VAT Registration in Turkey

VAT Registration in Turkey - 2024 Guide

Updated on Wednesday 31st January 2024

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Our lawyers in Turkey can provide information on how the VAT is applied in 2024 and how is the VAT registration in Turkey made, in respect with the applicable legislation. This aspect can be part of the business incorporation in Turkey, therefore, our specialists can offer immediate and complete guidance.

We can also help foreign entrepreneurs interested in opening businesses and immigration to Turkey.

Quick Facts
We offer VAT registration services	Yes
Standard rate	18%
Lower rates	8% for certain basic foodstuff, medical products, 1% for newspapers and magazines
Who needs VAT registration	Companies that sell goods and services (no threshold)
VAT for real estate transactions	18%
Exemptions available	- exports of goods, - cultural activities, - education, - charities, - machinery and equipment delivery
Period for filing	On a monthly basis
VAT returns support	Yes
VAT refund	Non-resident companies can apply for VAT refund, under reciprocal agreement
Local tax agent required	Yes, especially for foreign companies
Who collects the VAT	-retailers, - manufacturers, - wholesalers
Documents for VAT registration	- certificate of incorporation, - shareholder's documents, - other standard forms
VAT number format	10 digits
VAT de-registration situations	When the company closes its activities

Turkish VAT registration for a foreign company

Registration for VAT payment in Turkey is mandatory for foreign companies that carry out their activities in this country. There is also the imposed condition of applying for Turkish VAT registration for a foreign company before starting operations. Below you will find some formalities to take into account if you want to register for VAT in Turkey:

Presentation of company documents is required. Among them is the Certificate of Incorporation.
The fiscal authorities offer some standard forms that must be filled in with information about the company and its activities.
Companies with no establishment in Turkey and dealing with the sale of products situated in this country must appoint a fiscal representative, with residency in Turkey. This way, you can apply for a Turkish VAT registration for a foreign company, with or without an establishment in Turkey.
We remind you that after the VAT registration in Turkey, it is necessary to consider the VAT return each month.
It is important to remember that the authorities can impose penalties on companies that do not register for VAT payments.

One of our Turkish lawyers can represent you from a fiscal point of view for Turkish VAT for a foreign company, with a power of attorney.

VAT registration for a local company in Turkey in 2024

A foreign investor who registers his company for paying the usual taxes doesn’t have to register separately for VAT. The obligation of registering for VAT is applied for investors in commercial, industrial, agricultural and other independent activities. This procedure must be accomplished before doing business in Turkey, no matter the country of residence of the entrepreneur. A foreign investor must register his company for taxes even if he opens a branch or a subsidiary of his parent company.

If a foreign entity is not registered for paying taxes in Turkey, then the reverse charge mechanism is applied, but these companies can’t import goods or services into Turkey.

If you want to relocate to this country, alongside the company, please contact our immigration lawyers in Turkey.

How does the VAT apply in Turkey?

The value added tax enters the category of indirect taxes in Turkey as it is applied by commercial operators to the price of the services and goods they sell, and then it is charged to the final consumer. Turkish companies selling goods and services will need to register for VAT, collect the amount of money corresponding to the product or service sold and then transfer it to the tax authorities. Companies collecting VAT in Turkey must comply with specific requirements, among which:

issue invoices to the clients, the invoices must clearly state the amount of money collected as a VAT;
keeping accurate accounting documents related to the collection and transfer of the VAT;
file tax returns through which any VAT amount paid in excess is recovered by the company;
respect the requirements imposed on the tax base under which the VAT is imposed.

It is advisable to talk to one of our lawyers in Turkey for more information on the legislation related to the VAT registration in Turkey in 2024. You can also discuss details about immigration to Turkey, if interested.

VAT compliance in Turkey

In order to pay the Turkish value added tax, individuals and companies supplying goods and services are required to register with the tax authorities and obtain a VAT number. The VAT will be imposed on specific transactions, among which the delivery of goods and services, the import and export of specific goods, rental activities, organization of lotteries or other games of chances, activities related to the organization of various events, such as concerts and sports activities, and the sale of goods and services.

An important aspect to be considered when it comes to VAT registration in Turkey is that there is no minimum registration threshold in this country. This means that each taxpayer, no matter the amount of money charged as VAT, is required to register with the tax authorities.

In Turkey, transactions by licensed banks and insurance companies are commonly exempted from VAT. However, such transactions are subject to Banking and Insurance Transaction Tax or BITT at a rate of 5% in general. For some transactions, the BITT ranges from 0% to 1%.

VAT rates in Turkey in 2024

The standard rate for VAT in Turkey is 18%, but there are reduced rates for some goods and services and exemptions. For the following products, the VAT is 8%:

food;
textile;
raw for products sold in pharmacies;
accommodation in tourism entities, such as motels, hotels or every other unit that offers similar facilities.

The lowest VAT rate is 1% and is available for some agricultural products. In Turkey, there are a few exemptions from VAT and they are related to exports, international transportation, roaming for clients outside Turkey, equipment delivered to entrepreneurs who own an investment incentive certificate and who pay VAT, specific services in harbors and airports. The government and other public entities can deliver goods for educational, cultural and health purposes without the obligation of paying VAT. The same exemption is valid for services in free zones and for banking and insurance transactions.

Import of goods and services in Turkey is subject to the VAT, regardless of the nature of the transaction or the status of the trader. As such, the VAT is imposed only on the import of goods and services that are accountable to tax within Turkey. This measure helps to balance the tax burden on the import and domestic supply of goods and services in Turkey.

We remind that our immigration lawyers in Turkey can help you with company relocation.

The content of the invoice in Turkey

Once you register for VAT payment in Turkey, you can issue invoices for the products and/or services offered. An invoice of this nature should include the following information:

Details about the company, such as its name, unique tax id, and business address in Turkey.
VAT ID number of 10 digits.
Invoice unique number.
Description of products and services purchased.
Applicable VAT amount and the rate for the category of goods.
Price without VAT and price with VAT included.
Total amount due.

Electronic invoices can be issued by any business as long as it uses dedicated software and programs (TRA program required), as paper invoices are not legally valid, according to the legislation modifications made in 2020 in Turkey. More about the Turkish VAT registration for a foreign company can be discussed with one of our lawyers in Turkey.

The VAT on imports in Turkey is subject to the same rates applicable to the local supply of goods and services. More about the taxation of imports and exports of Turkey which includes the VAT can be discussed with our local lawyers. They know the legislation and can provide suitable guidance.

Foreigners interested in immigration to Turkey are advised to ask for specialized advice from our local lawyers. As there is a series of formalities for which legal help is needed, our experts can take care of the paperwork for obtaining the necessary visa. Thus, those interested can apply for work, tourism, business, or study visa. Next comes the application to obtain the residence permit.

Goods exempt from the VAT in Turkey

Turkey is a very advantageous country from a taxation point of view, especially when it comes to the value added tax. This is because many goods and services are exempt from the VAT. In other cases, the VAT can be credited after it has been paid. The following goods and activities benefit from VAT exemptions in Turkey:

cultural and educational activities are exempt from the VAT if they are provided by public authorities, if they encourage innovation, or if they bring any improvements;
goods sold by sole traders who benefit from tax exemptions under the provisions of the Income Tax Act;
the delivery of goods produced by farmers, as long as they are exempt from taxation under the Income Tax Act;
incomes generated by real estate rentals, as long as the property is not a company’s asset;
the delivery of gold, silver, and other precious metals, as long as they are deemed as mass deliveries;
various goods and services destined for export, such as vehicles also benefit from VAT exemptions.

Turkey also has many free zones in which companies are exempt from the VAT. Among these, we name the Antalya Free Zone, the Istanbul Atatürk Airport FTZ, the Istanbul Stock Exchange (ISE) International Securities Free Trading Zone and the Corlu European Free Zone. Starting with 2018, a few changes have been brought to the VAT Law in Turkey.

Among these, the most important ones refer to several VAT exemptions related to the delivery of goods to duty-free shops, the delivery of goods and services donated for the construction of public interest facilities such as schools and hospitals.

Specific healthcare services offered to foreigners are also exempt from the VAT. The purchase of equipment and machinery used for research and development activities in specific zones are also on the list of VAT-exempted goods. Starting with 2019, the delivery of software for gaming activities in technology zones are also exempt from the value added tax in Turkey.

When is VAT registration required?

The registration for VAT is mandatory for both local and foreign enterprisers involved in commercial activities in Turkey. These are required to obtain a VAT number if:

they import goods into Turkey;
they export goods outside Turkey;
they supply services and goods in Turkey.

It should be noted that compared to other countries, there is no VAT registration threshold in Turkey, meaning there is no exception to companies delivering taxable products and services in this country.

Companies who fail to pay the VAT can be subject to penalties of 2.t5% for each month. Late filing of tax returns is also subject to penalties of 10% and 20% if the declarations are submitted more than 30 days after the statutory period in Turkey.

Filing VAT returns in Turkey

All traders must file VAT returns on a monthly basis with the tax authorities. The return must be filed on the 24^th of the following month and the tax must be paid by the 26^th of the same month for the previous taxation period. This requirement must be fulfilled even if the company has not supplied any taxable goods or services. Local companies can recover the VAT paid in Turkey, however, this mechanism is not available for foreign companies with commercial activities here.

Foreign companies can reclaim the VAT paid in Turkey only if the resident country has signed an agreement with Turkey for this purpose. At the moment, there are several countries in the EU which have signed such agreements. We remind you our support for VAT registration in Turkey.

What is digital services tax or DST in Turkey?

DST set at 7.5% is imposed on digital service providers in Turkey, if they exceed a global revenue threshold of around EUR 750 million or TRY 20 million, as local revenue. The services that are subject to this kind of tax refer to visual or digital content like music, video games, computer programs, digital advertising services, and intermediary services offered by a digital platform to other digital services suppliers in Turkey.

We also mention that the basis of this digital services tax is calculated considering the amount of income obtained from digital services in the relevant fiscal period in Turkey. In addition, there are no deductions for such a fee or expenses involving the products and/or services mentioned above.

The VAT principles in Turkey implicate the reverse-charge VAT mechanism. This solicits the VAT calculation by resident companies on payments to persons in foreign states. Considering this system, the VAT is calculated and paid to the relevant tax institution by the resident company.

What penalties are imposed for misdeclarations of VAT

According to the tax legislation in Turkey, entities that make misdeclarations or late filings are liable to penalties. Among them, we mention:

Around EUR 300 for self-employed and first-class traders.
About EUR 150 for merchants whose profits are established in a simple method.
Around EUR 75 for other categories of businesses in Turkey.

In other cases, the authorities can impose special irregularity penalties and even imprisonment. But in order to avoid such legal problems, we suggest you talk to one of our tax advisors in Turkey so that you can stay up to date with the fiscal modifications, VAT registration in Turkey, payments, and more.

The import of goods and services is a taxable transaction, whether the import is made for business purposes or not. On the other hand, the export transactions are not subject to VAT, the VAT input being made with refunds or credit.

Short facts about double tax treaties in Turkey

The necessity of avoiding the double taxation on profits stands at the base of numerous double taxation agreements signed by Turkey with countries worldwide. The VAT, the corporate income tax, and the dividend tax are among the taxes protected by the above-mentioned double taxation agreements signed by Turkey. Estonia, Czech Republic, the Netherlands, Israel, Ethiopia, Finland, Greece, Latvia, New Zealand, Hungary, France, Singapore, Poland, Korea, Germany, Albania, Austria, Australia, Belarus, Norway, Montenegro, Saudi Arabia, Lebanon, Serbia and Montenegro, Malaysia, Japan, Morocco, Spain, Romania, Slovenia, Sweden, Croatia, Macedonia, Italy, Bulgaria, Qatar, and Thailand are among the countries with which Turkey signed double taxation agreements.

The avoidance of double taxation can be made with the help of the deduction method for a company that paid the taxes in one of the countries, or the tax exemption method in the same conditions. For those wanting to know more about the taxes in Turkey, how the VAT registration in Turkey is made, and about the double taxation treaties, our lawyers in Turkey stand at their disposal.

Short facts about the corporate tax in Turkey

The corporate tax in Turkey is set at a 22% rate and it is among the lowest taxes in the world and a benefit for international investors interested in making business in this country. Just like in all countries that impose the corporate tax, this is the main tax in Turkey that owners of companies in this country need to consider. We remind that the corporate tax applies to the profits of companies with establishments in Turkey, except for the partnerships.

Knowing the tax structure before engaging in a business in Turkey is mandatory for both local and international entrepreneurs, so complete guidance and information can be offered by one of our advisors. We can also provide accounting services, on request, for companies registered in Turkey.

Tax minimization tools in Turkey

Reducing the amount of taxes in Turkey enters the attention of foreign investors in this country who can consider the advantages of tax minimization methods available. All sorts of financial strategies can be implemented in the firm, with complete support of an advisor who must know the company and its expenses. In this sense, an experienced accountant can be hired for your company in Turkey and asked about the tax minimization tools that can be used in the firm.

For instance, paying in advance a credit or a loan to cut a part of the fees or making a donation in assets or cash can be among the tax minimization methods that can apply in the company. Also, making investments in the company’s equipment can be subject to tax exemption. The reinvested profits in the company are not subject to taxation, so this might be a useful tax minimization tool for entrepreneurs with businesses in Turkey. If you would like to receive a correct and suitable business and an investment tax planning comprising tax minimization methods, do not hesitate to talk to one of our advisors.

Making investments in Turkey

Located on two continents, Europe and Asia, Turkey is an important business destination for international investors who want to generate profits in this part of the world. The economic stability and the wide range of opportunities are among the strongest points of Turkey when it comes to the interest of making investments.

Alongside these, the skilled and trained workforce, the developed infrastructure and transportation, the low operational costs, the appealing tax structure, the simplified methods through which a company can be registered play a major role when deciding for business in Turkey. The agricultural and the tourism sectors are well-developed and two important areas that sustain the gross domestic product in Turkey. Below you can find interesting information and statistics about the investments and the economy in Turkey:

Turkey is considered the second largest FDI recipient found in the western part of Asia, according to the UNCTAD 2019 World Investment report.
Around USD 165 billion was the total FDI stock for Turkey in 2019.
World Bank ranked Turkey 43rd out of 190 worldwide economies.
Most of the investors in Turkey come from a European country, but the USA is also an important player.
Between January and March 2019, Turkey received most of the investments from Azerbaijan.
Retail and wholesale trade are two important sectors where foreign investments are directed.

If you need more details about the VAT registration in Turkey in 2024 or any other information about the taxes in Turkey, you may contact our Turkish lawyers. You can also rely on us for complete business registration services in Turkey. We can also help yout if you want to buy a property in Turkey.