Important changes in the Turkish VAT system

International Tax Review is part of Legal Benchmarking Limited, 4 Bouverie Street, London, EC4Y 8AX

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Important changes in the Turkish VAT system

intl-updates

The Turkish government has introduced a draft law amending the Turkish VAT Law. This is the most comprehensive amendment to the Turkish tax system since the VAT Law was first introduced in 1986.

The draft law has been submitted to the Turkish Grand Assembly for approval and it is expected that this draft law amending the Turkish VAT Law will be enacted.

We understand that the draft law introduces full VAT exemptions for:

  • Deliveries and services to donors;

  • Warehousing and terminal services;

  • Health services offered for non-residents; and

  • Delivery of machinery and equipment to research and development (R&D) centres and technology development zones (TDZs);

and partial VAT exemptions for:

  • Conversion of partnerships to equity companies; and

  • Delivery of apparel clippers.

However, the most important changes in the Turkish VAT system are related to deferred VAT, which is not refundable under the existing law, and to the period for VAT deduction.

A new VAT mechanism, which allows group VAT liability, will be introduced to the Turkish VAT system as well.

Deferred VAT will be refundable

Under the existing VAT Law, excess amounts of input VAT can be deferred to the following tax period, but VAT refunds are not available. This has been creating huge problems in the Turkish VAT system.

With the new provisions of the draft law, excess VAT can be deferred and if it cannot be deducted within a 12-month period it will be refunded on the condition that the taxpayer claims the VAT and applies for a refund within six months following the relevant 12-month period.

VAT deduction period is extended

Under the prevailing VAT Law, the right to deduct VAT can be exercised during the period in which the relevant documents are entered in the company books, provided that the VAT deduction takes place within the same calendar year that the action subject to the VAT occurred.

This will be changed under the draft law which provides an extension of the VAT deduction period. Accordingly, it will be possible to exercise the VAT deduction up to the end of the calendar year following the calendar year in which the taxable event took place provided that the relevant documents are entered in the company books in line with prevailing laws.

Introduction of group VAT liability

The draft law introduces a new VAT mechanism that allows group VAT liability. In this regard, the Ministry of Finance is authorised to register 'group VAT liability', which allows corporate income taxpayers to file a consolidated VAT declaration for all group companies.

Under this mechanism, it is required that a company holds at least a 50% share of group companies. Companies will also be able to deduct the VAT of other group companies as they compute their own VAT base.

A company may register for group VAT liability and will be responsible for the assessment of group VAT. Nevertheless, all members of the group are jointly responsible for the VAT payment.

This mechanism is optional. For that reason, we recommend that companies evaluate their VAT position before applying for this mechanism.

Outlook

The draft law introduces comprehensive changes in the Turkish VAT system. For instance, game development in TDZs is exempted from VAT. Thus, it is advisable that taxpayers monitor these expected VAT changes with a view to determining their VAT position in Turkey.

gozluklu.jpg
bicer.jpg

Burçin Gözlüklü

Ramazan Biçer

Dr Burçin Gözlüklü (burcin.gozluklu@centrumauditing.com) and Ramazan Biçer (ramazan.bicer@centrumauditing.com)

Centrum Consulting

Tel: +90 216 504 20 66

Website: centrumauditing.com

more across site & shared bottom lb ros

More from across our site

The ruling is ‘well-structured’ in its references to the OECD TP guidelines, one expert says, while another argues it overlooks key technical issues
India also brokered its first-ever multilateral APA last year, the Central Board of Taxes announced
A global tax framework may not materialise anytime soon, but a common set of principles is becoming increasingly necessary, Rudolf Winkenius also tells ITR
Kingsley Napley’s claimants are arguing that taxing the provision of education breaches the European Convention on Human Rights
While pillar two can progress without the US, it won’t reach the same heights without American involvement, argues Renáta Bláhová, founding partner of BMB Partners Taxand
There are unanswered questions as to how foreign investors could reclaim money via tax credits, advisers suggested
Amid an ever-changing tax environment, India’s advisory market is bustling with competition ahead of the 2025 World Tax rankings and ITR Awards
The deal comes after PwC had accused Paul McNab of using confidential information; in other news, McDermott hired a new London tax head from a US rival
Looking at transfer pricing simplification is “obviously helpful”, but it should be done in line with current standards, a senior government figure reportedly said
The UK Government’s plans to close the tax gap via increased HM Revenue and Customs investment have failed to impress local tax advisers
Gift this article