreign, particularly those engaged in defense industry, public procurement, imports, and real estate investments, must reconsider their strategies in light of these regulations.

For law firms and consultancy companies, these amendments create a new service area, especially providing critical legal frameworks for public-private partnership projects, investment disputes under ICSID, and import strategies.