Taxes on Expenditure | Law

2. Indirect Taxes

2.1. Value Added Tax

All goods and services that are supplied/rendered in Turkey within the scope of commercial, industrial, agricultural, and professional activities are subject to value-added tax (VAT). The importations of goods and services into Turkey are also subject to VAT.

The standard VAT rate is %18, a reduce rate of %8 applies to for basic foodstuff, books, pharmaceuticals, some medical products, medical examination fees and schooling fees, textile products; and a %1 rate for certain agricultural products, journals, newspapers.

Major VAT Exemptions are as follows;

- Export sales,
- Supply new machinery and equipment within the scope of incentive certificate,
- Delivery of equipment to the military and diplomatic personnel,
- Sale of real estate that are held at least for 2 years,
- Banking and financial transactions,
- Transit transportation,
- Petroleum exploration activities,
- Contract manufacturing for clients operating in free zones,
- Deliveries and services made to diplomatic representatives and consulates on condition of reciprocity.

2.2.      Stamp Tax

Documents within the scope of stamp tax are papers which are legally valid and exercisable, bearing a signature(or a sign replacing signature, or electronic signature) and prepared for the purpose of proving and legal subject. In these sense, stamp tax applies to a wide range of legal documents including contracts, notes payable, capital contributions, letters of credit, letters of guarantee, financial statements, and payrolls. Stamp duty is levied as a percentage of the value of the document at rates ranging from 0.189% to 0.948%.

The ceiling for stamp tax for 2015 is TRY 1.702.138,00 per each document.

2.3. Special Consumption Tax (SCT)

A special consumption tax applies on the import or delivery of the specific categories of product by their manufacturers. Unlike VAT which is applied on each delivery, SCT is charged only once. The following types of product are subject to SCT;

Motor vehicles,
Oil products and by-products such as solvents, lubricating oil,
Alcoholic beverages, tobacco and tobacco products,
Luxury goods

2.4. Banking and Insurance Transactions Tax (BITT)

The subject of the tax is transactions and services produced by banks, bankers and insurance companies. The transactions being performed by banks and insurance companies are exempt from VAT, but are subject to BITT at a rate of %5, which is due on the gains of such corporations from their transactions.(%0 on foreign exchange transactions)