Ramazan Öksüz said, “The current practice for companies working in taxation is to submit VAT 1 and VAT 2 declarations at the same time and offset them; As accepted in the omnibus law and currently presented to us at the draft stage; We have understood that it is on the agenda to introduce a practice such that the VAT No. 2 amount is paid on the 23rd of the month, that is, before the VAT declaration No. 1, no offset is applied and it cannot be subject to deduction. He continued by saying, "In this case, a conditional discount in the form of payment of VAT declaration no. 2 will make it impossible for us to make a deduction from our VAT declaration no. 1."
“It will cause irreparable consequences”
Stating that almost all of the companies operating in the sector are preparing to quit their business if the implementation comes, Öksüz said, “For current taxpayers, the financing cost of deducting VAT number 2 from the VAT to be paid in the following month by requesting a refund with the CPA report; It will impose a financial burden on companies operating in the iron trade sector, which has a very low profit margin and requires a high amount of capital, that it is impossible to overcome under the current market and interest conditions, due to the high turnover. It is reported in market conversations that if this practice comes, almost all of the companies operating in the sector are preparing to abandon the job they have worked for for years and have made a profession of themselves, and that they are already having a hard time due to the current commercial and financial conditions. It is obvious that this situation will have irreparable consequences in the economy. If the implementation is implemented, hundreds or even thousands of people operating in the sector are seriously considering quitting their jobs. "Because the financial cost to be incurred will make the continuity of companies almost impossible under current market and interest conditions," he said.
“It will cause an unstable and unhealthy price environment in iron sales.”
Emphasizing that an unstable environment will occur in iron sales, Öksüz said, “If the compensation for this situation is reflected in iron prices, a tremendous inflationary environment will arise and iron and steel prices will begin to be pronounced, as the financing cost that is completely specific to the companies, which is impossible to be implemented on a company basis, will begin to be pronounced. Thus, it will have a serious negative impact on our government's fight against inflation, it will cause an unstable and unhealthy price environment in iron sales, and it may create a terrible unemployment and employment problem considering Turkey in general, with serious layoffs from jobs. Considering that the average commodity cost for a truck is 600,000.00₺ and the gross profit from this sale is around 1,400.00₺, it is obvious how much financial leverage is needed in this sector in the current interest rate environment. And it will create an environment where it is impossible to do good business when the industry is already in a difficult situation due to current financial costs and very low profit margins. "In our country's current environment of serious struggle with inflation, this practice will cause the creation of a rapid and exorbitant inflationary environment in the iron and steel sector."
Touching on the negative effects this situation will have on accounting, Öksüz said, “It is also obvious that the refund and offset process in the following month will create a difficult and troublesome process in terms of accounting records. "The principle of equality in taxes is also a natural requirement of the rule of law principle included in Article 2 of the Constitution," he said.
“Iron merchants act as a bridge between the producer and the consumer”
Öksüz said, “At this point, the trade of companies operating in the relevant sector has come to a halt as of 01.01.2024 due to the current draft VAT application. The VAT 2 withholding part of the sales to be made in 2024 will require additional working capital, which will negatively affect the sustainability of companies and make it almost impossible, considering the increasing loan interest rates due to inflation. Moreover, it is almost impossible to use existing bank loan interest rates with these profit margins. The contribution of the relevant sector to our country and employment is undeniable. Manufacturers, which are flagships in exports, also contribute to employment. Some companies that are manufacturers today were iron traders in the past. Reducing financial difficulties is essential for the emergence of new entrepreneurs in our country. Iron merchants act as a bridge between the producer and the consumer. Companies that carry out small amounts of transactions create financing for large manufacturing companies and make serious contributions to the economy. Since these companies attach importance to their balance sheets, they contribute greatly to the development of our accounting principles and standards, their compliance with independent auditing criteria such as Basel 2000, and the mental and technological development of the country. "His contribution to the region, sector and country in the formation of a developed society and the accumulation of capital is undeniable."
“It will be impossible to reach iron and steel products”
Öksüz said, "If companies reduce or even abandon their activities due to financial difficulties, it will cause a serious decrease in the stock and product diversity in the market, and the end consumer will have serious difficulties in accessing the material. He said: "It will be almost impossible for some consumers to reach iron and steel products. "The new VAT 2 application has created a very serious financial difficulty that cannot be compensated, while additional costs already exist due to the fact that the iron and steel sector is a sector with high capital but low profit margin, and the use of foreign resources is almost mandatory due to the high working capital required," he said.
Saying that there is nothing more natural than the state securing the tax, Öksüz said: “However, it is possible to eliminate these problems with different applications for the reasons we have mentioned above. Such as taxation at the source or taxation at the final consumer, as in SCT-like practices in the automotive industry. Ensuring the continuity of the situation that currently allows us to deduct only the VAT no. 2 arising from the purchase made within the month of the same product and the VAT no. 1 arising from the sale at the same time will make an important contribution to ensuring justice and equality in taxes. Introducing a bank letter of guarantee instead of payment may also be a solution. In addition, our government will waive the payments of VAT, Corporate Tax, Income Tax Withholding and stamp duties as much as the profit every time the commodity changes hands, which will increase the costs for the sector producers or turn them into imports instead of exports and increase iron prices. "It is submitted for your orders and permission to ensure that our receivables arising from the VAT declaration no. 1 are offset at least to the same month, taking into account the principles of the state's conduct of trade in a peaceful environment and equal opportunity."
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