UTİKAD Objected to VAT Withholding Application

UTIKAD, International Transport and Logistics Service Providers Association, objected to the Value Added Tax Withholding Application Communiqué published in the Official Gazette numbered 16 on February 2021, 31397, with a letter signed by UTIKAD Chairman Emre Eldener.

“With the published notification, Domestic Road Freight Transportation Services has been subjected to VAT withholding at the rate of 1/2021 as of March 2, 10. In order to fulfill the VAT withholding application, all sectors that receive service from the physical road carrier and of course transport business organizers will have to submit a declaration with a VAT declaration number 2. Since every invoice information received in the current declaration format should be included and the companies and persons engaged in the actual shipping business may lack information about this application in the short term, it is necessary to be careful about both the control of the invoices received and the workload that will increase.

The letter signed by UTIKAD President Emre Eldener, in which the potential negative effects of the application, which will affect all sector stakeholders, especially the companies engaged in road transport, on the sectors, have been conveyed to the necessary public institutions and organizations, especially the Presidency office and relevant ministries. Eldener's article included the following evaluations:

“The Ministry of Treasury and Finance can take measures in order to hold the parties responsible for the payment of the tax, when it deems necessary in order to secure its tax receivable. Those who are parties to the transactions are responsible for the full deduction and payment of the tax and for fulfilling other related duties like a taxpayer. It is known that VAT withholding is one of the tax security institutions used for this purpose.

With the Communiqué on the Amendment of the Value Added Tax General Implementation Communiqué (Serial No: 16.02.2021) published in the Official Gazette dated 31397 and numbered 35, it is seen that implementation changes regarding VAT withholding were made in many areas. The effective date of these changes was determined as 01.03.2021. With the aforementioned Communiqué, Road Freight Transportation Services has been subjected to VAT withholding at the rate of 01.03.2021/2 as of 10.

While VAT withholding is basically a security institution that should be used for high-value transactions among certain taxpayers, it is understood that this regulation tries to enable the transfer of taxes to the Treasury earlier. However, while this regulation is being introduced, it is considered that the additional process and labor requirement that the application will bring to the relevant sectors and additional system investment analyzes are not made, the additional workload and negative consequences that the regulation will bring to the real sectors are not taken into account.

With this application, all industrial and commercial professionals who use road transport will now have to submit a VAT declaration number 2 every month. Therefore, the result will be as if a new general obligation has been introduced. Because there is almost no business that does not use road transport. Thus, a very detailed and bureaucratic tax obligation is imposed on the majority of taxpayers, which requires detailed additional work and is difficult to implement.

With the decision, the entire road transport sector will also endure many bureaucratic procedures in order to request from the tax administration the VAT amounts that it cannot collect in cash due to the transfer VAT, and the sector, which is already having difficulties in meeting its costs in the current economic conditions, will become even more difficult. Thus, it is obvious that it will cause an additional inflationary increase in transportation charges.

Industrial and commercial companies, which receive intensive road freight transportation services and receive hundreds of transportation invoices every month, will be forced with this new regulation and the shippers, that is, the real sector enterprises, who are struggling to ensure the document order in the current system, also make additional efforts to settle the new invoice order they will have to. More importantly, as a result of this regulation, taxpayers will not be able to produce work from preparing additional tax returns due to the obligation to add each invoice information to the VAT declaration no.

Considering the shortage of working hours in all sectors, especially our sector, which has to apply Short Working Time during the Covid-19 Pandemic process in our country and in the world, it is It is evaluated that it will adversely affect all sectors and cause a decrease in the creation of added value. This type of regulation, which has become widespread, will create a heavy workload for taxpayers and tax administrations, otherwise it will become an application that locks the system or even causes informality, but does not create a real benefit.

Stating that we are aware of the fact that our tax duties must be fulfilled completely and completely on behalf of the members of our association and companies in the transportation sector, we are honored to take part in the development process to take our country forward, and we kindly request that the VAT withholding practice be canceled or re-evaluated in order to make it applicable. . ” statements were included.