As of 07.08.2023, a monthly import quota of 12 tons was introduced regarding gold imports, which is one of the most important items that cause us to have a current account deficit. Despite this quota; If I say that we imported 318 tons of gold in the whole of last year, it can be easily understood that a very significant amount of foreign currency was used for gold imports and that it was the main reason for the current account deficit. Complaints that the quota was unfairly distributed among companies, the increasing physical demand for gold due to a poorly managed economy, and the increase in the price per kilogram of gold in Turkey by 3,000 to 5,000 dollars due to the quota caused gold smuggling to explode. So that; Even airport VIP lounges became the main venue for these activities!
Today for you; I will explain with examples the issue of value added tax, which does not arise in the import of jewelry, especially chains made of gold, whose imports have exploded due to the quota applied to gold.
WHAT DOES THE LEGISLATION SAY?
According to Article 17/4-g of the VAT Law No. 3065; Deliveries of gold bullion are exempt from VAT, and with Article 16/1-a, imports of goods and services whose deliveries are exempt from tax in accordance with this Law; A provision has been made to benefit from the import exemption, and different tax applications have been prevented in cases where transactions of the same nature are carried out domestically or imported from abroad.
However; The delivery and import of jewelery made of or containing gold and gold coins are subject to VAT. In accordance with Article 23/e of the same Law, the basis for the delivery and import of the products in question is; It is the remaining amount after deducting the gold bullion price.
In the delivery of jewelery and gold coins manufactured personally from gold bullion obtained through import or internal purchasing, or subcontracted, or purchased as delivered; VAT is the remaining amount after deducting the price of the gold bullion contained in the delivered product from the sales price, which is determined by taking into account the closing price of the gold bullion on the last official business day of the Borsa Istanbul, including the days when no transactions took place, and taking into account the setting of the product sold. will have a base. It is natural that those engaged in the production of gold bullion (including scrap gold) or gold-containing goods will also calculate VAT for the labor fees they receive for their work.
Expressing the purity of gold in thousandths is called MILYEM. MY 995 MILLIONS; 995 per thousand of the mass is pure gold, and the remaining 5 per thousand is another metal other than gold. The most used gold carat and MILLIUM values are: 14 carat 585 MILLIEM, 18 carat 750 MILLIEM, 22 carat 916 MILLIEM, 24 carat 995 and 999.90 MILLIEM.
THE CRITERIA BASED ON EVALUATION MUST BE CHANGED…
Coming to the subject of "VAT Impasse" in the title of our article; At the stage of importing jewelery containing gold bullion, the specific value of the gold bullion contained in the product subject to import is determined; Borsa İstanbul A.Ş. has higher pricing than the gold price in the London Bullion Market Association (LBMA), which is the only gold bullion market officially accepted worldwide. Taking into account the data of the Precious Metals and Precious Stones Market established within the Company causes the VAT base not to be formed in some cases:
Example: Y Jewellery business; With the import declaration dated 03.10.2024, it imported jewelry containing a total of 65,508.85 grams of 22 carat gold worth 5,150,895.29 USD. For the jewelry imported on 03.10.2024, the closing price of the last trading day of the Precious Metals and Precious Stones Market dated 02.10.2024: 3.055,00 TL / Gr.
MILYEM value to be taken into account for 22 carat jewelry: 0.916
22 carat pure gold gram price: 0.916 x 3.055,00 = 2.798,38 TL/Gr.
Gold bullion price exempt from VAT: 2,798.38 x 65,508.85 = 183,318,655.66 TL
Foreign exchange sales rate on the date of registration of the import declaration: 34.2154
Value basis for customs tax assessment: 34.2154 x 5.150.895,29 = 176.239.942,71 TL
VAT Base: 176.239.942,71 – 183.318.655,66 = -7.078.712,95 TL
As can be seen in the example; For crafted jewelery containing gold bullion, VAT base is not formed from all kinds of taxes, duties, duties, shares paid during import and other expenses and payments made until the registration date, except for those that cannot be documented.
In practice; Some importers, who do not want to cause a negative impact against the Treasury and subsequently face a penalty assessment, use the "overseas expense" line in their relevant import declarations and declare expenses that do not actually exist and are not based on any payment document, or if they exist; It is observed that they ensure the formation of a VAT base by rounding the actual expense amounts corresponding to freight costs and insurance costs significantly upwards.
In this context; In terms of legal legislation, in the import of jewelery containing gold bullion, the minimum VAT base for the labor amount is determined on a quantity basis or the specific value of the gold bullion contained in the product subject to import is determined; Changes such as using gold prices in the London Bullion Market Association (LBMA) as a basis should be made taking into account that import figures have increased significantly.
Source: Author, Dr. Nedim TÜRKMEN