New era in fuel! The National Vehicle Identification System will be mandatory starting from 2025.

The National Vehicle Recognition System (NVRS) will become mandatory for taxpayers and organizations from next year, preventing an annual tax loss of approximately 15 billion lira caused by the use of fraudulent invoices in the fuel sector.

END TO FRAUDULENT INVOICE USAGE

The National Revenue Administration of the Ministry of Treasury and Finance has completed all infrastructure work for the NVRS, a domestic and national system developed to prevent the use of fraudulent invoices in the fuel sector and to prevent tax losses. The NVRS will automatically recognize vehicles of taxpaying fuel consumers and ensure that this information is included in receipts and invoices. This will put an end to the practice of creating fraudulent invoices by manually entering license plate numbers into the system. The National Revenue Administration aims to prevent the annual tax loss of 15 billion lira caused by the use of fraudulent invoices in the fuel sector through the NVRS. The NVRS will ensure tax security for the government and create a competitive environment in the fuel sector.

MANDATORY ONLY FOR TAXPAYERS

The NVRS will only be mandatory for individuals and organizations who are taxpayers. These individuals and organizations will be required to install the vehicle recognition unit on their vehicles belonging to or acquired through leasing for their businesses by December 31, 2024. Individual vehicle owners who are not obligated under the NVRS can choose to benefit from the system voluntarily. Under the system, taxpayers are required to obtain payment recording device receipts indicating that the transactions were made under the NVRS in order to declare fuel expenses as deductions. Documents not issued under the NVRS after December 31, 2024 will be considered as if they were never issued and cannot be subject to tax deductions.

MANUAL ENTRY OF LICENSE PLATE INFORMATION WILL BE DISABLED

Out of the 29 million registered vehicles in Turkey, nearly 8 million consist of vehicles that provide tax deductions by declaring fuel expenses. Nearly 3 million of these vehicles are equipped with the Vehicle Recognition System. To benefit from tax deductions, the vehicles need to be acquired through leasing or included in the business and used for work purposes. In the current system, the license plate information of the vehicle refueling is manually entered by the station attendant. During this process, fraudulent invoices can be created by entering information of a license plate that does not belong to the vehicle. Some taxpayers take advantage of this loophole by invoicing for unused or excessive fuel expenses. When these invoices are shown as expenses, they are deducted from taxes. With the NVRS, it is expected that such practices will come to an end starting from 2025.

OPERATION OF THE SYSTEM

The NVRS, whose installation and operation tasks are assigned to the General Directorate of Mint and Stamp Printing, involves fuel distribution companies, fuel station operators, authorized hardware manufacturers, authorized vehicle and station assembly companies, and vehicle owner taxpayers as stakeholders.

For vehicles subject to the NVRS, a vehicle recognition unit will be installed at the fuel tank entrance, and ownership and license plate information of the vehicle will be recorded. The vehicle recognition reader device attached to the fuel pump nozzle at the fuel stations will perform decryption operations using the secure communication key in the communication module. Thus, the license plate information of NVRS-compliant vehicles will be automatically transferred to the Payment Recording Device at the fuel pump, and the invoice and sales data will be processed by the NVRS. Manually entering license plate information into the system will no longer be possible for these vehicles.

REGISTRATION AND INSTALLATION PHASE TO BE COMPLETED THIS YEAR

The Implementation General Communiqué of the National Vehicle Recognition System by the National Revenue Administration of the Ministry of Treasury and Finance came into effect with its publication in the Official Gazette on October 5, 2023. The communiqué made regulations regarding the automatic transmission of license plate information to new generation fuel pump payment recording devices and the determination of technical specifications of the system. The portal of the NVRS with the address "www.utts.gov.tr" was made available to stakeholders in March. Technical preparation work for the installation of fuel stations is planned to be completed by August. Only companies authorized by the General Directorate of Mint and Stamp Printing will be able to carry out the installation, repair, and service operations of NVRS equipment. Authorized vehicle assembly companies will perform the unit assembly, and authorized station assembly companies will install the vehicle recognition reader device and secure communication device at the fuel stations. The software of the Payment Recording Devices will be updated to integrate with the NVRS as part of the communiqué. Fuel distribution companies can choose to integrate their existing vehicle recognition systems with the NVRS.