Turkish Parliament Approves Canceling the KDV Tax of Properties’ Sale for Foreigners

Discussion in 'Property Market News and Trends' started by Ahmmed Alomar, Feb 24, 2017.

  1. Ahmmed Alomar

    Ahmmed Alomar Member

    Turkey's parliament approved a law to exempt foreign expatriates from KDV tax when buying residential or commercial buildings in Turkey, according to certain conditions.

    According to the new law, foreigners will be exempted from KDV tax when buying a residential and commercial buildings in Turkey.

    The law also exempt the Turkish citizens living in other countries of residence with work permits from the tax, for at least 6 months.

    The law requires from the non-resident foreigners and non-operating associations when buying for the first time a residential or commercial buildings to pay by foreign currencies in which are brought from outside Turkey.

    The law prohibits selling residential and commercial buildings that are purchased without KDV for a full year, the tax will be imposed in case it was sold before the expiration of the period specified.

    According to the Anadolu agency, the General Assembly of the Turkish Parliament has approved on Thursday night a package of laws on amendments of the Income Tax law and other laws.

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  2. totallyproperty

    totallyproperty Administrator Staff Member

    Hello, welcome to the forum :)

    Can i ask what KDV tax is as I haven't heard of it? Is this something unique to Turkey? Can you give us an idea of how much saving this is (for example, if a foreign investor purchased a £200,00, how much value would the KDV tax (and therefore savings) be? Interesting to know how that would actual translate.
  3. Ahmmed Alomar

    Ahmmed Alomar Member

    The KDV Tax: is a tax imposed at different rates of expenditure, in accordance with the Value-Added Tax Or KDV Law No. 3065 of 1984, although the companies are the ones that pay this tax in accordance with the sales profits they achieve, but this tax is deducted from the final goods’ consumers this Means that this tax is ultimately deducted from the individual who consumes the goods. This tax is applied in almost all countries of the world and is imposed in Turkey according to the necessity of the goods consumed by %3, %8 and %18.

    Computation of the KDV Tax

    The KDV tax is calculated by deducting the tax rates from the selling price of the product. Therefore, the tax is increased according to the high prices of the products’ sales from the producer until it reaches the consumer.

    Listed and calculated KDV Tax

    The simplest way to calculate the KDV tax is to multiply (the price of the product x 1 + the tax rate) For example, assuming a product price of 1000 lira and the tax rate is %18, the calculation is as follows: 1000x (1 + 0.18) = 1000x 1.18 = 1180 lira the price of the Product after listing the tax (after deduction of tax).

    For calculating KDV Tax not listed, it is enough to replace the multiplication process with division by dividing the price of the product by (1 + tax rate) e.g. by imposing the price of the product after deducting the tax of 1180 lira and the tax rate is %18, the calculation is as follows: 1180 / (1 + 0.18) = 1180 / 1.18 = 1000 lira the Product price before listing the tax (before deduction of tax).

    Differences in Rounding Numbers in the KDV Tax Calculation

    In the calculations, the first two places are used that follows the comma in the decimal numbers, and the reason for this is that the third in decimal numbers do not have a class or unit parallel to the Turkish currency, and rounding the third number that follows the comma as follows:

    • If the number mentioned is bigger than 5 it will be risen to the top such as 5,586 becomes 5,59.
    • If the number mentioned is smaller than 5, it will be dragged down as 5,583 becomes 5,58.
    • If the number 5 is close to the nearest number such as 5,585 becomes 5,58 because 8 is an even number. In this rule, zero is calculated as an even number. Rounding processes do not exceed the impact of calculations on one penny, which is a must to know the accounting.
    KDV Tax Rate According to the Products

    As mentioned above, there are three percentages of KDV tax imposed on products, namely %1, %8 and %18, which are divided by the following products:

    • Products with %1 Deduction
    Imposed on wheat and their derivatives that are considered basic consumables materials, as well as residential units that do not exceed an area of 150 square meters.

    • Products with %8 Deduction
    Also, imposed on basic consumer materials which that do not fall within the luxury goods, such as meat and its derivatives, milk and derivatives, eggs, legumes, honey, jam, syrup, candy, some animals, and other products and services.

    • Products with %18 Deduction
    Imposed on products that are not considered essential consumer goods with certain exceptions, such as: communications products, furniture, electrical appliances, some animals, some spices and other products and services.
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    To access the full product list, please visit the following link:


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