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Summary

Standard VAT rate: 18%
E-Invoicing: mandatory
Real-time reporting: mandatory
Digital service tax: yes

Compliance and rates

 

VAT number format

Turkish VAT number format is 10-digit taxpayer identification nuber. If the company name starts with A, the first digit is 0; if starts with B, it is 1; if it starts with Y or Z it is 9, hence fort.

 

VAT rates

The standard VAT rate in Turkey is 18%, with reduced rates of 8% and 1% on certain goods and services.

18% (Standard) – Applies to all taxable supplies, with certain exceptions

8% (Reduced) – Some existential foodstuffs, pharmaceutical products, books (excl. e-books)

1% (Reduced) – Some existential foodstuffs, newspapers and periodicals

0% (Zero) – Exportations

 

VAT payments and returns

Every taxpayer who is issuing invoices is obliged to submit a VAT declaration. Declarations are submitted electronically, via https://ebeyanname.gib.gov.tr/index.html portal.

VAT Declaration

Monthly – VAT return should be submitted until 26th of the following month.

If the taxpayer has the amount to pay ready, they should pay to the tax office monthly, immediately after the declaration(no later than 26th of the following month).

VAT Returns

If the taxpayer owes tax, it is not refunded, but accumulated to next reporting month.

 

Penalties in case of late filings or misdeclarations

There are 4 types of penalties envisaged by the TP Law:

  • Tax loss fine
  • Irregularity
  • Special irregularity penalties
  • Imprisonment

For the entities who avoid, do not comply with the preservation and submission duties of the Tax Procedure Law and those who do not comply with the obligation of electronic notification and declaration, following penalties will apply:

  • ₺2,300 (EUR 300) – for first-class traders and self-employed
  • ₺1.200 (EUR 150) – merchants, farmers who keep books and those whose earnings are determined in simple method
  • ₺600 (EUR 75) – for other than mentioned above

A special irregularity penalty of 5% of the amount subject to the transaction is reduced for each of the taxpayers who do not comply with the obligation to verify their collections and payments with documents issued by banks, similar financial institutions or postal administrations.

 

Invoice requirements

Invoices must contain at least the following information:

  • supplier / issuer data (company name, address, tax number, bank information)
  • customer data (address and other data if available, tax number)
  • The word “Invoice”
  • a unique number of the invoice
  • date of invoice issuance
  • Currency, must be the same currency as stated in the Purchase Order
  • full description of goods and services provided
  • rate and amount of VAT applicable for the category of goods and services provided
  • the net, taxable value of the invoice
  • the invoice total, gross amount

 

E-Invoicing

As of January 2020 paper invoices are not legally valid and it will be mandatory to use electronic invoices.

The E-arşiv Fatura is the electronic invoice that businesses must send all customers not logged in the TRA. Companies must send these invoices to recipients electronically.

E-Irsaliye or e-deliveries must be declared over the TRA portal by businesses obliged to invoice electronically.

Electronic invoicing requirements

Companies that want to invoice in Turkey must sign up to the TRA using their VKN tax ID code. They also have to complete a number of documents published on the government portal. Their tax advisors will determine exactly what information to send.

Companies must have the digital certificate of an individual and an electronic seal of the company and file their articles of association with the firm’s Notary.

 

Real-time reporting

Mandatory for everyone as of Jan 2020.

Once authorized by the TRA, companies submit invoices in UBL-TR 1.2 format over the TRA portal. The process is automatic and immediate if you use invoicing platforms. E-invoices have to be securely archived for 10 years to ensure long-term document integrity. That is why it is necessary to digitally sign stored documents in line with the XADES standard.

 

Digital service tax (DST)

Services subject to the digital services tax include:

  • Digital advertising services—including advertising control and performance measurement services, data transmission and management related to users, and technical services for the presentation of advertising
  • Sales of any audible, visual or digital content—including computer programs, applications, music, video, video games, etc. as well as services provided for listening, watching, playing or recording or using such content by use of electronic devices
  • Services for the provision and operation of a digital platform by which users may interact with each other—including services to sell or facilitate the sale of a good or service among these users
  • Intermediary services provided by a digital platform to “the digital service providers” for the services noted above also can be subject to the digital services tax in Turkey.

Persons subject to the digital services tax (that is, the taxpayer) are those that, either individually or on a group-wide basis, meet both of the following conditions in the calendar year before the year when the taxable revenues are obtained:

  • Total worldwide revenue of not less than €750 million (or an equivalent amount)
  • Revenue of not less than TRY 20 million (approximately €3.137 million) obtained in Turkey from the digital services (as defined above)
  • Regardless of the taxpayer’s residence, a permanent establishment or registered head office or business center in Turkey can be liable for the digital services tax.

The rate of the digital services tax is 7.5%, but the president has authority to reduce this rate downward to 1% and to increase the rate of up to two-fold the applicable rate of 7.5%.

The tax base of the digital services tax is the amount of revenue obtained from the digital services during the relevant tax period. No deductions are available for expenses, costs or tax.

Turnkey invoice compliance.

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