Amendments to the Value Added Tax Law of Turkey Related to the Exchange Rate Difference


In recent years the Turkish tax authorities and courts have been in dispute as to whether exchange rate differences are subject to VAT. Now an amendment to the applicable law provides greater clarity.

The influence of exchange rate differences on the financial performance of an economic unit is significant. Companies may have payables, debt claims and long-term contract reserves in bank accounts in foreign currencies.

In Turkey, there have been controversies in recent years related to the Value Added Tax Law. Gaps in legislation, particularly the absence of an express provision that could determine whether the exchange rate difference should be subject to VAT, resulted in continuing disagreements between the tax authorities and courts. Tax authorities considered the exchange rate difference subject to VAT, whereas courts decisions would deny this fact due to the above-mentioned lack of relevant legislation norms.

The amendment to the VAT law foresees that exchange rate differences will be considered an element on which to base VAT assessments. Any errors in companies’ business reports will therefore incur penalties in future.Aigerim Amankulova LL.M., legal advisor, ECOVIS Kapital Network, ISTANBUL, Turkey

Eventually “The Law on the Amendments to Tax Laws, Certain Laws and Statutory Decrees number 7161” was adopted and published in the Official Gazette on 18 January 2019. Primarily, the changes were related to the Article of the Value Added Tax Law No. 3065 dated 2 November 1984.

According to the new legislative amendments, the exchange rate difference is regarded as an element included in the tax base. Particularly, for transactions

  • which were conducted in a foreign currency or denominated in a foreign currency
  • where exchange rate differences occur because the price is fully or partially collected afterwards

are considered as an element of the VAT base either for the buyer or the seller. In other words, the exchange rate difference between the date of delivery of goods and/or services and the date when the payment was made is calculated by the seller on the date of the delivery of the goods and/or services, explain the experts at Ecovis. If the exchange rate difference on the date of payment appears to be in favour of the buyer, then the VAT shall be calculated by the buyer on the amount of the exchange rate difference per the payment date.

ECOVIS Kapital Network Turkey accountants and advisors monitor legislative developments closely and particularly take into account these recent changes to the Value Added Tax Law in order to prepare valid and correct financial reports for the clients and to protect them from incurring penalties in the future.


Aigerim Amankulova LL.M., Legal Advisor, ECOVIS Kapital Network, İSTANBUL, Turkey