VAT (Value-Added Tax)

The Turkish taxation system levies value-added tax (VAT) on the supply and the importation of goods and services.

Liability for VAT arises when:

a. A person or entity performs commercial, industrial, agricultural, or independent professional activities within Turkey

b. Goods or services are imported to Turkey

VAT is levied at each stage of the production and distribution process. However, while liability for the tax is levied on the person who supplies or imports goods or services, the real VAT burden is on the final consumer. This result is achieved by a tax-credit method where the computation of the VAT liability is based on the diference between the VAT liability of a person on his/her sales (output VAT) and the amount of VAT that he/she has already paid on his/her purchases (input VAT).


VAT taxpayers are deined in the VAT Law as those engaged in taxable transactions, irrespective of their legal status or nature and their position with regard to other taxes.

The following people or entities are liable for VAT:

– Those supplying goods and services

– Those importing goods or services

– Those required to complete customs formalities in case of transit of goods through Turkey

– Corporations supplying postal services and radio/television services

– Organizers of any kind of chance and gambling

– Organizers of shows, concerts, and sporting events with the participation of professional artists or professional sportsmen

– Lessors of goods and rights stated in Article 70 of the PIT Law

– Applicants for optional tax liability

Goods and rights set out in Article 70 of the PIT Law include immovable property such as land, buildings, mines and rights that are in the nature of immovable property and other goods and rights such as all kinds of motor vehicles, machines and equipment, ships, literary, artistic and commercial copyrights, commercial or industrial know-how, patents, trademarks, licenses and similar intangible properties and rights.


In the event that the taxpayer is not resident or does not have a place of business, a legal head oice, or place of management in Turkey, or in other cases deemed necessary, the Ministry of Treasury and Finance is authorized to hold anyone involved in a taxable transaction responsible for the payment of tax.

According to the VAT Law, there is a so-called reverse charge VAT mechanism, which requires the calculation of VAT by resident companies over payments made abroad. Under this mechanism, VAT is calculated and paid to the related tax office by the Turkish company or customers on behalf of the non-resident company (foreign company). On the other hand, the local company treats this VAT as input VAT and ofsets it in the same month.

– Toll-manufacturing and ready-made materials (textiles) are subjected to partial withholding: Only 50% of the calculated VAT is paid to the seller by the purchaser. Therefore, the purchaser will be responsible for paying 50% of calculated VAT to the tax oice directly.

– Junk metal, waste paper, junk plastic material deliveries are exempted from VAT. As it is the case with the above mentioned exemption, the purchaser pays 50% of the calculated VAT to the seller. Therefore, the purchaser will be responsible for paying 50% of the calculated VAT to the tax oice directly.


The taxable base of a transaction is generally the total value of the consideration received, not including the VAT itself. The VAT Law deals with the taxable base under four headings, namely the taxable base on deliveries and services, on importation, on international transportation, and special types of taxable base.

In the case that a consideration does not exist, is unknown, or is in a form other than money, the taxable base is the market value. The market value is the average price payable in the market for similar goods and services and is determined with reference to the Tax Procedure Law.


The following elements are not included in the taxable base:

a. Discounts, in amounts in compliance with customary commercial practices, in transactions of delivery and service shown on invoices and similar documents

b. The VAT calculated.


The standard rate of VAT on taxable transactions is set at 18% in the VAT Law.

Lower VAT rates are as follows:

For the deliveries and services speciied in List No. I …………….1%:

For agricultural products sold as raw materials, financial leasing transactions (except for automobiles and planes), newspapers/ periodicals, delivery of used (second-hand) vehicles (including cars, land vehicles, racing cars, golf cars, jeeps, motorized caravans, vehicles with electrical or gas motors), deliveries of houses with an area up to 150 square-meters, construction work performed for housing cooperatives, housing construction work (only for houses with an area up to 150 square-meters) performed for Social Security Institutions and municipalities, fees for Transfer of Operation Rights (TOR) determined according to the TOR Agreement concluded within the scope of Law No. 3096 (usually for transfer of operation rights of power plants), funeral services, deliveries of blood used for human health, deliveries of penetration asphalt (except for cut-back asphalt), frozen animal sperm for artiicial insemination, certiied fruit saplings.

For the deliveries and services speciied in List No. II …………….8%:

For deliveries of basic foodstuf, tickets for movies, theatre, opera and ballet, education services provided by private universities, schools and day-care centers for children licensed by the relevant ministry, deliveries of books, deliveries of infant foods and vaccines, human medical products licensed for selling with a prescription or permitted to be imported by the Ministry of Health, plant protection

products licensed for agricultural distress by the Ministry of Agriculture, veterinary products (except veterinary cosmetics) licensed by the Ministry of Agriculture and Forestry, textile products and raw materials of textile products including leather products such as bag, belt, shoes, and etc.


VAT is collected at every stage of the production and distribution process from the initial sales by the producer to the final sales to the consumer. At each of these stages, the amount of tax payable is the diference between the total amount of tax charged on the invoices issued by the taxpayer and the total amount of tax charged on the invoices issued to the taxpayer during the same period. Thus, the VAT is initially computed by applying the appropriate rate of taxation to the taxable base for goods and services supplied by the taxpayer during a taxable period. This amount is then reduced by a credit for VAT previously paid on importation and on goods and services supplied to the taxpayer.


VAT (input VAT) shown on the invoices and similar documents related to the transactions exempted from tax, such as:

– Exportation of goods and services

– Roaming services rendered in Turkey for customers outside Turkey (i.e. non-resident customers) in line with international roaming agreements, where a reciprocity condition sought for

– Contract manufacturing for clients operating in free zones

– Petroleum exploration activities

– Services rendered at harbors and airports for vessels and aircrafts

– Supply of machinery and equipment within the scope of an investment certiicate

– Transit transportation

– Deliveries and services made/ofered to diplomatic representatives and consulates on condition of reciprocity and to international organizations with tax exemption status and to their employees

– Banking and insurance transactions subjected to Banking and Insurance Transactions Tax

Those exemptions are deducted from the VAT (output VAT) to be calculated over the transactions of the taxpayer subjected to VAT.

In the absence of transactions subjected to VAT, or if the output VAT is less than the input VAT, then the input VAT that cannot be deducted is refunded to those who perform such transactions, on the basis of principles to be determined by the Ministry of Treasury and Finance.

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