<<< Go BackExportInward Processing Approval Certificate

Inward Processing Regime is a tool of export incentives that provides customs exemption to the inputs that are subject to customs tax and used in manufacturing of the export products. The firms take advantage of various incentives especially in the form of tax exemptions as well as convenient procedures with regard to the raw materials, supplementary materials, semi finished goods, finished goods, intermediary goods and packaging materials to be used in manufacturing the products that are planned to be exported, subject to the condition that an exportation commitment is made to the government. To be able to take advantage of these incentives it is required to obtain an Inward Processing Approval Certificate. .
The Inward Processing Approval Certificate is issued by the Undersecretariat of Foreign Trade and as such it provides customs exemption, while making possible for the purchase of imported goods and/or domestic purchases..
Inward Processing measures consist of two main sections:

1- CONDITIONAL EXEMPTION SYSTEM (Suspending in return for an export commitments):

It is about giving permission for the paid/unpaid importation of the raw materials, supplementary materials, semi finished goods, finished goods, intermediary goods and packaging materials that are not in free circulation and to be used in manufacturing of the products for which an export commitment has been made within the scope of the inward processing approval certificate, by the firms that are located in the zone that is subject to customs taxes, and without being subject to the provisions of the trade policy and by depositing a collateral in the amount of the tax that arises from the concerned import transaction.

In this system the exporters do not pay the taxes for the inputs that they import, and by depositing a collateral in the amount of the tax that could have been incurred, to the accounting office of the related customs authority, they are entitled to have the said taxes suspended. In order to take advantage of the tax exemption the export commitment must be realized.

Utilization of equivalent goods: In the manufacturing of the processed goods, the input material that are in free circulation having 8 to 12 customs tariff statistical position and made of the same quality with similar characteristics in terms of its technical and commercial specifications can be used. Following the exportation of the final product that is to be manufactured by using the raw material in free circulation, to the 3rd countries, the importation of goods exempt of tax and without the requirement of a collateral is permitted.  

The manufacturing exporter firms that use the input materials that are in free circulation in their production, and then export the finished products to the 3rd countries, will be entitled to import goods of equivalent nature and quality from the 3rd countries under customs tax exemption if they can document their export to the concerned country. With regard to the equivalent goods that are imported as input materials within the scope of the Inward Processing Approval Certificate, the importing firm has free disposal entitlement. These goods are imported to be included in free circulation.  

2- BACK PAYMENT SYSTEM:

In case of export to 3rd countries within the framework of Inward Processing Approval Certificate of products produced by using goods, for which all types of taxes have been paid within the framework of Import Regime and as such are goods in free circulation, the taxes collected at their import are paid back. There are matters that must be taken into consideration here. If your company is considering exports, an annotation must be inserted on the Customs Declaration that the goods are being imported within the framework of back payment system. In order to receive back the taxes paid at the time imports were made, your company will have to apply to get an Inward Processing Approval Certificate within 6 months from the date of import.
It is necessary to apply to the concerned customs administration within 3 months following the closing of the Inward Processing Approval Certificate prepared within the framework of Back Payment System for the back payment of taxes that paid at the time of imports.

ADVANTAGES OF INWARD PROCESSING APPROVAL CERTIFICATE:

• Exemption from Customs Duties, VAT and other duties, taxes and levies for imports made from the 3rd countries
• Exemption from VAT and other duties, taxes and levies in imports made from EU countries
• Exemption from quota and supervision measures in imports, provided that the export commitments are satisfied through exports to third countries
• Not being subject to Standardization and Technical Regulations in Foreign Trade
• Customs duty exemption in imports related to sales and deliveries deemed as exports
• Allows the use of equivalent goods
• Get refunds of paid taxes

INWARD PROCESSING APPROVAL CERTIFICATE PERIODS :

The term of the Inward Processing Approval Certificate shall be determined in accordance with properties of the subject matter goods. This period shall not surpass 12 months. However, the Undersecretariat may shorten such a period by taking into consideration the properties of the product. In case 50% of the exports committed to in the certificate are realized, the Inward Processing Approval Certificates may be extended for a period up to ¼ of the original period.

CLOSURE OF INWARD PROCESSING APPROVAL CERTIFICATE :

The companies with Inward Processing Approval Certificates have to apply to concerned General Secretariat of the export associations with the required information and documents for the closure of the export certificate obligation within 3 (three) months following the end of the term of the certificate.
The application for closure is irreversible. The companies who do not make applications for closure within the specified period are told to do so within 30 (thirty days) by the General Secretariat of Exporters Associations with a notice served within 10 (ten) business days of such closure date. The companies that do not perform the closure applications within the above-specified period are reported within 10 (ten)-business days to the Undersecretariat in order to ensure the termination process is performed.