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VAT taxation in Turkey

Taxable transactions

VAT applies to the following transactions:

  • The supply of goods or services in the course of performing commercial, industrial, agricultural, or independent professional activities made in Turkey by a taxable person.
  • Goods and services imported into Turkey.
  • Deliveries and services arising from other activities specifically stated in law.

Tax payer

A taxable person is any person or legal entity that has VAT liability in Turkey. Any entity that has a fixed place of business or regularly carries out commercial or professional activities in Turkey must register in Turkey.

VAT registration is granted automatically by the tax Office when a business registers for corporate income tax purposes. VAT grouping is not permitted under Turkish VAT law, so legal entities that are closely connected must register for VAT individually.

A non established business may not register for only VAT. If a Turkish taxable person receives services from an entity that does not have a fixed place in Turkey, VAT is accounted for using the reverse-charge mechanism. The reverse charge applies if certain supplies subject to Turkish VAT are made by a person that is not resident in Turkey or that does not have a permanent establishment or headquarters in Turkey. It is a form of self-assessment for VAT through which the recipient of a supply of services accounts for the tax.

The reverse charge applies to the following services performed by non residents without a fixed place of business in Turkey:

  • Services of independent professionals, such as engineering, consulting, data processing, and provision of information.
  • Transfers of copyrights, patents, licenses, trademarks, know-how, and similar rights.
  • Import commissions.
  • Interest payments made to foreign entities other than banks and financial institutions.
  •  Rentals.
  • Transfer or assignment of the right to use capacity for the transmission, emission, or reception of signals, writings, images, sounds, or information of any nature by wire, radio, optical or other electromagnetic systems.
  • Other services not specified in this list but utilized in Turkey.

VAT rates

In Turkey, the following VAT rates are applied:

  • Standard rate: 18%
  • Reduced rates: 1% and 8%

Examples of goods and services taxable at 1%: newspapers and magazines, some foods and beverages, used passenger cars, financial leasing services (under certain conditions).

Examples of goods and services taxable at 8%: some foods and beverages, boks, pharmaceuticals and medical products, some construction equipment, ready-wear products, garments and textile products, admission charges for cinemas, theaters, and operas.

VAT Exemptions

Exemptions are classified in two different groups. The term “fully exempt” supplies refers to supplies of goods and services not subject to VAT and recovery or refund of the input VAT is possible (exempt with credit). “Partially exempt” supplies refer to supply of goods and services not subject to VAT but no right of input tax deduction.

Examples of fully exempt with credit supplies of goods and services are: exports of goods and services, international transport, etc.

Examples of partially exempt supplies of goods and services are: leasing immovable property by an individual, financial transactions, delivery of goods or performance of services in free-trade zones, etc.

Source: Turkish Revenue Administration

Taxable transactions

VAT applies to the following transactions:

  • The supply of goods or services in the course of performing commercial, industrial, agricultural, or independent professional activities made in Turkey by a taxable person.
  • Goods and services imported into Turkey.
  • Deliveries and services arising from other activities specifically stated in law.

Tax payer

A taxable person is any person or legal entity that has VAT liability in Turkey. Any entity that has a fixed place of business or regularly carries out commercial or professional activities in Turkey must register in Turkey.

VAT registration is granted automatically by the tax Office when a business registers for corporate income tax purposes. VAT grouping is not permitted under Turkish VAT law, so legal entities that are closely connected must register for VAT individually.

A non established business may not register for only VAT. If a Turkish taxable person receives services from an entity that does not have a fixed place in Turkey, VAT is accounted for using the reverse-charge mechanism. The reverse charge applies if certain supplies subject to Turkish VAT are made by a person that is not resident in Turkey or that does not have a permanent establishment or headquarters in Turkey. It is a form of self-assessment for VAT through which the recipient of a supply of services accounts for the tax.

The reverse charge applies to the following services performed by non residents without a fixed place of business in Turkey:

  • Services of independent professionals, such as engineering, consulting, data processing, and provision of information.
  • Transfers of copyrights, patents, licenses, trademarks, know-how, and similar rights.
  • Import commissions.
  • Interest payments made to foreign entities other than banks and financial institutions.
  •  Rentals.
  • Transfer or assignment of the right to use capacity for the transmission, emission, or reception of signals, writings, images, sounds, or information of any nature by wire, radio, optical or other electromagnetic systems.
  • Other services not specified in this list but utilized in Turkey.

VAT rates

In Turkey, the following VAT rates are applied:

  • Standard rate: 18%
  • Reduced rates: 1% and 8%

Examples of goods and services taxable at 1%: newspapers and magazines, some foods and beverages, used passenger cars, financial leasing services (under certain conditions).

Examples of goods and services taxable at 8%: some foods and beverages, boks, pharmaceuticals and medical products, some construction equipment, ready-wear products, garments and textile products, admission charges for cinemas, theaters, and operas.

VAT Exemptions

Exemptions are classified in two different groups. The term “fully exempt” supplies refers to supplies of goods and services not subject to VAT and recovery or refund of the input VAT is possible (exempt with credit). “Partially exempt” supplies refer to supply of goods and services not subject to VAT but no right of input tax deduction.

Examples of fully exempt with credit supplies of goods and services are: exports of goods and services, international transport, etc.

Examples of partially exempt supplies of goods and services are: leasing immovable property by an individual, financial transactions, delivery of goods or performance of services in free-trade zones, etc.

Source: Turkish Revenue Administration

Taxable transactions

VAT applies to the following transactions:

  • The supply of goods or services in the course of performing commercial, industrial, agricultural, or independent professional activities made in Turkey by a taxable person.
  • Goods and services imported into Turkey.
  • Deliveries and services arising from other activities specifically stated in law.

Tax payer

A taxable person is any person or legal entity that has VAT liability in Turkey. Any entity that has a fixed place of business or regularly carries out commercial or professional activities in Turkey must register in Turkey.

VAT registration is granted automatically by the tax Office when a business registers for corporate income tax purposes. VAT grouping is not permitted under Turkish VAT law, so legal entities that are closely connected must register for VAT individually.

A non established business may not register for only VAT. If a Turkish taxable person receives services from an entity that does not have a fixed place in Turkey, VAT is accounted for using the reverse-charge mechanism. The reverse charge applies if certain supplies subject to Turkish VAT are made by a person that is not resident in Turkey or that does not have a permanent establishment or headquarters in Turkey. It is a form of self-assessment for VAT through which the recipient of a supply of services accounts for the tax.

The reverse charge applies to the following services performed by non residents without a fixed place of business in Turkey:

  • Services of independent professionals, such as engineering, consulting, data processing, and provision of information.
  • Transfers of copyrights, patents, licenses, trademarks, know-how, and similar rights.
  • Import commissions.
  • Interest payments made to foreign entities other than banks and financial institutions.
  •  Rentals.
  • Transfer or assignment of the right to use capacity for the transmission, emission, or reception of signals, writings, images, sounds, or information of any nature by wire, radio, optical or other electromagnetic systems.
  • Other services not specified in this list but utilized in Turkey.

VAT rates

In Turkey, the following VAT rates are applied:

  • Standard rate: 18%
  • Reduced rates: 1% and 8%

Examples of goods and services taxable at 1%: newspapers and magazines, some foods and beverages, used passenger cars, financial leasing services (under certain conditions).

Examples of goods and services taxable at 8%: some foods and beverages, boks, pharmaceuticals and medical products, some construction equipment, ready-wear products, garments and textile products, admission charges for cinemas, theaters, and operas.

VAT Exemptions

Exemptions are classified in two different groups. The term “fully exempt” supplies refers to supplies of goods and services not subject to VAT and recovery or refund of the input VAT is possible (exempt with credit). “Partially exempt” supplies refer to supply of goods and services not subject to VAT but no right of input tax deduction.

Examples of fully exempt with credit supplies of goods and services are: exports of goods and services, international transport, etc.

Examples of partially exempt supplies of goods and services are: leasing immovable property by an individual, financial transactions, delivery of goods or performance of services in free-trade zones, etc.

Source: Turkish Revenue Administration

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