What is KDV (Turkish VAT)?
KDV (Katma Değer Vergisi) is Türkiye’s value-added tax under Law No. 3065: a consumption tax charged at every stage of the supply chain on the value added, with input VAT credited against output VAT so the economic burden falls on the final consumer. Any business making taxable supplies in Türkiye must register, charge KDV on invoices and file monthly returns.
Current rates
Three rates apply: 20% standard (most goods and services, including software licences and professional services), 10% reduced (many foodstuffs, accommodation and certain services) and 1% super-reduced (basics such as bulk agricultural staples and specific housing). The standard rate has been 20% since July 2023; rates are set by Presidential decision and can change.
What tech companies most often get wrong
Exported services: services performed in Türkiye for a customer abroad and used abroad are KDV-exempt as service exports (Art. 11-12): the classic basis on which Turkish SaaS and dev shops invoice foreign clients KDV-free, provided the invoice is issued to the foreign customer and payment comes to Türkiye. Reverse charge: when a Turkish company buys services from abroad (cloud, licences, marketing), it must self-assess KDV via VAT return no. 2: a frequent diligence finding. Partial withholding (tevkifat): certain domestic services (e.g. workforce supply, some consultancy to designated buyers) require the customer to withhold part of the KDV.
Scope of KDV and the Taxpayer
Under Article 1 of Law No. 3065, deliveries and services performed in Türkiye within the scope of commercial, industrial, agricultural and self-employed professional activities, as well as all imports of goods and services, are subject to KDV. The taxpayer is the party making the delivery or performing the service (Article 8). However, under Article 9, where the taxpayer has no domicile, place of business or legal seat in Türkiye, the tax is collected from the Turkish buyer that is party to the transaction, as a responsible party. This article is the legal basis for a Turkish company filing VAT return no. 2 for cloud, licence and advertising services bought from abroad.
Full Exemption, Partial Exemption and Refunds
The export exemption (Articles 11-12) is a full exemption: input KDV incurred for an exempt transaction is deducted under Article 32, and the portion that cannot be deducted is refunded. A service export requires that the service is performed for a customer abroad and that the benefit of the service is used abroad. Most exemptions in Article 17, by contrast, are partial: for example, banking and insurance transactions within the scope of Law No. 6802 (Article 17/4-e) are exempt from KDV, but input KDV incurred for these transactions cannot be deducted and is expensed. The delivery of certain software produced in technology development zones is also exempt under Provisional Article 20. For software companies, whether an exemption is full or partial directly affects cash flow.
Tax Period and Filing
The tax period is, as a rule, the calendar month (Article 39). The return is filed in the following month within the period set by the Ministry of Treasury and Finance, and the tax is paid within the same period.
Do foreign SaaS providers owe Turkish KDV?
Yes: non-resident providers of electronic services to Turkish consumers must register under the special scheme (VAT return no. 3) and charge 20% KDV.
Can accumulated input KDV be refunded?
Generally it carries forward indefinitely; cash refunds are limited to defined cases such as exports and reduced-rate supplies, subject to certification.
Sources. Value Added Tax Law No. 3065. Statute links open the official consolidated Turkish texts on mevzuat.gov.tr.