VAT refund application due to the reduced rate in the construction sector in Turkey

VAT collected on expenditure is a part of a good tax system in developed countries and is used effectively as a fiscal policy tool. In Turkey, VAT has a significant share in tax revenues and is an effective budget revenue. For this reason, the VAT rates applied in Turkey and the transactions exempt from tax, although they are within the scope of VAT, are given serious importance by economic factors. As a requirement of fiscal policy, changes in VAT rates, exemptions and discounts are made from time to time. Since the construction sector in Turkey has a variable structure depending on the balance of supply and demand and unemployment is significantly affected, it is seen as a locomotive sector by the state and is constantly supported by government policies. In the construction industry, especially in the delivery of housing, a reduced rate of VAT is applied for economic and social purposes, and the sale of these houses is encouraged by applying a lower VAT rate instead of the general rate in the delivery of houses that meet certain conditions. Thus, it is possible to access houses with certain features at more affordable prices. For deliveries and services subject to a discounted rate, a lower VAT rate of 1% and 10% is applied instead of the general 20% VAT rate in force in Turkey. A refund opportunity has been introduced for taxpayers who carry out transactions subject to a constantly discounted rate, since the carried-over VAT difference cannot be eliminated with the discount feature of VAT. Discounted rates are applied to some deliveries and services in the construction sector. Since there are many actors in the sector due to the structure and diversity of construction works, problems may occur in taxation and the refund process arising from transactions subject to discounted rates. Problems may arise from legislation or practice. In this study prepared by the literature review method, one of the descriptive scanning methods, after giving general information about VAT and information about the construction sector in Turkey, the transactions subject to the discounted rate determined for the construction sector within the framework of the VAT provisions in the legislation, the refund process, some specific issues are mentioned and the problems in practice are examined and solution suggestions are given presented. Key Words: VAT, Construction, Construction Contracting Works, Housing Delivery, Discounted Rate, VAT Refund