Tax rate by region Turkey

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The information provided on this page is intended for general informative purposes only. It should not be interpreted as tax advice, nor is it meant to be. For advice on your particular tax responsibilities, consult with an experienced tax expert. PayPro Global does not assume any responsibility for any action taken or not taken based on the information presented here.

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 20%. 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.

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Turkey

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

Official government link: Revenue Administration

20.00%

E-products and services VAT/Sales tax rate

10.00%

Reduced tax rate

Reduced tax rate product categories

1% for the electronic supply of newspapers or magazines.
8% 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

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.

How-To Guides: Turkey SaaS VAT

Step: 1 Threshold

Effective January 1, 2018, Türkiye requires non-resident vendors of digital services to consumers (B2C) in Türkiye to register for and collect VAT, regardless of the sales amount.

 

• B2C: There is No Threshold for non-resident suppliers of electronic services to Turkish individuals. You must register from the first sale.
• DST Note: A separate Digital Services Tax (7.5%) only applies if global revenue exceeds €750M AND local revenue exceeds TRY 20M. Most standard SaaS only needs VAT.

Step: 2 Business Registration

Register online via the Digital Tax Office (Dijital Vergi Dairesi) specifically for “Special VAT Liability for Electronic Service Providers” (KDV Mükellefiyeti).

Step: 3 Obtain TIN

Upon registration, you are issued a Tax Identification Number (Vergi Kimlik Numarası).

Step: 1 Standard VAT Rate

Apply the standard VAT rate of 20% (increased from 18% in July 2023).

Step: 2 VAT Formula

To calculate your tax amount, use this formula:

 

VAT Amount = Net Price x 20%

Step: 3 Reverse Charge (B2B)

Yes. Supplies of digital services to VAT-registered Turkish businesses are subject to the Reverse Charge Mechanism. The foreign supplier does not charge VAT; the Turkish buyer declares and pays it via “VAT Declaration No. 2”.

Step: 1 Selling B2C

You must charge 20% VAT on all digital services supplied to individuals (non-VAT payers) in Turkey. The price displayed to consumers should be VAT-inclusive.

Step: 2 Selling B2B

• Registered Buyer: Do not charge VAT. The buyer is liable. You should validate their Tax ID.

• Unregistered Buyer: Treat as a B2C sale and charge 20% VAT.

Step: 3 Invoice Requirements

Foreign providers under the special VAT regime are not required to issue formal “Turkish Invoices” (Fatura) but must provide a receipt/document containing:

• Supplier Name & Tax ID
• Buyer Name
• Date & Unique Number
• Service Description
• Gross Amount & VAT Amount (or statement of tax inclusion)

Step: 1 Filing Interval

File the VAT Return No. 3 (KDV-3) on a Monthly basis.

Step: 2 Filing Deadline

Returns must be submitted by the 28th day of the month following the reporting period (e.g., January return is due by February 28). Payment is also due by this date.

Step: 3 Submission

File electronically via the Digital Tax Office portal. Payments must be made in Turkish Lira (TRY) via credit card or international bank transfer to the tax authority’s Ziraat Bank account.

Step: 4 Record Keeping

Maintain records for 5 years (statute of limitations).

PayPro Global Solution: Simplified Registration & Fiscal Representation

Navigating Turkey’s VAT registration and fiscal representation can be daunting. PayPro Global acts as your Merchant of Record, handling these complexities, including VAT registration and fiscal representation where needed, so you can focus on your business.

Learn more about our MoR services.

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