Türkiye introduces VAT exemptions for defense exports

ANKARA

Türkiye has implemented changes to its Value-Added Tax (KDV) regulations, providing exemptions for defense industry exports and other sectors to support strategic development, according to a communiqué published in the Official Gazette.

To bolster the defense sector, manufacturers of approved military vehicles, including ships, submarines, tanks, rockets, and missiles, can now procure goods and services VAT-free for export-oriented projects.

These exemptions apply to projects approved by the Defense Ministry or the Presidency of Defense Industries as defense initiatives.

The revisions also grant VAT exemptions for vehicle and equipment deliveries to the Defense Ministry, Interior Ministry, Presidency of Defense Industries, and National Intelligence Organization (MİT) to meet national security and internal security needs.

In urban renewal, exemptions cover land and property sales by the Urban Transformation Presidency and real estate transactions involving properties owned by mazbut foundations under the General Directorate of Foundations.

For fuel imports, the Special Consumption Tax (ÖTV) collateral is now included in the VAT base, eliminating discrepancies between imported and domestically sourced products in terms of VAT and ÖTV calculations.

VAT exemptions for goods and services related to construction under investment incentive certificates for industry and tourism sectors have been extended until Dec. 31, 2028.

Additionally, the minimum amount for VAT refund claims has been raised from 2,000 Turkish liras to 10,000 liras.