Navigating Turkey’s Evolving VAT Landscape

As an early adopter of the ‘clearance model’, Turkey positions itself as one of the leading countries in the world when it comes to tax digitisation. For more than a decade the Turkish Revenue Authority (TRA) has successfully collected real-time financial data from businesses ensuring the effectiveness of its VAT enforcement system.  

With data is becoming more precious than oil and technology, it has transformed global market dynamics across all sectors, and has changed the way businesses operate today.   

Data is also transforming the way governments reduce their VAT gap. 

Starting almost two decades ago, the first clearance models were introduced by the tax authorities in Latin America with real-time or near real-time reporting. Governments around the world have since become much bolder in introducing structural changes to the way they regulate and enforce VAT, and often at short notice. Turkey is no exception. 

The TRA continue to evolve the scope of its VAT control framework. Navigating this ever-changing and evolving transformation is a challenge for all companies trading in Turkey.   

Download this e-book if you are:  

  • A Turkish company with operations exceeding the mandated limits from TRA 
  • An International company with operations in Turkey  

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A Global Framework: Continuous Transaction Controls (CTC) 

The first steps towards the ‘clearance model’ began in Latin America in the early 2000’s, and most of these now have stable CTC systems where a significant amount of the data required for enforcement is based on invoices. A decade later other economies, like Turkey, followed suit. A considerable number of EU member states are now moving toward CTCs, not by imposing ‘clearance’ e-invoicing, but by making their VAT processes more granular and frequent via CTC reporting.  

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 grown with new requirements introduced to accelerate the digital tax transformation.  

The latest General Communique on the Tax Procedure Law (Communique) published on 19 October 2019 includes even more taxpayers who need to comply with the mandatory e-invoicing framework.   

What lies ahead for Turkey’s e-invoicing framework?  

When it comes to VAT enforcement, the TRA’s effectiveness now extends to include the scope of its VAT control framework by reducing thresholds and introducing new e-documents. The latest General Communique published by the TRA in October 2019, means even more taxpayers than ever need to comply. This trend is set to continue further.