How is VAT accounted for in Turkey?

Running a business involves looking for new markets. Among the interesting possibilities is to expand the company’s sales to countries such as Turkey. This is an attractive target for an entrepreneur to attract the attention of a new group of customers. Turkey is a country with a low average age, which can be an excellent place for new investments. In order to make this possible, it is worthwhile to know, what are Turkey VAT rates and how the tax system in Turkey works?

Registering a company for VAT

The most important thing to know is that, in Turkey, registration of a company for VAT is required before starting a business. This is due to the local tax authorities’ view that only VAT-registered entities can import goods into Turkey. VAT registration takes place at the tax office with jurisdiction over the area in which the company’s main place of business or branch is located. In the case of foreign entities, the registration process must be completed by a local tax representative who has proxy status. In many cases, this is also necessary due to the language barrier.

VAT threshold and rates

There is no VAT turnover threshold in Turkey. Any entrepreneur who carries out activities subject to Turkish VAT law is required to notify the local tax office. Registration for VAT is mandatory if taxable supplies are made. There are 3 basic VAT rates. The basic one is 18%. Some goods and services are subject to reduced rates of 8% and 1%. Detailed lists of products assigned to the different Turkey VAT rates are published by the tax authority.

Deadlines for VAT returns

VAT returns must be submitted by the 24th of the month following the end of the accounting period. The tax itself must be paid on the 26th of the same month. It should be noted that the Turkish tax authorities expect the entrepreneur to submit VAT returns on a monthly basis. This is necessary even if no taxable transactions have taken place during this period. The returns can be submitted on paper or electronically. It makes accounting easier.

Benefits for entrepreneurs

It is worth adding that there are free zones in Turkey whose companies are exempt from VAT. A similar situation may apply to certain goods and services. Their supplies may be exempt, for example, healthcare-related services or the purchase of equipment related to research and development. However, local regulations can change dynamically, especially in recent years. Therefore, it is advisable to seek the assistance of specialized tax offices such as INTERTAX before doing business in Turkey. This way, running a business will not expose you to financial losses and all transactions will always be carried out in full compliance with the applicable law.