VAT, or Value Added Tax, is a consumption tax levied on the production, import or sale of a good or service. Many goods and services in Turkey are subject to VAT and businesses collect and pay this tax to the government.
Calculating VAT is quite simple. The VAT on a good or service is the product of the tax rate (expressed as a percentage) multiplied by the price of the product. For example, if the selling price of a product is 100 TL and the VAT rate is 18 per cent, the VAT amount is 100 x 0.18 = 18 TL. By including VAT in the selling price, the total price of the product is 118 TL.
VAT rates in Turkey are determined according to the type of product or service and tax laws. Some goods and services are subject to VAT at rates of 1 per cent, 8 per cent, 18 per cent and 25 per cent. For example, food products are subject to VAT at 1 per cent, some medicines at 8 per cent, many goods and services at 18 per cent and luxury goods at 25 per cent.
Calculating VAT is important for businesses because the difference between the amount of VAT they collect and the amount of VAT they pay is the amount the business reports on its VAT return. The business’s tax liability or refund is determined by this difference.
As a result, VAT is an important type of tax for businesses and the state. Calculating VAT is a fairly simple maths operation and is applied at different rates depending on the type of product or service. The VAT declaration must be filled in correctly and the VAT amounts paid to the state must be declared within a certain period.