Value added tax refund system at exportation in Turkey a case study of Afyonkarahisar

Exemptions in VAT system that aim taxation of expenditure, of every transaction on property and of value added to services are an instrument which breaks the taxation line. This breakage is favoured for better improvement in the economical development of the country. Thus, the exemption of exportation proceedings from VAT provides the exporters with the advantage of keeping the prices of their products at lower levels equal to exemption rate, allowing them to compete in international markets and making their goods preferable. However, the refund abuse experienced particularly in cash refund practices has forced the Ministry of Finance to impose a series of stricter rules and regulations related to one another. This has caused the existing complicated refund system to become even more complicated.In this study, VAT exemption in exportation, which has become truly complicated, and the regulations and practices of refund as regards this exemption have been explained in a simple style in the light of lagislation rules. In the last part of this paper, the results of a survey applied to tax-payers who are refunded for exportation VAT in Afyonkarahisar have been presented. The kind of liabilities of these tax-payers and the problems they experienced in refund practices have been determined, and solutions to those problems have been suggested.