VAT Recovery in Turkey : financial leverage for international businesses
Turkey, a dynamic economy and gateway to Asian and European markets, is attracting an increasing number of international companies. Whether for production, distribution, or partnerships, many businesses are choosing to invest in Turkey. However, one often underappreciated aspect is the VAT recovery in Turkey on locally incurred expenses. This mechanism can provide a significant financial leverage to optimise costs.
Turkish VAT : Applicable Rates
Turkey applies a standard VAT rate of 20%, with reduced rates of 10% on food, clothing, and pharmaceutical products, and 1% on newspapers, magazines, and basic food items. For international companies, claiming a VAT refund in Turkey can be an effective way to recover part of the costs related to their operations in this country.
Which companies can obtain a VAT refund in Turkey?
VAT recovery in Turkey is not limited to local businesses. Foreign companies can also benefit from it, under certain conditions:
- Having no taxable operations in Turkey
- Having no permanent establishment, legal address, or tax residence in Turkey
- Being VAT registered in the country of establishment
- Having incurred the related expenses for business activities
Eligible Expenses
Unlike Turkish taxpayers, foreign companies can obtain a VAT refund in Turkey only on the following expenses:
-Fuel, spare parts, and vehicle repairs for international transport companies
-Expenses of cinematographic companies approved by the Ministry of Culture and Tourism
-Fairs and exhibitions expenses of companies from foreign countries having a VAT reciprocity agreement with Turkey
Turkish VAT on fairs and exhibitions
The VAT recovery on fairs and exhibitions in Turkey is only possible if the foreign company’s country of establishment grants equivalent refunds to Turkish companies. As the reciprocity is officially recognised with France, Norway, Switzerland, as well as with some other countries, French, Norwegian and Swiss companies can claim the VAT refund in Turkey on their expenses directly related to fairs and exhibitions: rental of exhibition spaces or stands, ancillary services and supplies, accommodation during the event, etc.
How to obtain a VAT refund in Turkey?
The process of the VAT recovery in Turkey involves several steps:
- Verification of the company’s eligibility
- Identification of refundable expenses
- Selection of eligible invoices and verification of their compliance
- Obtaining the certificate of VAT registration from the company’s country of establishment
- Preparation and signature of the Turkish VAT refund claim form
- Identification of the competent Turkish tax authority
- Submission of the Turkish VAT refund claim within a 2-year period (by December 31 of the second year following the year of the expenses)
Our VAT recovery solutions in Turkey
BTOBNICE accompanies companies in their VAT recovery in Turkey, taking care of all the steps of this long and tedious process.
Indeed, VAT recovery in Turkey involves many technical and administrative aspects. Turkish tax rules can be complex, and the procedure requires direct interaction with local tax authorities.
It is crucial to ensure that the procedure complies with current tax standards. Insufficient management of the process can result in delays or denials of VAT refund in Turkey. This is where a VAT recovery expert can make a difference.
Our specialised consultants understand the intricacies of the Turkish tax system, which helps maximising the chances of efficiently VAT recovery in Turkey.
In addition to recovering VAT in Turkey, a consultant can help identifying other tax opportunities in the country, contributing to a more optimal tax management strategy.
If your company incurs expenses in Turkey and you want to know if you are eligible for Turkish VAT refund, do not hesitate to contact us for discovering our solutions tailored to your needs: contact@btobnice.com
