VAT return step by step: deductions, carried-forward VAT and common mistakes

The VAT return is the calculation of the difference between the VAT you collected from customers and the VAT you paid to suppliers in a month. If the difference is positive, you pay it to the tax office; if negative, you carry it forward to the next month. In this seemingly simple calculation, most errors come from which invoice goes into which month and on which line.

Deadline: the 28th of every month

Taxpayers subject to the monthly filing period file the VAT return by the evening of the 28th of the month following the period and pay the tax the same day. If the last day falls on a weekend or public holiday, the deadline moves to the first working day. For current dates, see the tax calendar.

The three items in the calculation

In this example the VAT payable is 80,000 − 50,000 − 12,000 = TRY 18,000. The rates are 1%, 10% and 20%; to check amounts you can use the VAT calculator.

Which VAT can be deducted?

Three conditions must all be met for a deduction:

1. Document: the VAT must be shown separately on an invoice or similar document issued in your name.
2. Record: the document must be recorded in the statutory books.
3. Time: the deduction can be made until the end of the calendar year following the calendar year to which the invoice relates. For example, an invoice dated March 2026 can be deducted on the December 2027 return at the latest.

Some VAT, however, cannot be deducted even if the conditions are met. Examples are VAT on non-deductible expenses, on spending unrelated to the business, and on passenger car purchases by businesses not engaged in car rental or sales. Such VAT is treated as an expense or cost. Details: Non-deductible expenses

Tracking carried-forward VAT

Carried-forward VAT is a receivable, but it is not cash. A refund can be claimed only for transactions that give a right to a VAT refund (such as exports and reduced rates); in other cases it waits until it is offset against future output VAT. So:

• Compare the carried-forward amount on the return each month with account 190 Carried-forward VAT in the accounts.
• If you have been carrying high VAT forward for a long time, have your refund entitlement examined: VAT refund
• Carried-forward VAT is one of the first items looked at in a tax audit; keep the supporting invoices in order.

Common mistakes

Taking an invoice into the wrong month. The deduction is made in the period in which the document is recorded in the books. If an invoice relating to the previous month arrives late, you can deduct it on this month's return, provided you are within the statutory period.

Treating an invoice with withholding as if it carried full VAT. If you are the buyer, you declare the part you withheld separately on form KDV-2; if you are the seller, you fill in the withholding lines on the return. Details: VAT withholding

Forgetting return invoices. A return invoice issued for goods returned by a customer reduces your output VAT; a return you make to a supplier reduces your input VAT.

Missing the payment date. Late payment interest runs on unpaid VAT: Late payment interest calculator

If you notice an error after filing

• If you find an error that reduces the tax (such as a forgotten purchase invoice), you can make the deduction in later months within the statutory period.
• For an error that increases the tax (such as an under-recorded sale), a corrective return is filed. If you disclose it voluntarily before the tax administration learns of it, the voluntary disclosure provisions apply and no tax loss penalty is imposed: Voluntary disclosure petition

Short checklist

• Have all e-Invoices and e-Archive invoices been recorded in the books?
• Are purchases and sales with withholding on separate lines?
• Have return invoices been processed?
• Does carried-forward VAT match the accounting record?
• Has non-deductible VAT been set aside as an expense?

Legal basis: VAT Law No. 3065 arts. 29, 30, 34, 39–41; VAT General Implementation Communiqué.