A guide to YMM-report VAT refunds for exporters and reduced-rate sellers.
For exporters and businesses selling goods at reduced rates, the VAT they bear cannot be offset and builds up as a 'receivable'. That amount returns to cash flow only by refund. A sworn-in accountant (YMM) report is the tool that markedly speeds up the refund process.
When does a VAT refund arise?
- Export deliveries and transactions treated as exports (exemption)
- VAT receivable left on the buyer's side because of withholding transactions
- Input VAT exceeding output VAT in transactions at reduced rates
- Purchases of machinery and equipment under an investment incentive certificate
- Services provided abroad and other special refund cases
The role of the YMM report
Refund claims made by the normal route are subject to tax office review and long waiting times. In refund claims accompanied by a YMM report, the sworn-in accountant examines transactions and documents in person and certifies that the refund amount is correct and documented. The tax office can make the refund on the basis of the report without additional review.
Documents needed for the report
- VAT returns and accrual slips for the period
- Export invoices, customs declarations and bank currency conversion records
- Purchase invoices and the taxpayer status of suppliers
- Trial balance, ledgers and accounting records
- Refund request petition and bank account details
Process
- Preliminary review and sharing the document list
- Collecting documents electronically
- Risk analysis and tax compliance check of suppliers on purchase invoices
- Draft report and amount reconciliation
- Uploading the report to the Revenue Administration system and submitting the refund claim to the tax office
Points of attention
The tax risk of suppliers issuing purchase invoices is the most common problem in refunds. Invoices from risky taxpayers may have to be excluded from the refund; supplier selection and invoice checks should therefore be done regularly from the start. The report period is generally two to four weeks when documents arrive complete.
A simple example
Suppose an exporter buys 40 million TRY of raw materials and services in a year; 20 per cent VAT on the purchases comes to 8 million TRY. Because sales are mainly exports, the calculated VAT is only 1 million TRY. The 7 million TRY that cannot be offset gives rise to a refund right. With a YMM report this amount can usually be refunded in cash within a few weeks, whereas refund claims without a report may require a tax audit and take months.
At our firm VAT refund reports are prepared by our YMM team, which has experience of more than 1,200 reports a year; a free preliminary call can be arranged for the document list and a preliminary eligibility assessment.