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Turkey’s New Tax Application on Accommodation Services
This article will convey the essential points regarding the accommodation tax and its application to inform our esteemed readers about the new regulations.
The Accommodation Tax Implementation Communiqué (“Communiqué“), planned to enter into force on January 1, 2023, was published in the Official Gazette of the Republic of Turkey dated 14.12.2022. Accommodation tax was established with the revised article 34 of the Expenditure Tax Law No. 6802 (“Law“). Critical accommodation tax regulations were made in the Communiqué published by the Revenue Administration of The Ministry of Treasury and Finance.
Which Services Will Be Subject to Accommodation Tax?
Per the Law and Communiqué, overnight service provided in accommodation facilities such as hotels, motels, holiday villages, pensions, apart-hotels, guesthouses, camping, chalets, highland houses, and all other services offered within the accommodation facility (food, beverage, activity, entertainment services, etc.) pool, sports, thermal and similar areas) may be the subject of the accommodation tax. What is meant by overnight service is that these are the accommodation services provided within the said hotel, motel, and hostel-like accommodation facilities.
In the Communiqué, it is stated that the provision of facilities like wellness centers and entertainment venues will not impact taxation as long as the other services falling under this category are also offered with overnight services, such as eating, drinking, entertainment, etc. Another agreement made is that social service institutions providing overnight care to people in need of safety, support, and assistance will not be taxed.
The overnight service will begin with the room or bed allocated for an overnight stay at the person’s disposal. For overnight stays covering more than one day, the number of days that the person receives overnight service is included in the accommodation tax. At the same time, the condition of completing the night is optional for daily overnight stays to be the subject of the tax.
In other words, a hotel customer who holds a daily room will be deemed to have received 1-day overnight service even if they do not spend the night at the hotel. In contrast, customers who hold a 3-day room will be taxed only for the days they receive overnight service. We should point out that with the said regulations regarding the overnight service, it is meant not only the services provided in hotel-like accommodation facilities and the form of room allocation but also the overnight stays in the camps, in units such as tents, tent-cars, caravans, motorhomes, bungalows, whether they belong to the enterprise or not.
Services Offered With Overnight Service
All services provided within the scope of the concept, as well as overnight services on-site, marketed and/or sold under the names of bed+breakfast, half-board, full-board, all-inclusive, ultra-all-inclusive and similar, are included in the subject of the accommodation tax. It is an important issue that concerns consumers whether services such as eating, drinking, and entertainment provided in accommodation facilities are within the scope of overnight services.
While making this determination, matters such as whether the services are kept separate from the overnight service during the announcement, advertisement, reservation, sales, and/or marketing phases, whether they are offered within a predetermined accommodation concept, or whether it is possible to stay overnight at the facility without benefiting from other services are taken into consideration.
It is essential for the consumer to pay attention to these points and to examine the documents such as advertisements, pre-contracts, and offers regarding the concept in which the service is given. Issuing separate invoices for the services provided will not prevent these services from being subject to accommodation tax.
Who Can Become Taxpayers of Accommodation Tax?
Pursuant to article 34 of the Law, the taxpayers of the accommodation tax are the persons who provide the overnight service, which is the subject of the tax, and the other services (eating, drinking, entertainment, etc.) sold with the overnight service. In other words, the real and legal persons who operate the accommodation facilities will be taxpayers regardless of whether they own the facility.
Who Will be Exempted From Tax?
The Communiqué also includes regulations regarding student dormitories, hostels, and camps, among the first things that come to mind regarding accommodation services. Accordingly, services provided to students in dormitories, hostels, and camps will be exempt from tax.
According to another regulation regarding tax exemption within the scope of the Communiqué, services rendered to diplomatic representations, consulates, and their members with diplomatic rights in Turkey, as well as international organizations and their members, are granted tax exemption pursuant to international agreements, will be exempt from tax.
What Will Be Included in The Tax Base?
The Communiqué, referring to article 34 of the Law, has made a regulation that the sum of the benefits, services, and values that can be represented by money, provided in money, goods and other forms of money, goods and other forms of money received or borrowed for these services, excluding VAT, will be included in the tax base.
What is The Accommodation Tax Rate?
Following the article 34/5 regulation, it has been regulated that overnight services provided within the accommodation facilities and all other services provided within the scope of these services will be subject to accommodation tax at the rate of 2%.
Is it Obligatory to Show The Accommodation Tax in The Documents?
Under article 5/6, accommodation tax must be shown with invoices and similar documents issued by the facilities providing tax-related services. It has been ruled that no deduction can be made from this tax under any name.
Where is The Authorized Tax Office?
The Communiqué made a dual distinction regarding the tax offices authorized to be levied. For those who are VAT liable, the tax office authorized to levy is authorized to the tax office to which the taxpayer is affiliated in terms of VAT. For those who do not have VAT liability, the tax office of the place where the accommodation is located is authorized.
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