Turkish VAT SystemThe VAT has been valid since 1985 in Turkey. The Turkish VAT system is similar to the EU system, but it has significant differences. For example, the VAT refund is exclusive for exemptions, reverse charge mechanism, and reduced tax rate sales, such as food. If a company has lots of inventories, probably it must carry a VAT burden forever.
The Turkish VAT system levies sales of goods, imports, and services. Although VAT is a general tax, there are a lot of exemptions on the Turkish VAT system. VAT system has many exceptions that some of them are below.
Export exemption,
Petroleum and investment made under an investment incentive certificate,
Transit transportation,
Diplomatic exemption,
Social exemptions
Other exemptions (for example gold and jewelry sales)
Turkish VAT system has three different tax rates which are;
• 18 % standard rate,
• 8% reduced rate for deliveries and services mentioned in the list of II (for example some food products, books ext.)
• 1 % super-reduced rate for delivered and services specified in the list of I
(for example, some agricultural products such as raw cotton, hazelnut exc.)
Super reduced rate is used for tax security and social reasons. Reduced rates are used for social purposes.