VAT in Turkey

VAT in Turkey

value added tax It is a wide-ranging tax on consumer spending and is generally neutral in its impact on business. This is achieved by allowing a business to offset any value-added tax incurred on business expenses, against the value-added tax collected from customers. Each business must calculate the amounts Excess collected from VAT and incurred more than VAT on business expenses. Person unable to reimburse VAT incurred (generally final) Then you will bear the tax at the end. A business can usually pay more tax than it collects. Redemption of surplus, usually offsetting recovery with a future liability rather than a refund. Any business that manufactures supplies in a country with a value-added tax system is usually required to do so. They are registered as a VAT payer with the tax authorities, however some countries operate a registration turnover and threshold system so that businesses do not register for small trading. In general, "output tax" is the value-added tax levied by a taxable person on sales (supplies) made “Input tax” is the value added tax incurred by a taxable person on purchases made.

Value Added Tax (VAT) Deliveries of goods and services are subject to VAT at rates ranging from 1% to 18%. The overall rate is 18%. The value added tax due on domestic purchases and imports is considered “input tax”, and the calculated and collected value added tax on sales is considered “output tax”. The input tax is offset against the output tax in the VAT return filed at the relevant tax office. If the output VAT exceeds the input tax, the excess is paid to the relevant tax office Conversely, if the input tax exceeds the output tax, the balance will be carried over to the following months to offset it against the future output tax except in a few cases, such as export And sales to the investment incentive holder, there is no cash back to recover excess input tax. Turkish VAT principles contain On the Reverse Charges VAT Mechanism, which requires VAT to be calculated by resident entities on payments to persons in foreign countries under this mechanism, VAT is calculated and paid to the relevant tax office by the resident entity as the resident entity is treated as a value tax This is added as input tax and offset in the same month. This VAT does not constitute a tax burden on the resident or non-resident entity, except for the cash flow effect on the first entity in the event that the output tax is not sufficient to offset the input tax. VAT is also collected at the point of import. The VAT rate is the same as the rate applied to transactions in the country of origin. The basis for VAT is the value of the goods for customs tax purposes plus any type of tax payable at the point of import and all expenses incurred until the single administrative document is recorded. Compliance with VAT in Turkey and its rates Compliance with VAT in Turkey There are detailed rules to control the registration and processing of Turkish transactions, and these include guidelines on: Turkish invoice requirements. Prepare and translate foreign currency reports Credit notes and corrections, and what accounting records should be kept. VAT refund in Turkey In certain circumstances, a non-resident company can apply for a VAT refund in Turkey. As of 2003, the Turkish VAT law states that an application can be submitted for a refund of VAT incurred on purchases of the following: Goods and services related to transportation activities. Goods and services related to participation in exhibitions. In order to apply for a VAT refund, the company's country of residence must have a reciprocal agreement with Turkey. However, the Turkish tax authorities have not published the countries to which this applies, and there is no confirmation that a claim will be accepted. Turkish VAT Return Periodic VAT returns must be submitted by all companies with a Turkish VAT number, indicating all taxable supplies (sales) and inputs (costs). Returns are usually provided monthly. The proceeds are due by the 24th day of the month following the end of the period and any liability associated with it by the 26th day. Businesses can choose to file VAT returns online or on paper. VAT rates in Turkey The standard rate of value added tax is 18%. A reduced rate of 8% has also been applied to: basic foodstuffs; medical products; books, etc., and a deeply discounted rate of 1% applied to: agricultural products; some residential real estate; newspapers and periodicals; and others.

The local name for VAT in Turkeyis Katma deger vergisi (KDV).

Turkey has one standard VAT rate of 18%, and two reduced rates of 1% and 8%. In addition, Turkey also applies 0% on certain transactions (this is called "totally exempt" since VAT is not due on output but input tax can be claimed).

Recent Developments A few months ago, a 1% VAT rate was discussed for construction under urban transformation projects. In addition, a VAT refund limit was set for transactions subject to a reduced VAT rate of 18,900 TL for tax year 2021 until May 31, 2021, Turkey applies The reduced value-added tax rate on certain goods and services. Special consumption tax rates have been increased on passenger cars, while value-added tax on education services has been reduced. Standard rate: 18% Turkey's previous standard VAT rate was 17% in 2000. It changed to the current level in 2001. This rate applies to all transactions, unless an exception is applied (such as a reduced rate, zero rate, exemption or reason to treat the transaction on It is outside the scope of VAT). Zero rate (0%) Turkey applies 0% (this is called "totally exempt" because no output tax is due but VAT can be claimed) on various exports of related goods and services, international transport, as well as supplies to persons engaged in petroleum exploration and to the Directorate of Defense Industry . Discounted rate: 1% Certain foodstuffs (eg cereals, legumes, agricultural products with high export potential (raisins, dried figs, dried apricots, etc.) Discounted rate: 8% certain foodstuffs Entry to cinemas, theatre, opera, ballet and museum pharmaceutical products Textile and apparel products Books (excluding e-books) Accommodation services Agricultural tools and equipment, some professional equipment, furniture

Sources and references https://www.avalara.com/vatlive/en/country-guides/asia/turkey/turkey-vat-compliance-and-rates.html https://taxsummaries.pwc.com/turkey/corporate/other-taxes https://www.vatupdate.com/2021/04/26/vat-rates-in-turkey https://www.verginet.net/UserFiles/File/pusula_serisi/VAT.pdf