At a Glance: The Rulings and the Administration’s View
| Ruling topic (date) | Legal basis | The administration’s view (summary) |
|---|---|---|
| Deduction period for VAT Return No. 2 (27.03.2026) | VAT Law Art. 29/1; VAT Communique (III/C-1.1) | Withholding paid on time is deducted in its own period; if paid late, in the payment period |
| Solar plant electricity offsetting (17.04.2026) | VAT Law Art. 2/3, 2/5 | Mutual electricity supplies are barter; no offsetting — invoiced reciprocally |
| Self-employed professional’s second car expense (31.12.2025) | Income Tax Law Art. 68; VAT Law Art. 30/d, 30/b | The expense and VAT of a sole practitioner’s second passenger car are non-deductible |
| Import surveillance VAT deduction (16.02.2026) | VAT Law Art. 30/d; Presidential Decree 7846 & 8000 | No deduction right for VAT paid on the surveillance value difference and related taxes/charges |
| VAT on industrial-zone late-payment surcharges (27.03.2026) | VAT Law Art. 24/c | Late-payment surcharges collected for late payment are included in the VAT base |
| Pre-export certification (31.03.2026) | VAT Law Art. 11/1-a, 12/2 | A certification service used in Turkey is subject to VAT |
| Engineering work in Kyrenia (31.03.2026) | VAT Law Art. 1/1, 6/b | Work in Kyrenia is performed abroad and outside VAT; the portion in Turkey is taxed |
| University laboratory analysis (27.03.2026) | VAT Law Art. 17/1-a | Analyses by research centers fall outside the science-dissemination exemption |
| Scrap circuit-board import (30.04.2026) | VAT Law Art. 17/4-g | No exemption for importing scrap boards with non-separable precious metals |
| University Open Access payment (30.04.2026) | VAT Law Art. 9/1 | Fees paid to a foreign publisher are subject to VAT under reverse charge |
| VAT deduction after the simplified procedure (16.04.2026) | VAT Law Art. 29/1-a, 34/1 | VAT on a vehicle bought under the simplified procedure cannot be deducted after the switch |
| International game development (03.03.2026) | Income Tax Law Art. 89/1-13; VAT Law Art. 11/1-a | Outside the mobile-app exemption; conditional 80% income deduction and VAT export-of-services |
What Is a Ruling, and Why Are These Decisions Important?
A ruling is a written opinion requested by a taxpayer from the Revenue Administration regarding their specific circumstances. It serves as a guide in practice by demonstrating how the Administration approaches a particular issue; however, it is not a regulation binding on everyone, such as a general circular.
Rulings issued between the end of 2025 and April 2026 fall under several headings: the timing of VAT deductions and return filing principles, energy and infrastructure transactions, the “place of consumption” criterion in service exports, vehicle expense limitations, and special provisions regarding imports. Each of these is addressed below through frequently asked questions from taxpayers.
1. VAT Deduction and Filing Principles
When is the withholding tax paid via VAT Return No. 2 deductible?
Short answer: As a general rule, it is deductible in the period in which it is paid; however, withholding tax that is filed and paid on time may be deducted in the period to which it pertains.
Pursuant to Article 29/1 of Law No. 3065, taxpayers may deduct the VAT they have paid by filing a return in their capacity as a liable party. In accordance with the VAT General Application Circular (III/C-1.1), starting with the January 2024 tax period, VAT that is withheld and reported via VAT Return No. 2 must be deducted on VAT Return No. 1 for the period in which it was paid. The exception is as follows: VAT that is reported on time and paid on time may be deducted on VAT Return No. 1 for the period to which it pertains.
For partially paid withholding amounts, a deduction may be made only for the portion that has been paid. It is also possible to pay the tax by offsetting it against a tax refund receivable.
Is the VAT on a previously owned vehicle deductible when switching from the simplified method to the actual method?
No. Taxpayers who cease operations while taxed under the simplified method and subsequently begin operations under the actual method (e.g., passenger transportation) cannot claim a deduction for the VAT paid on a commercial vehicle purchased during the simplified method period (e.g., in 2023) after their actual method tax liability is established. This VAT is considered to have been closed out as a final cost or expense item for the simplified tax regime period (Article 29/1-a, 34/1 of Law No. 3065).
2. Energy and Infrastructure Transactions
Can electricity be offset for self-consumption in a solar power plant ?
No; reciprocal deliveries are invoiced separately. Pursuant to Article 2/3 of the VAT Law, electricity distribution constitutes a delivery of goods; under Article 2/5, a barter transaction is considered two separate deliveries. Electricity generated at a solar power plant and electricity consumed from the distribution company constitute two reciprocal and independent deliveries.
When the production facility and the consumption facility are located in the service areas of different distribution companies (for example, the production facility is in a rural area and the factory is in Istanbul), physical offsetting does not occur. Therefore, it is not possible to net the transactions and invoice based on the net balance; it is mandatory to invoice and calculate VAT separately based on the total production and total consumption amounts. VAT is calculated as of the date the amount becomes due, and the invoice must be issued within seven days.
Is the late payment surcharge on OSB invoices subject to VAT?
Yes. Pursuant to Article 24/c of the VAT Law, price differences, interest, late payment interest, and late payment surcharges are included in the VAT base. Accordingly, late payment surcharges and late payment interest collected by organized industrial zones due to late payment of electricity, water, natural gas, and wastewater bills issued to participating taxpayers are subject to VAT, and VAT must be calculated on these amounts.
3. Export of Services and International Transactions
Is the SASO/SABER certification service considered an export of services?
No; it is subject to VAT. The SASO/SABER compliance certificates and audit services required of producers and exporters established in Turkey prior to exporting to Saudi Arabia—even though obtained for the purpose of export—are actually provided to the taxpayer within Turkey, and the service is benefited from in Turkey. Therefore, it cannot be classified as an export of services; it is excluded from the export exemption and is subject to VAT under general rules (Article 11/1-a, 12/2 of Law No. 3065).
Are construction site operations in the TRNC subject to VAT?
The portion performed abroad is VAT-exempt; the portion performed in Turkey is subject to tax. Services provided to a company operating in the TRNC for its construction sites in Girne—including seabed surveys, mapping, the design of coastal erosion prevention projects, obtaining project permits, and construction activities—are not subject to VAT because the services are performed directly abroad and the benefit from the services is derived abroad (Law No. 3065, Art. 1/1, 6/b). Work performed directly in the TRNC by subcontractors in Turkey is also excluded from the scope.
However, if a portion of these services is performed by subcontractors in Turkey (for example, the drafting of projects in Turkey), that portion is subject to VAT under general provisions.
Are there any tax advantages for game development services provided to foreign companies?
The mobile application exemption does not apply; however, if the conditions are met, an 80% profit deduction and the VAT exemption for service exports may apply.
Providing sub-game, game character, and graphics development services within the main game through online gaming platforms to foreign-resident companies, and collecting revenue via in-game digital units, does not fall under the scope of the “social content creation and mobile app exemption” under Article 20/B of the Income Tax Law. The reason for this is that the income is derived from the use of virtual items within the game, rather than from direct sales through mobile app stores.
However, provided that the conditions for design and software services under Article 89/1-13 of the Income Tax Law are met—specifically, that invoices are issued in the name of a foreign company and that the entire revenue is transferred to Turkey by the income tax filing deadline—the 80% revenue deduction may be claimed. Additionally, if the service is used exclusively abroad, a VAT exemption applies under Article 11/1-a of the VAT Law as part of the export of services.
4. Vehicle Expenses and Depreciation Limitations
Are expenses for a self-employed individual’s second passenger vehicle deductible?
No; neither the expense nor the VAT incurred on it is deductible. Taxpayers who engage solely in legal practice and mediation (and do not employ workers) may not deduct from their income the depreciation, fuel, maintenance, and repair expenses related to their second passenger vehicle (for example, a passenger car purchased while a motorcycle is already on the inventory) for use in their professional activities—such as depreciation, fuel, maintenance, and repair expenses—cannot be deducted from gross income pursuant to Article 68 of the Income Tax Law.
Since these expenses are classified as Legally Non-Deductible Expenses (KKEG) under Article 30/d of the VAT Law, the corresponding VAT amounts are also non-deductible. Furthermore, the VAT incurred on the acquisition of the passenger car cannot be claimed as a deduction under Article 30/b.
5. Imports, Academic Publications, and Other Special Provisions
Is the VAT paid on the surveillance fee in imports deductible?
No; the right to deduct VAT related to surveillance has been revoked. Pursuant to Presidential Decree No. 7846, the right to deduct VAT paid on amounts declared in customs declarations for goods subject to import surveillance that cannot be substantiated, as well as on taxes, duties, fees, and levies arising from these amounts and included in the VAT base, has been revoked (Article 30/d of Law No. 3065; Presidential Decrees No. 7846 & 8000).
Conversely, VAT paid on the KKDF fee and additional customs duties for products not subject to surveillance may be deducted in accordance with general principles.
Are universities’ Open Access payments subject to VAT?
Yes; they must be declared under the “responsible party” status. Publication fees paid by universities to foreign publishers for the “Open Access” publication of their academic staff’s articles are not covered by the exemptions under Articles 16/1-a and 17/1-a of the VAT Law. Since the foreign publisher does not have a place of business in Turkey, the university is required to declare and pay the calculated VAT in its capacity as a responsible party (under the full withholding regime using VAT No. 2) (Article 9/1 of Law No. 3065).
Are university laboratory and analysis services exempt from VAT?
No; they are subject to VAT under general rules. Analysis, measurement, and laboratory services provided by Application and Research Centers (e.g., TÜTAGEM) within universities to both internal and external researchers do not fall under the “exemption for the dissemination of science and technology” and are subject to VAT under general principles (Article 17/1-a of Law No. 3065).
Is there a VAT exemption for the import of scrap printed circuit boards?
No. Since the precious metals—such as gold, silver, palladium, platinum, and copper—contained in the scrap printed circuit boards intended for import cannot be separated, the “scrap metal and waste” exemption under Article 17/4-g of the VAT Law does not apply to the import of these boards; the transaction is subject to VAT. (Ruling Date: April 30, 2026)
Practical Implications: Checkpoints for Companies
Although these rulings come from different sectors, they offer several common lessons in practice:
- The timing of withholding tax deductions depends on payment. The rule for deducting tax declared on Form No. 2 is the payment period; only withholding tax paid on time can be deducted in the period to which it pertains. This should be monitored in terms of cash flow and deduction planning.
- The decisive criterion for service exports is the “place of consumption.” The fact that a service facilitates an export (e.g., SASO/SABER) does not, by itself, qualify for an exemption; if the service is consumed in Turkey, VAT is due. In the case of the Turkish Republic of Northern Cyprus (TRNC), however, since the service is performed abroad and used there, it is VAT-exempt. Reading the two rulings together clarifies this criterion.
- Restrictions on passenger vehicle expenses and VAT are strict. In particular, expenses and VAT related to a second passenger vehicle are not recognized in sole proprietorship activities.
- VAT applicable to surveillance/protection fees on imports is not deductible. This has a direct cost impact on companies importing products subject to surveillance; it must be taken into account in cost accounting and pricing.
- VAT liability for payments made abroad must not be overlooked. In service purchases such as Open Access publication fees, if the provider does not have a place of business in Turkey, VAT must be declared with full withholding.
Binding Nature of Rulings: Important Notice
Rulings are administrative opinions regarding the specific circumstances of the taxpayer who requested them and apply only to that taxpayer and that specific case; they do not constitute a generally binding regulation for third parties. For the taxpayer to whom the ruling is issued, acting in accordance with the opinion provides protective effect; however, other taxpayers in similar situations may have different circumstances.
Therefore, the opinions above should be considered as guidelines; before undertaking a specific transaction, the taxpayer must separately analyze their own situation and, if necessary, request a ruling in their own name.
The GİB rulings issued in the first four months of 2026 illustrate the administration’s approach to frequently encountered issues in practice, such as the timing of VAT deductions, the place-of-supply criterion for service exports, vehicle expense limitations, and special provisions regarding imports. Correctly interpreting these rulings both reduces the risk of penalties and provides a solid foundation for VAT and income tax planning.
As Özbek CPA, we provide support to both domestic and foreign-owned companies regarding VAT applications, service export exemptions, withholding tax, and ruling processes. Please contact us to evaluate your company’s specific transaction.
Frequently Asked Questions
- What is the difference between a ruling and a general circular?
A general circular is a regulation binding on all taxpayers. A ruling, however, is an administrative opinion specific to the requesting taxpayer’s concrete situation; it does not establish a binding general norm for others, but serves as a guide in demonstrating the administration’s approach.
- If I do not pay the withholding VAT on time, in which period can I claim the deduction?
Withholding tax not paid on time can be deducted on Form No. 1 VAT Return for the period in which the tax was actually paid, not the period to which it pertains. In the case of partial payment, only the paid portion can be deducted.
- Are all services supporting exports exempt from VAT?
No. The determining factor is where the service is utilized. If the service is provided to a taxpayer within Turkey and used in Turkey, it is subject to VAT even if it is intended for export.
- Is there VAT on digital/academic services purchased from abroad?
If the provider does not have a place of business in Turkey, the VAT on these services must be declared and paid by the recipient in their capacity as a responsible party (full withholding, VAT Return No. 2).
- Does the scrap metal exemption apply to all types of scrap?
No. The “scrap metal and waste” exemption does not apply to the import of scrap printed circuit boards containing precious metals that cannot be separated; such transactions are subject to VAT.
