A New Reporting Tool to Control VAT Deduction

EXECUTIVE SUMMARY

The Turkish Value Added Tax ("VAT") system is built upon the input VAT deduction mechanism, making it one of the most sensitive areas from a tax compliance perspective. In particular, ensuring the accurate calculation and proper treatment of deductible VAT arising from import transactions has become one of the Turkish Revenue Administration's key audit priorities in recent years.

To strengthen its monitoring framework, the Turkish Revenue Administration introduced a new control mechanism through  Communiqué No.57 Amending the VAT General Implementation Communiqué . Under this Communiqué, taxpayers engaged in certain import transactions may be required either to submit a Special Purpose Sworn-in CPA ("YMM") Report or to file an electronic notification, depending on the applicable conditions.

Although the new rules may initially appear to introduce an additional reporting obligation, they primarily represent a significant shift in the Turkish Revenue Administration's approach to monitoring VAT deductions. By combining electronic data analytics, risk assessment tools and independent assurance mechanisms, the tax authority aims to verify the accuracy of VAT deductions before a formal tax audit takes place.

This Tax Circular discusses:

• The legal background of the new reporting framework
• The obligations introduced by VAT Communiqué No. 57
• The import transactions falling within the scope of the application
• The treatment of non-deductible VAT
• The applicable monetary thresholds; and
• The reporting and submission deadlines

When Did the New Requirements Become Effective?

The obligation to submit a Special Purpose Sworn-in CPA Report or an electronic notification has not been introduced through a single legislative amendment. Rather, it is the result of a series of complementary legislative developments. Accordingly, reviewing the chronological development of the legislation provides useful context for understanding the new compliance framework.


Accordingly, the said Communiqué did not introduce a new VAT deduction restriction. Instead, it established the implementation procedures governing the deduction restriction introduced under Presidential Decree No. 7846.

Within this framework, the Communiqué introduced new reporting obligations requiring taxpayers to substantiate, through either an electronic notification or a Special Purpose Sworn-in CPA Report, that non-deductible VAT has been treated correctly. It also provides certain procedural simplifications for taxpayers subject to full certification, provided that the conditions specified in the Communiqué are satisfied.

What Obligations Have Been Introduced by the VAT Communique No.57?

The VAT General Implementation Communiqué No.57 introduces new reporting obligations aimed at verifying the proper treatment of non-deductible VAT arising from import transactions falling within the scope of Presidential Decree No. 7846.

Under the Communiqué, taxpayers are subject to different compliance requirements depending on the applicable monetary threshold calculated for each six-month period. Where the relevant threshold is not exceeded, submission of an electronic notification is sufficient. However, where the threshold is exceeded, taxpayers must substantiate the proper treatment of the relevant non-deductible VAT by submitting a Special Purpose Sworn-in CPA Report.

The Communiqué also includes specific provisions for taxpayers covered by a Full Corporate Income Tax Certification Agreement. In such cases, a separate Special Purpose Sworn-in CPA Report is not required, provided that the findings required under the Communiqué are included in the Full Certification Report. Nevertheless, this exemption does not relieve taxpayers from their obligation to properly account for and report the relevant transactions in accordance with the Communiqué.

The main compliance obligations are summarised below:


What Is the Purpose of the Regulation?

The primary purpose of the said obligation is to verify whether non-deductible VAT arising under Presidential Decree No. 7846 has been treated in accordance with the applicable legislation.

The Communiqué does not introduce a new VAT exemption or an additional tax liability. Rather, it establishes the procedures and principles governing the implementation of the existing VAT deduction restriction.

Within this framework, the Turkish Revenue Administration seeks to verify, through electronic notifications and Special Purpose Sworn-in CPA Reports, that:

• Non-deductible VAT has been calculated correctly
• The relevant amounts have been properly reflected in the accounting records; and
• Such amounts have not been claimed as deductible input VAT in VAT returns

The regulation also forms part of the Turkish Revenue Administration's broader strategy of enhancing tax compliance through electronic data analytics and risk-based audit techniques. By cross-checking customs records, accounting records and VAT returns, the tax authority aims to identify inconsistencies at an early stage and strengthen voluntary tax compliance.

Which Import Transactions Fall Within the Scope of the Application?

The obligation to submit an electronic notification or a Special Purpose Sworn-in CPA Report does not apply to all import transactions.

The reporting obligations introduced by the said communiqué apply exclusively to import transactions that fall within the scope of Presidential Decree No. 7846, where non-deductible VAT arises.

Accordingly, the reporting requirement applies to imports subject to:

• Import Surveillance Measures
• Safeguard Measures; and
• Legislation on the Prevention of Unfair Competition in Imports (Anti-Dumping and Countervailing Measures)

where such imports fall within the scope of Presidential Decree No. 7846.

Accordingly, taxpayers should first determine whether the relevant import transaction falls within the scope of the Presidential Decree before assessing the reporting obligations prescribed by the Communiqué.

The scope of the application may be summarised as follows:


How Should Non-Deductible VAT Be Treated?

The said communiqué does not introduce a new rule regarding the calculation of non-deductible VAT. Instead, it establishes a mechanism to verify that non-deductible VAT arising under Presidential Decree No. 7846 has been treated in accordance with the applicable legislation.

Accordingly, VAT amounts that are not eligible for deduction under Presidential Decree No. 7846 must not be claimed as deductible input VAT in the relevant VAT return. The electronic notification and the Special Purpose Sworn-in CPA Report serve to confirm that this requirement has been properly fulfilled.

In particular, the notification or report is intended to verify:

• Whether the import transaction falls within the scope of Presidential Decree No. 7846
• Whether the amount of non-deductible VAT has been determined correctly
• Whether the relevant VAT has not been claimed as deductible input VAT in the VAT return; and
• Whether the customs records, accounting records and VAT returns are fully consistent with one another

Accordingly, the new reporting obligation should not be regarded as a mere procedural filing requirement. Rather, it constitutes a compliance mechanism designed to provide assurance that the rules governing non-deductible VAT have been properly implemented.

How Is the Monetary Threshold Determined?

Under the said communiqué, the obligation to submit an electronic notification or a Special Purpose Sworn-in CPA Report is assessed separately for each six-month period, namely January–June and July–December.

For each reporting period, taxpayers must determine whether the amount of non-deductible VAT exceeds the monetary threshold specified under the Communiqué No. 46 on the Law on Certified Public Accountants and Sworn-in Certified Public Accountants.

The relevant threshold is updated periodically by the Ministry of Treasury and Finance. As of the effective date of the Communiqué, the applicable threshold for 2026 is TRY 2,600,000.

Accordingly:

• Where the threshold is not exceeded, submission of an electronic notification is sufficient; and
• Where the threshold is exceeded, taxpayers are required to submit a Special Purpose Sworn-in CPA Report

It should be noted that the monetary threshold merely determines which reporting method applies and does not affect the VAT deduction restriction introduced under Presidential Decree No. 7846.

Further guidance from the Turkish RevenueAdministration has been provided clarifying that TRY 2,600,000 import threshold shall be computed by taking into consideration only the import value falling under the scope of legislation concerning import surveillance measures, safeguard measures, and the prevention of unfair competition in imports. If this threshold is exceeded, the submission of a Special Purpose Sworn-in CPA Report will be required (except in cases where a full  corporate income tax certification agreement has been concluded on time and this matter is disclosed in the full certification report); if the threshold is not exceeded, an electronic notification will suffice. 

Reporting and Submission Deadlines

Electronic notifications and Special Purpose Sworn-in CPA Reports must generally be submitted by the end of the month following the relevant six-month reporting period (i.e. by the end of July and January, respectively). Taxpayers should therefore ensure that the deadlines prescribed by the Communiqué are carefully monitored.

For the first implementation period, however, the Turkish Revenue Administration granted an extension through VAT Circular No. 71/2026-1.

Accordingly, the deadline for submitting Special Purpose Sworn-in CPA Reports relating to the first six-month period of 2026, originally due by 31 July 2026, was extended until 31 August 2026.

This extension reflects the Turkish Revenue Administration's intention to facilitate taxpayers' transition to the new compliance framework during the initial implementation period.

It should be noted, however, that this extension does not apply to electronic notifications.

Practical Compliance Checklist for Companies

Companies are advised to perform the following compliance checks on a regular basis:

CONCLUSION

The said communiqué establishes a new compliance and reporting mechanism aimed at verifying the proper treatment of non-deductible VAT arising under Presidential Decree No. 7846.

Rather than introducing a new VAT deduction restriction, the Communiqué is intended to strengthen the monitoring of the existing rules by requiring taxpayers to substantiate the correct application of the non-deductibility provisions through electronic notifications or Special Purpose Sworn-in CPA Reports.

Accordingly, taxpayers should not only comply with the new reporting obligations but also ensure that the scope of the application is properly assessed, non-deductible VAT is correctly identified, and all reporting requirements prescribed by the Communiqué are fulfilled in a timely manner.

In addition, companies should regularly review the consistency between their import transactions, accounting records and VAT returns to minimise potential tax risks and ensure ongoing compliance with the applicable VAT legislation.