Amendment on the VAT Declaration Regarding the Declaration of Bad Debts

As is known, there have been some amendments on the General Implementation Communique on Value Added Taxes published on the 26.4.2014 dated and 28983 numbered Official Gazette with the “COMMUNIQUE ON THE AMENDMENT OF THE GENERAL IMPLEMENTATION COMMUNIQUE ON VAT” published on 15.02.2019 dated and 30687 numbered Official Gazette.

Below you may find our detailed explanations on the issue of bad debts brought with this amendment:

The amendment is made with the 7104 numbered Law on the Value Added Tax Law as adding the line of 505 code numbered “VAT belongs to the Debts Under 322 Tax Procedure Law” to the “Other Transactions” table in “Tax Assessment” part of 1 numbered VAT Declaration. Also, the 111-code numbered line of “the Vat to be Decreased regarding the Bad Debts” is added to the “Deductions” table in “Deductions” part.

The value added tax to be calculated and declared regarding the bad debts (according to the art. 322 of Tax Procedure Law) shall be subjected to the deduction in the taxation period of which an income is recorded as a loss, as of 01.01.2019 with the amendment made in the Art. 29 of the Value Added Tax Law. Besides, under the Art 30/e to be added in VAT Law, the VAT which is not paid by the buyer, regarding the bad debts according to the Art. 322 of Tax Procedure Law, shall not be decreased from the VAT which is calculated on the taxpayer’s transactions that are subject to taxation, as of 01.01.2019.

As a conclusion, while the taxpayers were able to make corrections if they meet certain conditions before in case a debt owed becomes a bad debt; it is possible now to correct the VAT amount regarding a bad debt with making it a subject to deduction.

You may reach the Turkish version of the related circular here.