VAT Reduced in Construction Contracting Works Regarding Urban Transformation Houses

VAT Reduced in Construction Contracting Works Regarding Urban Transformation Houses
An amendment was made in the decision regarding the determination of VAT rates to be applied on goods and services. The President's Decree on the determination of these VAT rates entered into force after being published in the Official Gazette.
According to this decision, the VAT rate for the contracting works for the houses to be built in the new construction area up to 1.5 times the existing construction area belonging to the real estate owners within the framework of transformation projects in places where risky buildings are located within the scope of Law No. 6306 was reduced to 1 percent.

Before this decision, if the real estate owners wanted to build houses in the same area by having the transformation projects done by themselves without giving the land share to the contractors and they received construction contracting service from the contractors for this, the general rate of VAT applied to these services was 18 percent.

With the new decision, a tax reduction opportunity was also provided for risky building owners who could not make a construction contract in return for flat for houses that were deemed necessary to be renewed against disaster risks, especially earthquakes.