Turkey VAT System – Complete Guide
📘 What is VAT in Turkey?
Value Added Tax (KDV – Katma Değer Vergisi) is a key component of Turkey’s tax system. It is levied on the sale of goods and services, as well as imports. Introduced in 1985, VAT in Turkey is regulated under Law No. 3065 and administered by the Turkish Revenue Administration (Gelir İdaresi Başkanlığı).
VAT is charged at each stage of the supply chain and input VAT can be claimed to avoid cascading tax effects.
📊 VAT Rates in Turkey
🔸 Standard Rate: 20%
Applies to most goods and services.
🟡 Reduced Rates:
- 10%: Basic food products, books, passenger transport, certain medical goods
- 1%: Specific agricultural products, newspapers, and essential foodstuffs
🚫 Zero-rated & Exemptions:
- Exports (zero-rated)
- Health and education services (exempt)
- Financial and insurance transactions (exempt)
🏢 VAT Registration in Turkey
✅ Mandatory Registration:
- Businesses must register for VAT in Turkey if:
- They carry out taxable supplies in Turkey
- They import goods into Turkey
- They are foreign companies providing taxable services in Turkey
There is no minimum turnover threshold for mandatory VAT registration.
🌍 Foreign Businesses:
Foreign companies without a permanent establishment must appoint a tax representative in Turkey to handle VAT compliance.
🌐 VAT on Digital Services in Turkey
As part of digital economy taxation reforms, Turkey imposes VAT on electronic services supplied by foreign businesses to Turkish consumers.
🧾 Scope Includes:
- Streaming and subscription services
- Mobile apps and software
- Cloud services and web hosting
- Online advertising and gaming
💼 Requirements:
- Foreign businesses must register electronically for VAT in Turkey
- VAT at 20% must be charged on B2C sales
- Monthly returns must be submitted via the Digital Service VAT system
🔢 Turkish VAT Number Format
Once registered, businesses receive a Turkish Tax Identification Number (TIN).
🧾 Format Example:
1234567890
The number is used for all tax filings, including VAT returns and e-invoicing.
🧾 VAT Invoice Requirements
All VAT-registered businesses must issue invoices with:
- Seller and buyer names
- Turkish Tax ID
- Invoice date and number
- Description of goods or services
- Net amount, VAT rate, and VAT amount
- Total amount due
Invoices must be generated via Turkey’s e-Fatura (E-Invoice) system for eligible businesses.
🧮 VAT Calculation Example
Example:
A company sells digital services worth TRY 10,000 to a Turkish resident:
- VAT @ 20% = TRY 2,000
- Total invoice = TRY 12,000
- If input VAT = TRY 500
- Net VAT payable = TRY 1,500
📅 VAT Return Filing in Turkey
🗓️ Frequency:
- Returns are filed monthly
- Deadline: 26th of the following month
💳 Payment:
- VAT must be paid by the same deadline as the return
- Payments can be made through authorized banks
Late filing results in interest and administrative fines.
📥 Imports & 📤 Exports
- Imports: Subject to VAT at the border, paid during customs clearance
- Exports: Treated as zero-rated, and input VAT can be claimed as a refund
🚫 VAT Exemptions in Turkey
Some transactions are exempt from VAT, including:
- Education and healthcare services
- Banking and insurance
- Cultural activities by public institutions
- Leasing of residential property
Note: Input VAT on exempt supplies is not recoverable.
✅ Compliance Tips
- ✔️ Register for VAT (mandatory for any taxable activity)
- ✔️ Use e-Fatura and e-Arşiv systems if required
- ✔️ Issue valid invoices with all legal details
- ✔️ File monthly VAT returns by the 26th
- ✔️ Stay updated with rate changes (last increase in 2023)
- ✔️ Keep digital records for at least 5 years
- ✔️ Appoint a tax representative if non-resident
📌 Conclusion
Turkey’s VAT system is evolving, especially in its treatment of foreign digital service providers and adoption of e-invoicing. Businesses whether local or international must ensure timely registration, accurate invoicing, and monthly return compliance to avoid penalties.
👉 Use our 🇹🇷 Turkey VAT Calculator at gstcal.org to calculate VAT accurately and stay compliant.