On February 14, 2020, certain important amendments have been introduced with regards to the Value Added Tax (VAT) implementation in Healthcare Public-Private Partnership (PPP) projects.
The Communiqué amending the VAT General Implementation Communiqué (the “Amending Communiqué”), which was published in the Official Gazette No. 31039 dated February 14, 2020, provides the following VAT withholding rates for the services provided within the scope of healthcare PPP projects:
| Services | Withholding Rate applicable for Sub-contractors which actually provide the service | Withholding Rate applicable for Sub-contractors which do not actually provide the service | Withholding Rate applicable for the Contractor | |
| Type of Activity | Rate | |||
| Land and Garden Maintenance Services | Cleaning, Environment and Garden Maintenance Services (Section I/C-2.1.3.2.10 of the Communiqué) | 7/10 | No withholding | 5/10 |
| Spraying Services | ||||
| Linen and Laundry Services | ||||
| Cleaning Services | ||||
| Sterilisation and Disinfection Services | ||||
| Waste Management Services | ||||
| Patient Guidance and Accompaniment / Reception / Help Desk / Transportation Services | Manpower procurement Services (Section I/C-2.1.3.2.5 of the Communiqué) | 9/10 | No withholding | 5/10 |
| Security Services | ||||
| Parking Services | ||||
| Other Medical Equipment Support Services | Alteration, maintenance and repair services related to Machine, Equipment, Inventory and Vehicles (Section I/C-2.1.3.2.3 of the Communiqué) | No withholding* | No withholding | 5/10 |
| Furnishing Services | ||||
| Catering Services | Catering and Organisation Services (Section I/C-2.1.3.2.4 of the Communiqué) | No withholding* | No withholding | 5/10 |
| Extraordinary Maintenance and Repair Services | Construction Works (Section I/C-2.1.3.2.1 of the Communiqué) | 3/10 | 3/10 | 3/10 |
| Building and Site Services | ||||
| Laboratory Services | – | No withholding | No withholding | 5/10 |
| Imaging Services | ||||
| Rehabilitation Services | ||||
| Shared Services Management Service | ||||
| Hospital Information Management System | ||||
* In the case that the service is provided to those mentioned in section I/C-2.1.3.1/b of the Communiqué, withholding will be made based on the “type of activity”.
The Amending Communiqué also provides that the transaction of renting the health facilities to the Ministry of Health within the scope of the PPP projects is exempt from VAT pursuant to Article 12 of the Health PPP Law and Temporary Article 29 of the VAT Law.
Further, Article 7 of the Amending Communiqué adds a new article 2.7 to section III/B-2.6 of the VAT General Implementation Communiqué regarding the VAT implementation for services provided during the operation period of the health PPP projects. Pursuant to such new clause, the laboratory, rehabilitation, imaging and catering services provided by the SPVs to the Ministry of Health and the same services provided by their sub-contractors are subject to VAT at a rate of 8%.
Full text of the Amending Communiqué is available at the following link in Turkish: https://www.resmigazete.gov.tr/eskiler/2020/02/20200214-8.htm.
This information is provided for your convenience and does not constitute legal advice. It is prepared for the general information of our clients and other interested persons. This should not be acted upon in any specific situation without appropriate legal advice. This information is protected by copyright and may not be reproduced or translated without the prior written permission of Ergün Avukatlık Bürosu.