Those who want to deal with VAT-exempt transit trade in Turkey or just want to have information will find the answers to their questions. Besides, the investors who are planning to register a company in Turkey may find this post useful.
Transit Trade and Accounting Record in Turkey
What is transit trade in Turkey in its simplest definition? Simply it is purchasing any good from a different country. Then selling it to a different country without bringing it into the customs borders of our country. In the scope of this article, it is Turkey. All natural and legal persons subject to tax and hasa chamber of commerce registration can engage in transit trade in Turkey.
So, how you perform transit trade in Turkey? Traders in Turkey do not require customs declaration for transit trade for export and imports. Besides, cash payments and letter of credit payments for foreign trade can also be applicable in transit trade in Turkey.
If we summarize the documents the traders require for transit trade and its general functioning and transit trade legislation in few points;
- If the goods will enter the customs areas within the borders of Turkey, the trader shall firstly must prepare a transit trade declaration. Such declaration is not not for products that do not enter the customs territory.
- Duties, funds and taxes that operate in standard trade logistics such as import and export do not exist in transit trade in Turkey.
- Products whose trade and sale are under probition cannot be subject to a trade. The trader shall consider laws of the country.
- In the invoicing section, the other company must issue you an invoice for the goods purchased from abroad. Then you must issue a separate invoice for the sales you made from Turkey to another country. The invoice you issue must be in both English and Turkish formats, and the trader shall send English invoice to the buyer.
- You must report the profit you make after your trade by recording it in the ledger.
- There are no restrictions on the method of money transfer and transportation of goods. The requirement is to examine the laws of the entry and exit countries
Although it may seem easier in terms of legislation than import and export, there are important details to pay attention to in transit trade in Turkey. It is not important which countries are in trade during the shipment of the goods. However, the trader shall prepare according to the rules of the countries where the goods enter and exit.
How to Prepare a Transit Trade Invoice in Turkey?
A trader of transit trade in Turkey must issue invoices for these transactions. E-Archive taxpayers must issue e-archive invoices, while other taxpayers must issue paper invoices.
We can make the subject more understandable by giving examples of transit trade: Company X buys the products for transit trade from China. When he receives an order from Germany, if he prints his own brand on the goods from China and sends it directly to the customer, the event in question is within the scope of transit trade in Turkey.
According to the e-invoice guide of GIB (Presidency of Revenue Management), “The obligation to issue export invoices as e-Invoice is valid only for goods export invoices which are annex to the Customs Declaration. ”
Therefore, an e-invoice user must issue an e-archive invoice when it comes to transit trade in Turkey. For those who are not e-Invoice users, issuing paper invoices is sufficient.
We recommend that the transit trade accounting record shall be as follows: Since the goods in transit trade do not actually enter the stocks of the companies, it would be healthy to track these goods in the “Other Stocks” account and make an accounting for their sales under the heading “Overseas Sales”.
Is Transit Trade in Turkey Kind of Export?
It is not a full export due to tax exemptions, but it is a very similar method of trade.
Goods the trader purchase abroad and sell directly abroad without ever arriving in Turkey are exempt from VAT. If the goods you purchase are subject to sale to abroad, VAT on these goods is as zero. As you can see in the invoice example above, there is no VAT amount on the invoice.
Although the trade seems to be export, transit trade proceeds with a different paperwork process. In addition, we can say that transit trade is not an export. Since there are factors such as tax exemptions that distinguish the two.
Things to know about VAT in transit trade in Turkey
In order for VAT during trade, the goods or services must be within the borders of Türkiye. Even though the goods sold in transit trade enter and exit the assets of a company in Turkey, they are not subject to this practice. Since they are not physically located in the customs territory.
Likewise, since a service must be carried out within the country, transit trade in this category is exempt from VAT. Due to this exemption, transit trade cannot be part to VAT declaration.
