1 EXCISE DUTY IN TURKIYE GENERAL FRAMEWORK. 2 CONTENTS I.General Explanations II.Legislation III.General Structure IV.Goods Within the Scope V.Common

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EXCISE DUTYEXCISE DUTYIN TURKIYEIN TURKIYE

GENERAL FRAMEWORKGENERAL FRAMEWORK

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CONTENTS

I. General Explanations

II. Legislation

III. General Structure

IV. Goods Within the Scope

V. Common Provisions

TAXATION: EXCISE DUTY

The Presidency of Revenue Administration

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I. GENERAL EXPLANATIONS

Law on Excise Duty No:4760

The Official Gazette No: 24783, dated 12 June 2002

Put into force on 1 August 2002



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Harmonization with EU legislation

I. GENERAL EXPLANATIONS (cont’d)

Aim:

Simplification of indirect tax system

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II. LEGISLATION



Law on Excise Duty

No: 4760

Cabinet Decrees

Communiqués

Circulars

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III. GENERAL STRUCTURE

Excise Duty

collected at one stage of consumption process only for once.

taxes the goods laid down in the four Lists annexed to the Law.

Tax incidence to the final consumers is possible.

The goods laid down in Lists annexed to the Law, are subject to Excise duty only for once, from the stage of production and

importation to the stage of selling and using.



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IV. GOODS WITHIN THE SCOPE

Goods listed in the Excise Duty Law numbered 4760 are laid down in the 4 Lists annexed to the Law.

These goods are mentioned in the Law by codes in the Turkish Customs Tariff Nomenclature (TCTN).

Turkish Customs Tariff Nomenclature is in compliance with the Combined Nomenclature which is the international classification system for goods.

Example:

2710.11.31.00.00 Aviation spirit

2710.19.41.00.11 Diesel

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IV. GOODS WITHIN THE SCOPE (cont’d)

The List No: (I) Energy Products

The List No: (II) Vehicles

The List No: (III) Alcoholic Beverages And Tobacco Products

The List No: (IV) Other Consumption Goods



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LIST NO: I

TABLE (A)Petroleum ProductsNatural GasLPG

TABLE (B)SolventsMineral Oils

LIST NO: II

Cars and Other Transporting VehiclesMotorcycleAirplaneHelicopterYacht-Cutter

LIST NO: III

TABLE (A) Cola Soda PopsAlcoholic Beverages

TABLE (B) Cigarettes and Other Tobacco Products

LIST NO: IV

Caviar, Fur and Other Consumption Goods White Goods and Other Electrical Household Machines

IV. GOODS WITHIN THE SCOPE (cont’d)


10The Presidency of Revenue Administration

The List No: (I) Energy Products % 57,3

The List No: (II) Vehicles % 10,3

The List No: (III) Alcoholic Beverages And Tobacco Products

% 29,6

The List No: (IV) Other Consumption Goods % 2,8

SHARES ofEXCISE DUTY REVENUE’S

TOTAL % 100

1. Energy2. Alcohol&Tobacco 3.Vehicle4. Other


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V. COMMON PROVISIONS

1. Taxable event2. Delivery3. Importation4. Tax responsibility5. Exemptions6. Tax deduction7. Rate or amount8. Declaration, assessment and payment of duty9. Indication of duty on documents



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1. Taxable event (Article 1)

Taxable event occurs at the time of: deliveryimportfirst acquisition

Taxable event differs for each of the Lists annexed to the Law.



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“Delivery” means the transfer of

the right of disposition of

property to the recipient or to

those acting on behalf of him, by

the owner or by those acting on

behalf of him.

2. Delivery (Article 2)

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2. Delivery (cont’d)In addition; The consignment of goods to a place or to a person designated by the recipient or by those acting on behalf of him, is considered as delivery.

In the case of dispatching of goods to the recipient or to those acting on behalf of him, commencement of the transportation of goods or the consignment of the goods to the transporter or driver,shall also be regarded as delivery of the goods.

Barter is considered as two separate deliveries.

In the cases of returning of containers, wraps, wastes andleavings are routine; delivery is considered to be done for the products inside of these.

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Delivery (cont’d)

Where invoice or similar documents are issued beforethe goods are delivered, issuing of invoice or similar documentsis considered as delivery provided that the amount is limitedto that shown on such documents.

When delivery of goods in parts is routine or in the cases of an agreement to this effect, delivery of each part is consideredas a separate delivery.

Where goods are sold through intermediaries or on consignment, dispatch of goods to the recipient is delivery.

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2. Delivery (cont’d)

States considered as delivery:

Any kind of utilisation, consumption, removal from the enterprise, dispensions to the employees as wages, premium, bonus, gift, donation,

of the goods subject to taxation,

However the above mentioned uses of goods in the production of the goods subject to taxation is not considered as delivery.

Transfer of possession in the bailment lease sales.

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3. Importation (Article 2)

“Importation” means the entry of goods subject to excise duty

into the Customs Territory of the Republic of Turkey.



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4. Tax responsibility (Article 4)

Persons involved in the transactions, are responsibleresponsible for the payment of the duty in the following cases:

When taxpayers do not have, domicile, workplace, head office and business headquarter, in Turkey

When considered necessary by the Ministry of Finance.



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5. Exemptions

a. Exportation exemption

b. Diplomatic exemption

c. Importation exemptions

d. Supply of goods destined for export



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a. Exportation Exemption (Article 5)

Export deliveries of goods are exempted from duty, if the following conditions are met:

a) The delivery must be made to a customer abroad.

b) The goods subject to delivery must leave the Customs Territory of the Republic of Turkey.


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a. Exportation exemption (Article 5) (cont’d)

The term “customer abroad” shall mean recipients whose domicile, place of business and legal headquarter are abroad, as well as branches in foreign countries acting on behalf of a firm established in Turkey.

Excise duty indicated on invoices or similar documents related to exported goods is refunded to exporter.


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Persons and enterprises benefiting from diplomatic exemption: diplomatic representation and consulates of foreign countries

in Turkey, international organizations to whom a duty exemption based on international agreements have been granted, their members who have diplomatic rights.

Goods in List No: (IV) are not subject to diplomatic exemption.

b. Diplomatic exemption (Article 6)

The first acquisition and importation of goods laid

down in Lists No: (I), (II) and (III) for the needs of the

following persons and enterprises or deliveries to them

are exempted from duty, on provision that this be done

on a reciprocal basison a reciprocal basis.


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c. Importation exemptions (Article 7)

Importation of goods which are exempted and excluded from the

customs duties under the following provisions of the Customs Law

No:4458 are also exempted from excise duty;

Article 167, temporary import procedures, outward processing procedures, importation of goods returned.

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d. Supply of goods destined for export (Article 8)

The excise duty of the goods delivered to the exporters for the

export purposes is assessed, accrued and then deferreddeferred by tax

office upon the request of taxpayers provided that the duty are not

collected by these taxpayers from exporters.

Deferred duty is cancelledcancelled when these goods have been

exported within 3 months as of the first day of the month following

the date of delivery to the exporter.

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6. Tax deduction (Article 9)

If the goods subject to excise duty are used in manufacturing

of other goods in the same List, duty paid shall be deducted from

due duty.



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purchase:

goods must be directly imported or duty must be paid to the taxpayer at the time of purchase

duty must be seperately indicated in the invoice and

customs receipt

sale:

goods must be in the same List with the purchased goods

duty must be seperately indicated in the selling documents

6. Tax deduction (Article 9) (cont’d)



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7. Rate or amount (Article 12)

Excise duty shall be collected on rates and/or amounts shownin Lists annexed to this Law.

The Council of Ministers is authorized to change the rates and/or amounts designated for each List annexed to the Law.

The limits of the above mentioned authorization are defined in the Law.



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8. Declaration, assessment and payment of duty (Article 14)

Excise duty is assessed and collected upon declaration of taxpayers.

Excise duty is calculated by customs administration on importation. The duty is paid at the same time with import duties.



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9. Indication of duty on documents (Article 15)

Taxpayers must separately indicate the excise duty on their

sales documents.

Although there is no transaction subject to duty, the persons who

indicates the duty on the documents by mistake (invoice or similar

documents) are liable for declaration and payment of the duty.

This provision is also valid for taxpayers who indicates the amount

higher than the duty that they have to calculate according to the Law.



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9. Indication of duty on documents (Article 15) (cont’d)

Taxpayers who realised transactions subject to duty, can make

adjustments on duties which they have debted or paid, can deduct

from this duty, can claim for refund in the following conditions when,

the goods are returned

the transaction does not occur

the transaction is given up

excessive and unnecessary duty is calculated





ENERGY PRODUCTS

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I. Legislation

II. Energy products subject to duty

III. Energy products not subject to duty

IV. Subject of duty

V. Taxable event

VI. Taxpayer

VII.Taxation



CONTENT

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VIII. Units of taxation

IX. Tax amounts

X. Joint responsibility

XI. Declaration and payment of duty

XII. Exemptions and reduced duty

applications



CONTENTS (cont’d)

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• Related Legislation

Electricity Consumption Tax laid down in the Law on Municipality Revenues No:2464

Customs Law No: 4458.

Electricity Market Law No: 4628

Natural Gas Market Law No: 4646

Petroleum Market Law No: 5015

LPG Market Law No: 5307

• Basic legislation

Law on Excise Duty No: 4760

Cabinet Decrees

Communiqués on Excise Duty

I. LEGISLATION

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II. ENERGY PRODUCTS SUBJECT TO DUTY

Energy products are classified in the List No: (I) annexed to Law on Excise Duty No:4760 in Tables (A) and (B).

There are 130 kinds of CN Codes, 90 of which are placed in Table (A) and 40 of which are placed in Table (B).

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THE LIST NO: I

(A) TABLE (B) TABLE - Petrol - Solvents

- Diesel - Thinner - Fuel oil - Mineral Oils - Natural Gas (lubricating oils) - LPG

II. ENERGY PRODUCTS SUBJECT TO DUTY (cont’d)



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Coal and coke, and electricity are not in the scope of Law on

Excise Duty No:4760, although, they are among the energy products

listed in the Article 4 of the Directive No: 2003/96/EC.

Coal and coke are only subject to VAT and electricity is subject

to both VAT and Electricity Consumption Tax regulated in the

Law on Municipality Revenues No: 2464



III. ENERGY PRODUCTS NOT SUBJECT TO DUTY

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V. SUBJECT OF DUTY (ARTICLE 1)

Delivery of goods laid down in the List No: (I) by their importers or producers (including refineries),

Sale of the goods laid down in the List No:(I) by public auctionwhich have not been subject to excise duty

is subject to excise duty only for once.



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V. TAXABLE EVENT (ARTICLE 3)

For the goods laid down in the List No: (I) taxable event does not

occur at the stage of importation but at domestic delivery of goods.

According to the Article 16 of the Law, for the goods in List (I), at

the stage of importation, guarantee is required for the corresponding

duty which becomes payable in Turkey.



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V. TAXABLE EVENT (ARTICLE 3) (cont’d)

When the goods incompliant with the standards which are

confiscated on the border gates are delivered to the refineries by

the public authority, taxable event does not occur at this stage, but

at the deliveries of them to the refineries.



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VI. TAXPAYER (ARTICLE 4)

Producers and importers of the goods in List No: (I),

Persons carrying out the sale of these products by auction.

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VII. TAXATION

Proportional excise duty is

not applied to goods laid

down in the List No: (I).

Instead, specific tax is

collected from these goods

on declared tax amounts.

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VIII. UNITS OF TAXATION (ARTICLE 11)

The specific excise duty amounts determined for goods in theList No: (I) can be defined with: kilogram liter meter cube standard meter cube kilo calorietheir sub and over units and if necessary can be defined as containers, wraps or units considering their greatness.

The Council of the Ministers is authorised to change the units

of taxation according to the type of goods.



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TL / unit €/unit Unleaded Petrol 1,89 TL/Lt ≈0,77 €/Lt Diesel 1,30 TL/Lt ≈0,53 €/Lt Fuel Oil 0,23 TL/kg ≈0,09 €/kg Natural Gas Used as propellant 0,69 TL /St.M³ ≈0,28 €/St.M³

Other purposes 0,02 TL/St.M³ ≈0,01 €/St.M³ LPG Used as propellant 1,28 TL/kg ≈0,52 €/kg Other purposes 1,21 TL/kg ≈0,49 €/kg Biodiesel 0,91 TL/Lt ≈0,37 €/Lt Solvent 2,01 TL/kg ≈0,82 €/kg Mineral Oils 1,05 TL/kg ≈0,43 €/kg

IX. TAX AMOUNTS



1euro=2,44 TL

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X. JOINT RESPONSIBILITY (ARTICLE 13)

The refineries producing the goods in the List No:(I) as contract manufacturing,

The persons using goods in the List No:(I), as the goods subject to higher amounts of duty, or those selling them at these higher amounts to the third parties,

have joint responsibility.



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X. JOINT RESPONSIBILITY (ARTICLE 13) (cont’d)

Example; Tax differentiation is applied for natural gas by taking account of

its utilization places.

Natural gas Tax amount/unit - used as propellant 0,52 €/St.M³ - others 0,49 €/St.M³

If the persons buy the natural gas with the lower amount of duty but use it as a good subject to higher amount of duty because of its utilisation purpose, they must pay the duty difference.



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XI. DECLARATION AND PAYMENT OF DUTY (Article 14)

There are two taxation periods in a month. The first taxation

period is the first 15 days of each month and the second taxation

period is the remaining part of the month.

Excise duty return is submitted to the tax office by the end of the

10th day following the end of the taxation period and payment

should be done in the same period.



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XII. EXEMPTIONS AND REDUCED DUTY APPLICATIONS

1.Common exemptions- exportation exemption - diplomatic exemptions - importation exemptions - supply of goods destined for export

2.Energy products delivered to the armed forces3.Energy products used for petroleum exploration and production activities4.Free of charge delivery of the goods which have been disposed according to the Customs Law to the public institutions in case of disasters, infectious diseases and similar circumstances5. Exemption on diesel for the vehicles leaving Turkey for export



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XII. EXEMPTIONS AND REDUCED DUTY APPLICATIONS (cont’d)

6. Deferment and cancellation

7. Tax reduction for the Table (B) of the List No: (1)

8. Tax reduction in the fuels of sea vehicles

9. Tax reduction in the delivery of base oil

10. Tax reduction application in delivery of petrol with

bioethanol

11. Tax reduction application in biodiesel



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Thank you for Thank you for

your attentionyour attention

Documents

1 EXCISE DUTY IN TURKIYE GENERAL FRAMEWORK. 2 CONTENTS I.General Explanations II.Legislation III.General Structure IV.Goods Within the Scope V.Common