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FDI: Financial incentive
In Official Gazette number 30057 of 5 May 2017, the government of Turkey published a Communiqué concerning the Turkish General Value Added Tax Application. This highlighted Communiqué entered into force on 1 April 2017 and established that foreigners purchasing assets aimed to serve as office or residence premises are now for the first time exempted from their VAT obligations. The highlighted VAT exemptions only apply when the purchased real estate is held for a minimum period of one year and its original purchase transaction was executed using foreign currency exclusively.
Furthermore, according to the highlighted Communiqué, foreign parties in order to be able to benefit from this VAT exemption, must now for the first time ensure that they pay minimum 50% of the financial value of the real estate before the date the acquisition invoice is issued (while the remaining percent of the investment needs to be paid by the end of the year).
Lastly, the Communiqué denoted that the following foreign parties are eligible to apply for the highlighted VAT exemptions:
Previously, foreigners for purchases of this nature were subjected to Value Added Tax (VAT) obligations ranging from 1% to 8% ( as 1% to 8% are the general VAT obligations applicable within the Turkish jurisdiction for purchases of estates for residence or office purposes).
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