For the purpose of promoting the changing of the foreign-flagged vessels’ and yachts’ flags from foreign to Turkish, and contributing to the development of the maritime industry and considering the complaints of yacht owners residing in Turkey, it has been intended to make a new tax and import regulation. The “Law on the Amendment of the Retirement Fund Law and Certain Laws and Statutory Decrees” (“Law”) has been published in the Official Gazette dated 27.01.2017 and numbered 29961. The amendments brought by the Law into the Law on the Amendment of Turkish International Ship Registry Law No. 4490 and the Statutory Decree No. 491 and the Statutory Decree No. 655 Concerning Organisation and Duties of the Ministry of Transportation, Maritime Affairs and Communication have entered into force on the publication date of the Law. As known, a similar regulation was made in 2009 for foreign-flagged boats and yachts and, in that period, the 8% Special Consumption Tax (“SCT”) was reduced to zero and the 18% Value Added Tax (“VAT”) was reduced to 1% for a certain term in order to facilitate the changing of foreign-flagged vessels’ flags to Turkish flag. By this new regulation, the changing of flags of numerous foreign-flagged vessels to Turkish flag has been aimed.
The following amendments are stipulated in the Law: - The annual visa charges collected for vessels, sea and internal water vehicles registered in the home port logs, which have been created as per the provisions of the Statutory Decree No. 491 Concerning Establishment and Duties of the Undersecretariat for Maritime Affair, have been abolished. - The second paragraph of Article 12 of the Law on Amendment of the Turkish International Ship Registry Law No. 4490 and the Statutory Decree No. 491 has been amended as follows:“Purchase, sales, mortgage, registration, credit facility, charter, time charter and all freight contracts of vessels and yachts to be registered in the Turkish International Ship Registry (TISR) shall be exempt from stamp duties and charges; and monies to be collected for those procedures shall not be subject to banking and insurance transaction tax and funds.” - By revising the exemptions for vessels and yachts registered in the Turkish International Ship Registry (“TIGS”), it has been made possible to apply profit exemption for deregistration from TIGS of the related vessels and yachts, which are sea vehicles subject to registration within the scope of the law, and for their registration in or transfer in any other way to another domestic or foreign registry. Thus, it is ensured that no charge shall be imposed on those who have benefited from the mentioned exemptions prior to the entry into force of the article; the previously imposed charges shall be withdrawn, provided that the related lawsuits, if any, are drawn back; the accrued amounts shall be cancelled, but the collected amounts shall not be refunded.
However, for vessels which are above 3,000 DWT (300 gross tons for cruise ships and special-purpose and special-structure vessels) and are registered in TISR, the exemption for their transition to another registry, for their export or sales for scrapping purposes may be applied under the condition that they have been operated under TISR registration for minimum 6 months.
- In order to promote changing to Turkish flag, for properties included in the sections 8901.10.10.00.11 and 8901.10.90.00.11 of Turkish Customs Tariff Schedule and, among the properties included in the tariff classification of 89.03, yachts, cutters, boats and cruisers which are abroad or foreign-flagged, it is regulated that;
o Inheritance and transfer tax shall not be collected for the free-of-charge transfer to real persons and legal entities in Turkey,
o Transactions for importation to Turkey and registration of the same shall be exempt from all kinds of taxes, duties, charges, funds and shares, including the customs duty,
o However, as those vessels are registered in the home port log in Turkey, charges relating to the home port log certificates shall be collected.
For the terms prior to the importation to Turkey or registration of the above-mentioned yachts, cutters, boats and cruisers, no tax inspection shall be made or no charge shall be imposed for those who import the same to Turkey or have the same registered in their name in relation to the acquisition of the same; the previously imposed charges shall be withdrawn, provided that the related lawsuits, if any, are drawn back; the accrued amounts are cancelled, but the collected amounts shall not be refunded.
Following entry into force of the Law on 27.01.2017, additional regulations shall be prepared and put into force for the performance of the necessary procedures and also in relation to implementation of the law. As may be understood in the light of the foregoing, by the entry into force of the Law, the changing of the flags of foreign-flagged vessels from foreign to Turkish has been considerably facilitated.
* The views expressed in this memo are those of the authors and aimed only at providing brief information on the relevant subject matter. This memo does not constitute a legal document or a legal opinion or legal advice. Please do not hesitate to contact our offices should you require more detailed information on any of the issues mentioned in this memo.