Tax rate by region Turkey

Select region

Understanding SaaS Sales Tax in Turkey: A Comprehensive Guide

Turkey’s robust tax system includes Value Added Tax (VAT), implemented in 1984 to streamline tax administration and promote compliance. Businesses offering Software-as-a-Service (SaaS) in Turkey must navigate VAT regulations with precision to ensure adherence and optimize financial management. This guide provides a detailed exploration of SaaS sales tax in Turkey, empowering businesses to navigate the complexities with clarity.

The standard VAT rate for SaaS services in Turkey stands at 18%. This applies to most digital offerings within this category. Notably, specific products and services enjoy a reduced 8% VAT rate, including e-books, newspapers, and educational publications in digital formats. While these categories are exempt, businesses should always stay abreast of any updates or modifications to the applicable VAT rates. E-invoicing has become mandatory, adding a layer of efficiency and security to the process.

Compliance requires meticulous attention to detail. VAT returns must be filed monthly and submitted electronically. Payments are expected by the 26th of the following month to avoid penalties or complications. Businesses are mandated to retain specific records for a minimum of five years. This includes issued sales invoices, received purchase invoices, copies of filed VAT returns, and supporting payment documents. Additionally, customs documents and accounting records must be available for audit purposes. Maintaining meticulous documentation is essential to demonstrate compliance and avoid potential risks.

Turkey

Turkey adopted a VAT system in 1984 to improve tax compliance and modernize its tax administration.

Official government link: Revenue Administration

18.00%

E-products and services VAT/Sales tax rate

8.00%

Reduced tax rate

Reduced tax rate product categories

1% for the electronic supply of newspapers or magazines.
10% for the electronic supply of books and similar publications.

Exempted product categories

E-books, including newspapers, magazines, and textbooks in electronic form

Reverse charge mechanism for B2B sales

Yes

Tax ID validation required

Yes

When do you have to register

Registration is a requirement

Online registration possible

Yes

Local representative needed

–

Registration procedure

Non-residents can easily register for VAT online through a simplified process. While appointing a local tax representative isn’t mandatory, it might be beneficial for smoother compliance.

List of digital and electronic services liable for tax

Provision of websites, webpages, domain names, web hosting, and related services.
Remote maintenance of software and equipment, system management, and online data storage.
Sale of software and digital products, including access, downloads, and updates (e.g., antivirus programs, ad blockers, device drivers, and website filters).
Supply of images, texts, information, and database preparation services.
Provision of music, movies, games (including gambling and chance games), applications with cultural, political, sports, art, scientific, and entertainment content, and in-app purchases via computers, mobile phones, or similar devices.
Supply of distance learning services.
Radio and TV broadcasting services.
Other internet or electronic network services similar to those mentioned above.

Penalties

Late Filing Penalty: If a VAT return is not filed on time, a penalty of TRY 2,500 is imposed for each missed return.
Late Payment Interest: For late payment of VAT, interest is charged at a rate of 1.6% per month on the outstanding amount.
Undeclared VAT Penalties: There are variable fines for undeclared VAT, which can be significant depending on the amount of tax that was not reported.
Irregularity Penalties: Late filing and other non-compliance issues may be classified as irregularities, leading to additional penalties under the Turkish Tax Procedure Act. Late filing is considered a first-degree irregularity, which can incur lump-sum penalties that vary each year.
Tax Loss Penalty: If a tax loss occurs due to non-compliance, a penalty equal to the amount of the tax itself may be applied.
Non-Compliance with Electronic Declaration: Failure to comply with electronic declaration requirements can result in a special irregularity penalty.

Registration threshold

No threshold, non-resident companies must register for VAT

Filing interval

Monthly

Filing deadline

By the 26th of the following month

E-invoicing requirements

Yes

Record keeping

For a minimum of 5 years the following must be kept:

Sales Invoices: All issued sales invoices, including e-invoices (e-Fatura).
Purchase Invoices: All received purchase invoices.
VAT Returns: Copies of all filed VAT returns.
Payment Records: Documentation of VAT payments made to the tax authorities.
Customs Documentation: If applicable, records related to imports and customs clearance.
Accounting Records: General accounting records that support VAT calculations and reporting.
Supporting Documentation: Any additional documents that support the transactions reported for VAT purposes.

Effortless Subscription Management and Billing

Demystifying VAT Compliance for SaaS Businesses in Turkey: Essential Considerations

Navigating VAT for SaaS businesses requires careful planning and a comprehensive understanding of regulations. Ensuring accurate VAT reporting and timely payments is crucial to avoid financial complications. The Turkish tax authorities have established the Electronic Tax Administration System (Gelir İdaresi Başkanlığı Elektronik Vergi Dairesi) for streamlined filing and management. Businesses must register for VAT with the tax authority if their annual earnings surpass the mandatory threshold, currently 30,000 TRY. Failure to register can attract substantial fines and penalties. It is advisable to seek professional assistance, such as collaborating with a qualified tax consultant, for expert guidance in navigating VAT regulations and ensuring compliant operations.

Businesses with operations in diverse geographical locations face the unique challenge of managing compliance across multiple jurisdictions. It’s essential to closely examine the applicable VAT regulations within each region to determine whether they are considered the ‘place of supply.’ In the European Union, the location where the service is effectively used determines the relevant VAT regime. Thus, an EU business supplying SaaS to a Turkish-based customer would charge 18% Turkish VAT, registering for VAT purposes in the country. Understanding these nuances will ensure correct VAT application and eliminate the risk of non-compliance.

Optimizing SaaS VAT Management: Best Practices for Turkish Businesses

Several best practices can enhance your efficiency when managing VAT. Leveraging technology through cloud-based VAT management software offers a practical and effective approach. These solutions streamline automation tasks, facilitate data accuracy, and minimize risks associated with manual processes. Partnering with tax experts who specialize in the complexities of SaaS VAT is another invaluable asset. Their deep knowledge of regulations and evolving legislation ensures your business operates within compliance framework. Additionally, consider engaging in industry events and workshops to stay informed of any updates or amendments to VAT regulations.

In summary, understanding SaaS sales tax in Turkey is essential for ensuring efficient and problem-free business activities. By delving into core VAT concepts, compliance requirements, and practical advice outlined within this comprehensive guide, you can effectively navigate this domain while optimizing financial management within your SaaS operations. Adherence to VAT laws not only avoids potential fines and penalties but also fosters transparency and accountability within the Turkish tax system.

What is the VAT rate applicable to SaaS in Turkey?

The standard VAT rate for SaaS in Turkey is 18%. However, certain categories, like e-books, may be eligible for an 8% reduced rate. Exemptions apply to e-books, including newspapers and educational materials in electronic format.
What are my responsibilities for complying with SaaS VAT in Turkey?

To comply with SaaS VAT in Turkey, you must register for VAT if your annual turnover surpasses 30,000 TRY, file monthly returns electronically, and settle payments by the 26th of the following month. Maintaining comprehensive records for five years, including e-invoices and accounting documentation, is essential.
Is e-invoicing mandatory for SaaS businesses in Turkey?

Yes, e-invoicing is compulsory for all businesses offering SaaS in Turkey. The Electronic Tax Administration System facilitates electronic filing and management.

Ready to get started?

We’ve been where you are. Let’s share our 18 years of experience and make your global dreams a reality.

Talk to an Expert