TÜRKİYE Law and Practice Contributed by: Serkan Gül, Nazım O Kurt and Türkay Avanaş, Hergüner Bilgen Üçer Attorney Partnership
8. Tax 8.1 VAT and Sales Tax
tors’ liability is not very common. Moreover, clauses containing waivers, indemnifications and limitations of liability in favour of contrac - tors are not generally accepted by courts. 7.4 Management of Schedule-Related Risk Provisions on schedule-related risks are subject to freedom of contract; therefore, parties may agree on certain milestones and penalties. This is commonly used in practice. As per the law, an owner is entitled to compensation if the con - tractor does not comply with the milestones and deadlines specified under the agreement. 7.5 Additional Forms of Security to Guarantee a Contractor’s Performance Provisions on schedule-related risks are subject to freedom of contract; therefore, parties may agree on certain milestones and penalties. This is commonly used in practice. As per the law, an owner is entitled to compensation if the con - tractor does not comply with the milestones and deadlines specified under the agreement. 7.6 Liens or Encumbrances in the Event of Non-payment Contractors are entitled to request the registra - tion of a mortgage over the land to guarantee their receivables. Owners may request removal of the mortgage upon fulfilling their obligations
Sale of lands within the scope of a commercial enterprise and land owned by limited liability companies and corporations are subject to VAT. The generally applicable VAT rate for land sales is 10%. However, the VAT rate applicable for flats gener - ated from urban regeneration that are up to a net area of 150 square metres is 1% and from 150 square metres and higher is 20%. The VAT rate applied to sales of flats can be 10% or 20%, depending on the tax value of the flat concerned. VAT is paid by the purchaser. The sale of lands held by limited liability compa - nies and corporations for more than two years is exempt from VAT. However, this exemption does not apply to limited liability companies and cor - porations that conduct real estate business. 8.2 Mitigation of Tax Liability Methods such as division, mergers, share trans - fers, etc, are used to benefit from mutual tax agreements and exemptions. Moreover, REIFs and REICs are exempt from corporate income tax. These structures can also be used to miti - gate tax liability. 8.3 Municipal Taxes There is no periodic tax applicable for the occu - pation of business premises. However, a fee determined by municipalities is paid to obtain and renew operation permits. There is no spe - cific exemption for operation permit fees. Moreover, real property tax is paid to munici - palities. The municipalities determine this tax according to the value of the respective lands.
under the construction agreement. 7.7 Requirements Before Use or Inhabitation
An occupancy permit certifying that the con - struction has been completed in accordance with the official designs (projects) should be obtained before a project is inhabited or used for its intended purpose.
1009 CHAMBERS.COM
Powered by FlippingBook