What is Turkish KDV?
Katma Değer Vergisi (KDV) is Turkey’s value-added tax, governed by 3065 sayılı Katma Değer Vergisi Kanunu (enacted 1985). KDV is a consumption tax levied at each stage of production and distribution; final burden falls on the consumer while businesses act as collection agents. Turkey’s KDV framework largely mirrors EU VAT design but with Turkey-specific exemption regimes and rate structures.
Current rate structure
- Standard rate: 20% — applies to most goods and services (raised from 18% in July 2023).
- Reduced rate: 10% — basic foodstuffs, books, certain agricultural inputs.
- Super-reduced rate: 1% — basic groceries, certain agricultural products, periodicals.
- Zero rate (with input VAT recovery): exports, international transport, certain financial services.
- Exempt (no input VAT recovery): health, education, some financial services.
KDV mechanics
- Tahsil (collected) KDV: seller collects from buyer at invoice level.
- İndirim (input) KDV: seller deducts KDV paid on inputs.
- Net ödenecek KDV: Tahsil − İndirim = monthly KDV declaration via KDV-1 beyanname.
- İade (refund) regime: exporters and certain other categories can claim refunds for excess input KDV.
Practice notes for foreign-owned companies
Three KDV points recur in tech-company practice. First, reverse charge: services imported from abroad — cloud infrastructure, SaaS licences, head-office services charged to a Turkish subsidiary — generally trigger KDV via the responsible-party mechanism (sorumlu sıfatıyla KDV), payable by the Turkish recipient through KDV-2 returns. Second, exported services can qualify for exemption where the service is performed for a customer abroad and the benefit is used abroad — the core planning point for Turkish dev hubs invoicing a foreign parent, with documentation discipline deciding whether the exemption survives an audit. Third, refund positions (devreden KDV) tie up real cash for exporters and investment-phase companies; modelling KDV cash flow belongs in every Turkish-subsidiary budget, not just the tax appendix.