For the sake of clarity, VAT levied on imports and domestic purchases is referred to as input VAT, while VAT related to sales is referred to as output VAT. These two values cancel each other out when filing a VAT return. If input VAT is exceeded, VAT refund is not made. Instead, balances are carried over to the next month. However, the situation may be different if the tax rate is reduced or the goods or services are completely exempt from taxation.
How to pay VAT when registering VAT in Turkey?
Turkish VAT registration must be done before any business or commercial activity takes place. Registration is carried out at the tax office in whose jurisdiction the permanent establishment or place of business is located. In the case of several companies, registration for VAT purposes must be carried out by the tax office competent in such cases.
The process of registration of a foreign legal entity must be completed by a local tax agent with the status of an authorized agent. Unlike many countries, in-person registration can be inconvenient due to language barriers, time-consuming and complicated processes, but it is not possible to register in person in Turkey.
Is registration always required?
Regarding the need to register for VAT in Turkey, the reverse charge mechanism if the organization is not registered can be confusing, as buyers of Turkish goods and services are required to pay VAT. Since the previous case applies mainly to B2B, B2C transactions, especially digital services that do not have a business center in Turkey, registration is required and must be carried out through a designated representative. Another incentive to register is the fact that only persons registered for VAT in Turkey purposes can import goods into Turkey. Turkey has laws that require any person carrying out activities subject to Turkish VAT law to be registered in Turkey. local tax office. there is no VAT threshold on turnover due to the obligation to notify. If you produce taxable goods, you are required to register them in Turkey for VAT purposes.
Three groups of Turkish VAT
Turkish VAT law provides for three groups of VAT rates. The base VAT rate is set at 18%, with two reduced rates of 8% and 1%. Products within your companys operations may be included in one of the discounted rates, so it may be worth checking out the detailed list of products and services. Income tax is set at 23%, but this is due to a temporary change. The main tax rate is 20% and it is expected to return to the base level in 2023 if no legislative changes are made. According to Turkish tax law, the tax rate for the financial sector is 25%.
The VAT in Turkey return must be filed by the 24th day of the month following the end of the tax period, and taxes must be paid on the 26th day of the same month. Turkey generally requires monthly VAT returns, even if there were no transactions subject to VAT and they were submitted in electronic or paper form.