NEWSLETTER-2019-metin

321 TAX LAW VAT on Exchange Difference* Att. Canan Doksat Introduction Under Article 24 of Value Added Tax Code No. 3065 (“VAT Code”), it is regulated that earnings, such as delay interest, price dif- ferences, interest, premiums, etc., are included within the scope of the VAT base for domestic delivery of goods and services. Prior to the promulgation of Law No. 7161, the above-mentioned provision of the VAT Code clearly was not regulating that exchange differences are also included within the scope of the VAT base. Accordingly, this lack of certainty concerning the taxation of exchange differences in terms of VAT has been the cause of different applications and controversies amongst the Revenue Administration and taxpayers. In general, with respect to tax cases initiated in relation to the VAT application on exchange differences, tax courts rendered their decisions in favor of the taxpayers on the grounds that exchange dif- ferences cannot be subject to VAT. However, despite the favorable court decisions, through the promulgation of Law No. 7161, it is now clearly regulated that VAT should be applied on exchange differences in relation to domestic delivery of goods and services. Within this scope, this Article evaluates the situation of exchange differences in terms of VAT application for the period prior to the promulgation of Law No. 7161, the amendment made through Law No. 7161 and the relevant court decisions. * Article of February 2019