Introduction

As known, for construction works spread over years, 3% WHT is calculated over the advances and progress payments within the scope of the construction work.

If project will lead to a loss and consequently you will not have a corporate tax payable from which the previously calculated WHT amounts will be deducted.

Thus, most probably the situation will lead to a refund of the WHT paid by you.

Options

The issue is regulated in the communique no. 252 of the Income Tax Law. According to the comminique there are two options for refunding.

credit method
cash refunding

Credit Method

The refundable WHT amounts can be credited from the other tax liabilities, provided that the request has been shown in the annual corporate tex return of the period in which the construction work is completed and other documentation requirements are fullfilled.

In order the utilise this method, a Letter of Guarantee (LOG) or a SFA report is not necessary.

Cash Refunding

In case the tax payables will not be enough to recover the refundable WHT amount, cash refunding will be the only option. According to the comminique;

Refundable WHT amount up to 10.000TL will be paid as cash after the submission of the CT return, without submitting a LOG or a SFA report.
The following amount up to 100.000 TL will be refunded based on the tax certification report, which will be prepared by CPA (Sworn)
The amounts exceeding 100.000TL will be paid after the inspection of the tax authorities.