TAV IT

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TAV Airports Holding Annual Report 2008
TAV AIRPORTS HOLDING AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2008
(Amounts expressed in Euro unless otherwise stated)
Contingent asset
TAV İstanbul is able to expense VAT on concession rent payments upon the issuance of the related invoice and DHMİ issues the
invoice monthly. Cumulative VAT expense related with DHMİ invoices as at 31 December 2008 is EUR 33,532,119 (31 December
2007: EUR 24,258,638).
TAV İstanbul has opened a tax court case in February 2006 against Ministry of Finance for the concession rent, which has been paid
partially and the remaining will be paid to DHMİ, for not being subject to VAT. According to temporary VAT code number 12, TAV
İstanbul stated that airport privatisations are exempt from VAT. The resolution of the İstanbul First Tax Court has been declared
to TAV İstanbul on 9 April 2007. The resolution sets forth that the administrative transaction is not a tax error in the manner
prescribed in the Tax Procedures Law, and that no legal inappropriateness had been observed in the transaction that had been
formed via the rejection of the application made upon complaint. The decision does not assess whether there is an exemption
from the VAT or not; and it is judged that the application does involve a legal shortcoming; TAV İstanbul had submitted the case
to the Court of Appeals. With regard to the mentioned case, the Company had submitted a letter to the 4th Department of the
Court of Appeals on 28 May 2007 and required a motion for stay. TAV İstanbul has brought a tax case against Ministry of Finance
and Maltepe Tax Administration, with the claim that the rent amounts paid to the State Airports Authority General Directorate
are exempt from value added tax; and the Tax Court dismissed the case on the grounds of incompetence. TAV İstanbul had applied
against the dismissal decision of the Tax Court. The award of the 4th Chamber of the Council of State (“Danistay”) had been
declared to TAV İstanbul on 25 July 2007. Accordingly, the Council of State approved the application of TAV İstanbul and decided to
reverse the judgement of the Tax Court. The case reverted to the Tax Court according to the Code of Administrative Procedures and
the Tax Court rejected the case with the decision notified to TAV İstanbul on 29 November 2007. An application for appeal has been
made, and the process is continuing as of the date of this report. Group management believes that this court will be finalised in
Group’s favor, paid VAT will be reimbursed to the Group, and the Group will not pay VAT on concession rent anymore.