Customs, Indirect Taxes

Tax Exemption on Fast Cargo Imports has been Removed

With the decision dated 15.05.2019, an amendment has been made on the general decision that regulate the application of Customs Law. With this amendment, the customs tax exemption provided for personal goods that do not have any commercial purpose brought by fast cargo deliveries under the value of 22 EUR limit, has been removed.

The exemption that was provided in the same article for books and similar print materials brought by fast cargo deliveries that value under 150 EUR remains the same.

Accordingly, goods brought by fast cargo deliveries under the value of 22 EUR will be subject to taxation same with the ones that value under 1.500 EUR. The rates are;

  • 18% for the goods brought from EU countries,
  • 20% for the goods brought from other destinations,
  • 0% for books and similar print materials,
  • Additional 20% on the above if the goods are subject to Special Consumption Tax (Excise Duty)
Customs, Free Trade Zone, Incentives

Free Trade Zones in Turkey

Free Trade Zones (FTZs) in Turkey are special areas that are determined by the Council of Ministers where all types of industrial, commercial and certain service activities are encouraged by tax exemptions and incentives.

According to Article 1 of the Free Trade Zones Law; purposes of FTZs are:

  • to improve investments and production for export purposes
  • accelerate foreign direct investment and technological development,
  • direct companies to export activities and improve international trade.

Free Trade Zones are within the political borders of Turkey, but from a Turkish customs legislation perspective, they are considered and treated outside the customs borders of Turkey. Therefore, products brought to FTZ from abroad are not subject to import regime but movement of goods from a Turkish FTZ to Turkey is subject to import regime. On the contrary, movement of goods from Turkish customs territory to a FTZ is considered as export. This consideration allows significant advantages for companies operate in a FTZ.

Production, trade and service activities are allowed in Free Trade Zones. For this purpose, companies should obtain the related activity licence.

Some other advantages are;

  • Corporate Tax exemption for production companies
  • Income Tax withholding on employee salaries exemption for companies exporting more than 85%
  • Procure goods and services from Turkey with VAT exemption

If you have further queries on this issue, please feel free to contact us.


Turkey to bring 25% Customs Duty on Steel imports

On October 2, 2018 a new presidential decree has been published regarding the implementation of a protection measure on steel imports to Turkey.

According to decree, Turkey still investigates whether the global developments on steel tariffs may have a probable impact of serious harm on the local steel industry. The decree states that during the investigation period (for 200 days) %25 of the import value will be collected as a guarantee payment on these imports and if at the end of the investigation, it is decided to collect the exact rate; collected guarantees will be converted to revenue. If the investigation results with a lower rate or deciding not to implement a tariff, collected guarantees will be refunded.

On the other hand, a tariff quota is defined per product type (hs code) and per country that will not be taxed on import. Accordingly, the imports exceeding this tariff quota will be subject to tax. A communique has been published on 16th of October about the distribution of this quota. The communique states that the quota amount will be used in a “first come first serve” principle which means early imports will be considered in the quota limits but when the total imported product per HS code or per country reaches the defined limit, later imports will be subject to tax.


Customs Tax rate reduced to 0% on 1882 types of raw materials

A new Decision annex to Import Regime Decision has been published on the Official Gazetted dated June 27, 2018 which reduces the custom tax to 0% for 1882 different type of raw materials for producers.

The relief is made by adding all these products to annex “list V” of the mentioned decree, which means importer of these products must use these materials in their production and the customs tax will be suspended during the importation if they fulfil the necessary documentation that validate their use of these materials in the production.

If you have further queries on this issue, please feel free to contact us.


Royalty Payments in the scope of Customs Value

Although Turkey is not yet part of the EU, as being a party to GATT and having customs union agreement between Turkey and EU, main principles of customs regulation in Turkey is designed in parallel with EU customs rules.

Accordingly, the primary basis for the customs value of import goods is defined as the transaction value, that is the price actually paid or payable for the goods when sold for export to the customs territory of Turkey, and adjusted, where necessary.

Adjustments of the transaction value is defined on articles 27 and 28 of the Customs Law. Besides others, as the subject of this article, royalty related adjustment is defined as below;

royalty and licence fees are to be added to the price actually paid or payable for the import goods where they are related to the goods being valued that the buyer must pay, either directly or indirectly, as a condition of sale of the goods being valued, to the extent that such royalty or licence fees are not included in the price actually paid or payable. Continue reading “Royalty Payments in the scope of Customs Value”