Input VAT of destroyed goods and responsible parties

Input VAT of destroyed goods and responsible parties

Last month, in the Official Gazette dated 05.12.2009, the Ministry of Finance published the Value Added Tax General Communiqué Serial No. 113 under the title of "VAT to be Charged for Goods that Expire or become Unusable".

In this article, we would like to analyse this communiqué, which is particularly relevant to the pharmaceutical and food sectors.

In this regulation of the Ministry of Finance, the following explanation was given in summary on the grounds that it was understood that there was a hesitation on this issue from the incidents transferred to the Revenue Administration.

"In the event that the goods, which are available in the stocks of the taxpayers in relation to their activities, but which have expired or cannot be used for another reason, are destroyed in the presence of the official commissions or the Appraisal Commission established in accordance with the relevant legislation, in accordance with the provision of Article (30/c) of the VAT Law, since the goods that have expired or otherwise become unusable and destroyed are in the nature of lost goods, it is not possible to deduct the VAT incurred by the taxpayers due to the acquisition of these goods.

In this framework, the VAT incurred for the goods that are lost and previously made subject to discount should be removed from the discount accounts by including it in the "VAT to be added" line of the VAT declaration No. 1 for the taxation period covering the date of destruction."

This regulation of the Ministry of Finance will cause great difficulties especially in the aforementioned sectors.