What Is a VAT Refund, When Can It Be Claimed and How?

The short answer to what a VAT refund is: when the VAT a business pays on purchases exceeds the VAT it charges on sales, and this difference arises from a transaction for which the law grants a refund right, the difference is recovered from the tax office. A VAT refund is the payment to the taxpayer, in cash or by offset against its debts, of value added tax borne on transactions that give rise to a refund right and that cannot be eliminated through deduction. Not every carried-forward VAT balance is refunded. What matters is which transaction the excess arises from.

This article is the main guide in our Tax Legislation series. We explain the logic of the VAT refund, which transactions give rise to a refund right, the difference between refund by offset and cash refund, the YMM report, tax inspection report and guarantee routes, the KDVİRA check, and the process in 6 steps. We will cover the details of export, reduced-rate and withholding refunds in separate articles.

What is a VAT refund, and why does it arise?

The VAT system works through a deduction mechanism. You deduct the VAT you paid on purchases from the VAT you charged on sales and pay the difference to the tax office each period. Article 29 of Law No. 3065 governs this deduction. If deductible VAT (the tax you paid on purchases) exceeds output VAT (the tax you added to invoices on sales), the difference is carried forward to the next period.

Under normal circumstances, carried-forward VAT is not refunded; it waits to be deducted from the tax calculated in the following months. A refund becomes relevant when this excess arises from transactions specifically listed in the law. For example, an exporting company invoices its buyer abroad without charging VAT. But while producing the goods it exports, it pays VAT on purchases of raw materials, energy and services. Because there is no output tax, this burden can never be absorbed through deduction, and the refund exists to solve this.

This principle is clearly stated in the Revenue Administration (GİB) explanation on the common aspects of VAT refunds: if there is no transaction giving rise to a refund right, VAT borne and carried forward to the next period is not refunded. This is also the question our clients ask most often: “We have a large carried-forward VAT balance; can we get it back?” The answer depends not on the size of the carried-forward amount, but on its source.

Are carried-forward VAT and refundable VAT the same thing?

No. Carried-forward VAT is the total amount that could not be eliminated through deduction, regardless of why it arose. Refundable VAT is only the portion of that amount attributable to transactions giving rise to a refund right, determined using the calculation method in the communiqué. The amount claimed as a refund is deducted from that period’s carried-forward VAT and is not carried over to the next month.

Which transactions give rise to a VAT refund right?

Article 32 of the VAT Law and the Revenue Administration (GİB) explanations tie the refund right to specific groups of transactions. The summary below is a starting point to help you understand which group you are in; each group has its own document and calculation rules.

Fully exempt transactions

Articles 11, 13, 14 and 15 of the Law, subparagraph (4/s) of Article 17, and the provisional articles granting deduction and refund rights govern fully exempt transactions. Under full exemption, the sale is made without VAT, but deduction and refund of the VAT borne for that sale are possible. The best-known example is the export of goods and services.

This group also includes deliveries for export, deliveries of machinery and equipment covered by an investment incentive certificate, transportation exemptions and diplomatic exemptions. The document and customs declaration details of VAT refunds on exports will be the subject of a separate article.

Transactions subject to a reduced rate

For deliveries and services whose tax rate has been reduced by Presidential Decree, the VAT charged on sales may fall below the VAT paid on purchases. Article 29/2 of the Law permits the refund of this tax that cannot be eliminated through deduction within the year and that exceeds the set threshold. Communiqué Serial No. 56, published in the Official Gazette on December 31, 2025, set this threshold at 164,000 TL for 2026.

The timing of this refund differs from full exemption. According to the Revenue Administration (GİB) explanation, a refund arising from transactions subject to a reduced rate is declared in one of the returns for the January-November periods of the year following the year in which the transaction took place, and is claimed by the end of that year at the latest.

Transactions subject to partial withholding

Under Article 9 of the Law, for certain transactions the buyer declares and pays part of the VAT as the responsible party. Because the seller collects only part of the tax charged on the invoice, its deductible VAT may accumulate. For transactions subject to partial withholding, the withheld VAT can be refunded to the seller. The withholding refund, together with refund by offset and cash refund options, will be covered in detail in a separate article.

Who can get a VAT refund?

The short answer: VAT taxpayers who carry out a transaction giving rise to a refund right and cannot eliminate the VAT borne for that transaction through deduction. This may be a limited liability company or joint stock company subject to corporate income tax, or an individual merchant. What matters is not the company type but the nature of the transaction.

In practice, we most often answer the question of who can get a VAT refund with the following profiles:

• Companies that export goods or services, and manufacturers that make deliveries for export
• Those who deliver machinery and equipment under the exemption to holders of an investment incentive certificate
• Businesses that sell goods or services subject to a reduced rate but pay VAT at a higher rate on their purchases
• Contractors and service providers performing work subject to partial withholding
• Members of diplomatic missions and international organizations under Article 15 of the Law, subject to reciprocity

Foreign-owned companies making new investments in Turkey encounter this topic with their first exports after formation. While clarifying the activities with which the company will be established, the VAT refund potential should also be planned. We discussed the relationship of this planning to the formation stage in our how to set up a company guide.

What are the conditions for getting a VAT refund?

Although the conditions for getting a VAT refund vary in detail by transaction type, they fall under four common headings. If one of them is missing, the refund is either delayed or never concluded.

• There must be a transaction giving rise to a refund right. The transaction must fall into one of the groups listed in the law: full exemption, reduced rate or partial withholding.
• The VAT borne must not be able to be eliminated through deduction. The communiqué requires that the VAT borne for transactions giving rise to a refund right first be deducted. Only the portion that cannot be eliminated through deduction enters the refund calculation.
• Documents and lists must be complete. The standard refund claim petition, the list of deductible VAT, the list of VAT borne, the VAT borne calculation table and the list of sales invoices are the basic documents. Depending on the transaction type, additional documents such as customs declarations are required.
• The claim period must not be missed. After the period has expired, it is not possible to claim a refund by filing an amended return or submitting a petition.

On top of these conditions, your suppliers’ tax status also comes into play. If the KDVİRA system finds a negative finding about the companies you purchased from, the amount attributable to those purchases is subject to a separate assessment (for details, see the update note in the KDVİRA section below).

Claim periods

The Revenue Administration (GİB) explanations on refund claim periods set out two different timelines depending on the transaction type:

• Full exemption and partial withholding: The refund claim is filed by the end of the second calendar year following the period in which the transaction took place. For example, for exports in any month of 2026, the deadline is December 31, 2028.
• Reduced rate: The refund is claimed by the end of the year following the year in which the transaction took place. For reduced-rate deliveries in 2026, this date is December 31, 2027.

For refunds claimed with a YMM report, the report must be submitted within six months from the end of these periods. If the documents were submitted on time but their content is incomplete, the deficiencies can be remedied after the period.

Refund by offset or cash refund?

You can use a VAT refund receivable in two ways. In a refund by offset, the receivable is deducted from your debts. In a cash refund, the amount is paid to your bank account. It is also possible to use both together, i.e., to take part of the refund by offset and part in cash.

Refund by offset

According to the Revenue Administration (GİB), a VAT refund receivable can be offset against the following debts: public receivables followed by tax offices, taxes collected on imports and SGK premium debts. For ordinary partnerships, general partnerships and ordinary limited partnerships, offset against the partners’ debts in proportion to their partnership shares is also possible. As a rule, however, offset against special consumption tax (ÖTV) debts is not permitted.

The offset request is carried out, for amounts with no negative findings, after the documents are completed and the VAT Refund Control Report generated by KDVİRA is received. Offset against debts to the tax office is completed within 10 days following the date on which the information and documents are completed. If you respond to the tax office’s deficiency letter within 30 days of notification, the date on which you submitted your offset petition is taken as the basis.

There is one more deadline for offset against SGK premium debts. The offset petition and documents must reach the tax office by the last day of the month in which the VAT return is filed at the latest.

Cash refund

A cash refund is the direct payment of the amount to your account. The communiqué fulfills cash refund claims that do not exceed the threshold it sets for each transaction type without requiring a guarantee or tax inspection report. For amounts exceeding the threshold, one of the routes of a YMM report, a tax inspection report or a guarantee is required. If you want the receivable remaining after offset to be paid to third parties, a notarized assignment of receivables agreement is required.

YMM report, tax inspection report and guarantee: what does each route offer?

When the cash refund amount exceeds the threshold in the communiqué, you and the transaction type together determine which assurance the refund will rely on. The amendment made to Article 36 of the VAT Law by Law No. 7524 dated 28.07.2024 adopted as the principle that refund claims are fulfilled based on the result of a tax inspection report. The same article authorizes the Ministry to set different refund methods according to taxpayers’ level of tax compliance.

a YMM VAT Refund Certification Report

The certification report prepared by a Sworn Financial Advisor (YMM) is the basis for refunds in many transaction types. If there is a full certification agreement executed on time, no tax inspection report or guarantee is required, regardless of the amount, for refunds other than those for suitcase trade and exports of goods carried by passengers. For a taxpayer requesting a refund with a YMM report, no refund is made until the report is submitted.

Refund against a guarantee

A taxpayer who does not want to wait for the report to be prepared can receive the refund first by providing a bank letter of guarantee or an insurance company surety bond for the entire amount exceeding the threshold. A cash refund made against a guarantee is fulfilled within 10 days after the VAT Refund Control Report is generated and the necessary confirmations are made. Depending on the transaction type, the guarantee is released based on the result of the YMM report or the tax inspection report.

If you do not submit the YMM report within six months after receiving a refund against a guarantee, the refund is referred for inspection. If there is a justified excuse, the tax office may grant an additional six months.

Increased guarantee and pre-check report

According to the Revenue Administration (GİB), for cash refunds claimed with a YMM report, if a guarantee equal to 120% of the claimed amount is provided, the refund is made within five business days. For holders of the İTUS (Refund Claims Compliance Certificate), this rate is 60%. After the report is submitted, the checks are completed within two months, and if there is no problem, the guarantee is returned.

Under the pre-check report practice, taxpayers meeting certain conditions can receive payment earlier without providing a guarantee. Among these conditions are having filed VAT returns for at least 24 periods (8 periods for quarterly filers) and having had refund claims concluded for at least three periods. 50% of the amount with no negative findings is refunded within ten business days from the generation of the VAT Refund Pre-Check Report.

Tax inspection report

If no alternative assurance is used, or if the transaction type requires it, the refund is tied to a tax inspection report. If a deficiency identified during the checks is not remedied within the time granted, the refund claim is referred for inspection within 15 days. According to the Revenue Administration (GİB), at this stage, if a bank letter of guarantee equal to 150% of the claimed amount is provided, the refund is made and the guarantee is released based on the result of the inspection.

VAT refund methods comparison table

The table below places the methods side by side using criteria that make the decision easier. Amounts and periods are based on the Revenue Administration (GİB) explanation on the common aspects of VAT refunds; exceptions specific to a transaction type should be assessed separately.

How to get a VAT refund: the process in 6 steps

The answer to how to get a VAT refund is a file discipline that runs from the return to the payment. The order below is the general workflow we follow in practice.

• Step 1: Identify the transaction giving rise to a refund right and the amount. Determine which group the transaction falls into, then calculate the VAT embedded in the transaction. The tax borne on direct inputs, general expenses and depreciable assets enters this calculation.
• Step 2: Declare the refund on the VAT return. Show the transaction in the correct table on the return for the relevant period and complete the field for VAT borne or VAT subject to refund. If you leave this field blank, the declaration alone does not count as a refund claim.
• Step 3: Submit the lists through the Internet Tax Office. The list of deductible VAT, the list of VAT borne, the VAT borne calculation table and the list of sales invoices are submitted electronically. Documents submitted electronically are not also submitted on paper unless requested otherwise.
• Step 4: Submit the standard refund claim petition and choose the method. State whether you want offset, cash or both. For a cash refund exceeding the threshold, choose one of the YMM report, guarantee or inspection routes.
• Step 5: Follow the KDVİRA check and any deficiency letters. The system screens the companies you purchased from and your documents, and generates a VAT Refund Control Report as a result. If a deficiency letter arrives, respond without missing the 30-day period.
• Step 6: Monitor the conclusion of the refund and the release of the guarantee. After the offset or payment is made, if you provided a guarantee, submit the YMM report on time and follow up on the return of the guarantee.

As a VAT refund guide, these six steps provide the same framework for every transaction type. What changes are the additional documents required in the second and third steps and the choice of method in the fourth step.

What is KDVİRA, and how does it assess your refund file?

KDVİRA is the VAT Refund Risk Analysis system, and its checks shape what a VAT refund means in practice. After the documents are completed, your refund claim is queried in this system, and a VAT Refund Control Report is generated as a result. The report contains findings on the tax status of both your company and the companies from which you purchased goods and services.

If the report shows no negative findings, the offset or cash refund process moves forward. If a negative finding is identified, the tax office notifies you in writing and gives you time to remedy it. The amount attributable to purchases with negative findings is set aside, and the portion without negative findings can be refunded without delay.

Update (October 2026): The amendment to the VAT General Implementation Communiqué, Serial No. 57, published in the Official Gazette of January 31, 2026, reorganized the refund process for taxpayers whose suppliers have a negative report or finding. The taxpayer is given 15 days to remedy the negative finding; for a taxpayer who within this period proves the genuineness of the transaction or removes the VAT attributable to the relevant purchases from deduction, the claim is concluded under the general procedure. If the negative finding is not remedied, the portion without negative findings is refunded and the remaining portion is referred for tax inspection. If a cash refund of this portion is requested, a guarantee is required: three times the portion attributable to purchases from suppliers with a fake document finding, and twice that portion for other negative findings.

With the same amendment, for taxpayers with a full certification agreement executed on time, amounts not exceeding 5% of the refund claim for each transaction giving rise to a refund right were excluded from this practice.

The situation we often see in practice is this: the company’s own records are in order, but a supplier failing to file returns or having a negative report on file slows down the file. For this reason, we treat supplier selection and the consistency of invoices with the counterparty’s returns as part of the refund plan.

Common mistakes in VAT refunds

Most of the delays we encounter in refund files stem from file preparation; the legislation itself rarely causes problems. The most common mistakes are:

• Assuming that all carried-forward VAT is refundable. If there is no transaction giving rise to a refund right, the carried-forward amount is not refunded, no matter how large it is.
• Leaving the VAT borne field blank on the return. Declaring the transaction without showing the tax borne may result in you being deemed not to have filed a refund claim.
• Missing the deadline. Once the end of the second calendar year for full exemption, or the end of the following year for the reduced rate, has passed, a refund cannot be claimed with an amended return.
• Inflating the VAT borne calculation. Including expenses unrelated to the refund in the calculation leads to corrections and delays at the checking stage.
• Ignoring supplier risk. Purchases from companies with negative findings hold up that portion of the refund.
• Taking the guarantee route and forgetting the report. If the YMM report is not submitted within six months after a refund against a guarantee, the refund is referred for inspection.

What these mistakes have in common is that the refund is considered only during the filing period. In a business with refund potential, the bookkeeping system should be set up months before the refund claim.

An example scenario for an exporting company

Let’s consider a hypothetical example. A foreign-owned limited liability company manufacturing in Ankara exports most of its products to Europe. The company charges little VAT on its domestic sales but regularly pays VAT on purchases of raw materials and machinery. Its carried-forward VAT grows every month.

This company’s first task is to separate, through the VAT borne calculation, how much of the carried-forward amount is attributable to exports. It then needs to show the exemption and the VAT borne on the return for the period in which it exported, submit the lists and choose a method. For this company, which has regular SGK premium and withholding tax debts, refund by offset makes a quick contribution to cash flow; the cash refund route is open for the remaining amount.

This scenario was constructed to show how to think about the process and does not constitute advice. In an actual file, the company’s compliance history, supplier structure and refund amount change the choice of method.

How should this VAT refund guide be used?

In this article, we have built a general framework for the questions of what a VAT refund is, who can get one and how it is obtained. Export, reduced-rate and withholding refunds will each be covered in separate articles with their own document lists and calculation details. You can find other guides in the Tax Legislation category on our Tax Legislation knowledge base page. If you would like to review the text of the legislation itself, the Revenue Administration (GİB) explanation on the common aspects of VAT refunds is the official reference source.

As Akal CPA, we manage refund files together with the return, list preparation, KDVİRA follow-up and method selection. You can find our scope in this area on our VAT refund services page. For general questions, you can also visit our frequently asked questions page.

A VAT refund is a right granted by law. The way to exercise this right is through a file with complete documents submitted on time.