Is Your Business Ready for Turkey’s Digital Tax Transformation?

This blog was last updated on February 29, 2024

The value of data is rising

The value of data is becoming more precious than oil.  Technology has transformed market dynamics across all sectors and the way businesses operate. Big data has grown in importance and data-based platforms are today’s new technology giants. On one hand; Facebook, Google and other data-based platforms are collecting data to monetize it, whilst at the same time governments around the globe are taking steps to collect financial and fiscal data. The latter is particularly true in countries where the tax gap is large. When governments and tax authorities first started the digital collection of financial data, it was typically done periodically, resulting in audits of taxpayers based on the data after it had been collected. Today however, a growing number of countries’ tax authorities are collecting data in real-time. Turkey, having been an early adopter and an example of a country successfully collecting real-time financial data from businesses to increase the effectiveness of their VAT enforcement, is now extending the scope of its VAT control framework.

Turkey’s digital tax journey

The e-invoicing framework was introduced in Turkey as early as 2012. Since then, the scope of the e-invoicing mandate has gradually grown. Every day there are new requirements to speed up the digital tax transformation. With the latest General Communique on the Tax Procedure Law (Communique) published on 19 October 2019, more taxpayers now need to comply with the mandatory e-invoicing framework. Additionally, the previously introduced concepts of e-arşiv, e-waybills and e-export invoices are other mandatory e-documents for certain businesses to issue and store. New e-documents were also introduced for the first time with the Communique: e-Self Employment Receipts, e-Producer Receipts, e-note of expenses, e-Tickets, e-Insurance Commission Expense Documents, e-Insurance Policy, eDocument of Currency Exchanges, and e-Bank Receipts.

Thresholds reduced

With the new framework, the turnover threshold for mandatory e-invoicing has been lowered to 5 million Turkish Lira (TL) compared to the previous threshold of 10 million TL. This change means that by 1 July 2020, companies with at least 5 million TL turnover in 2018 or 2019 will have to switch to e-invoices. Taxpayers exceeding this limit in 2020 or later will have to switch to e-invoices by 1 July of the following accounting year.

However, mandatory e-invoicing is not only based on the threshold; there are also sector-based parameters. Companies licensed by the Turkish Energy Market Regulatory Authority, middlemen or merchants trading fruits or vegetables, online service providers facilitating online trade, importers and dealers are some of the taxpayers that are also required to switch to e-invoices, irrespective of their turnover. E-invoice registered businesses must also follow the e-arşiv application from 1 January 2020.

Moving goods within Turkey

Another important e-document is the e-waybill, a document that is required for the movement of goods within Turkey and which must be issued before the dispatch of the goods occurs. As stated in article IV.3.5. of the Communique it is mandatory for certain businesses, depending on the threshold and the sector they operate in, to register for the e-waybill application by 1 July 2020.

A General Communique on e-Ledgers was also enacted on the same date as the Communique. According to the e-ledger provisions, companies in scope of the e-invoice mandate must also start to keep e-ledgers. In addition, companies that are subject to independent audits must start to keep e-ledgers from January 2020.

The new e-documents framework in Turkey puts pressure on businesses as the new rules are calling for new actions. To survive and prosper in the digital tax transformation era businesses operating in Turkey need to have robust e-invoicing strategies in place that not only meet their needs but also comply with the growing demands of tax authorities across the world.