Tax Refund: How to Apply and How the Process Works?

This article details what a tax refund is, what types of tax refunds exist, and how to obtain one.

What is a Tax Refund?

In Turkey, the types and methods of taxation for individuals and businesses are determined by laws. Businesses that meet certain conditions specified in these laws can reclaim a portion of the taxes they have paid. This benefit provided to businesses is called a "tax refund." Tax refunds are applied to alleviate the tax burden on taxpayers, ensure the fair functioning of the tax system, and, in some cases, provide incentives to taxpayers.Tax refunds are subject to certain conditions determined by legal regulations. Only some companies can receive a refund, and the conditions for a tax refund may vary depending on the type of tax paid.

Who Can Receive a Tax Refund?

In Turkey, sole proprietorships pay income tax, while limited and joint-stock companies are subject to corporate tax. Click here to read about the types of companies that can be established in Turkey and their features.Companies can benefit from tax refunds depending on the taxes they are subject to and their areas of activity. While income and corporate tax refunds may apply to all companies, certain groups are designated for VAT refunds.

Income Tax and Corporate Tax Refunds

The process for obtaining income tax and corporate tax refunds is easier than for VAT refunds. After the tax return is submitted, a request for a refund can be made. Applications must be made through GEKSIS, a system established by the Revenue Administration, and the required documents must be uploaded online.The taxes paid through withholding during the year are first offset against the amount calculated on the tax return submitted annually by income taxpayers.

Value Added Tax (VAT) Refund

According to Turkiye's taxation system, VAT is intended to be collected from the consumer when a product or service is sold. However, in certain situations, companies are supported by the government through VAT refunds. For example, since exporter companies do not sell their goods and services domestically, and foreign consumers are not subject to Turkey's tax system, a VAT cost disadvantage arises for companies. To prevent this, the government offers VAT refunds to companies.

How to Obtain a VAT Refund?

A company must belong to one of the groups eligible for a VAT refund. The following groups can apply for a VAT refund:

• Exporters
• Intermediaries of Export
• Companies Operating in Special Economic Zones
• Companies with Tax Exemption
• Public Institutions and Non-Governmental Organizations

Apart from this condition, a tax return must be submitted, and the required documents must be uploaded to the system to apply. It is advisable to have a certified public accountant or financial advisor handle the application, as the process can be more complex than other tax refunds.

When Can a Tax Refund be Obtained?

A tax refund application can be made within one year of the tax payment being made. The process can take two to six months.

What Documents are Required for a Tax Refund?

The necessary documents for a tax refund can be listed as follows:

• Tax Return
• Invoices and Receipts
• Business Accounts and Records
• Export and Import Documents
• Refund Request Petition
• Others

Tax Return

In all tax refund processes, the taxpayer must fill out the tax return and submit a petition stating their refund request.

Invoices and Receipts

The person or business requesting the tax refund must present invoices and receipts for the relevant period.

Business Accounts and Records

The tax office may request documents showing the business's financial status. These documents can include the income statement, balance sheet, bank account summaries, and other financial records.

Export and Import Documents

If the tax refund request concerns export or import activities, documents related to these transactions (such as import or export declarations) must be submitted.

Refund Request Petition

The required documents include the petition for the tax refund request.

Other Necessary Documents

Other documents requested by the tax office or relevant institution for the tax refund application may also be required. These documents may vary depending on particular circumstances or tax regulations.

How to Apply for a Tax Refund?

The Revenue Administration's GEKSIS platform facilitates tax refund application processes. Businesses can start the process by uploading their documents electronically to this platform. We recommend seeking the assistance of a certified public accountant or financial advisor for the tax refund application. Since they will be familiar with the company's financial details, these advisors can provide better guidance.A guide on how to perform GEKSIS transactions can be accessed here.

Tax Refund Calculation

When calculating the tax refund, the documents submitted by the company are taken as the basis. The amount to be refunded is determined by tax officers based on the tax amount paid and is paid to the company. The tax payment to the company can occur in two ways:

Offset Refund

The amount of tax refund obtained by the company is offset against the company's different debts to the state. In an offset refund, the company's debts to the tax office to which it is affiliated can be chosen, or debts to other tax offices can also be offset.

Cash Refund

The tax refund obtained by the company is paid directly to the company's account in cash.

Tax Refund Inquiry

Tax refund applications, document uploads, and inquiries can be performed online through the GEKSIS platform. Since the Revenue Administration may take time to evaluate the company's data and submitted documents, patience is required during this period.

Canceling a Tax Refund

In some cases, businesses may want to withdraw their tax refund requests. Businesses that wish to cancel their tax refund requests should view their ongoing refund requests on GEKSIS. The cancellation process can be done from the menu where the request details are located.

Frequently Asked Questions

When is a tax refund made?

A tax refund application can be made within one year after submitting the tax return.

What documents are required for a tax refund?The necessary documents for a tax refund include the tax return, invoices and receipts for the relevant period, business accounts and records, export and import documents, a refund request petition, and other additional documents if required.

How is a tax refund calculated?

The refund is calculated based on the documents submitted by the company. Tax officers determine the amount to be refunded based on the tax amount paid, and it is paid either as an offset or cash refund.

How to inquire about a tax refund?

Tax refund inquiries can be made through the GEKSIS platform of the Revenue Administration.

How to cancel a tax refund?

Tax refund applications, process tracking, and cancellations can be performed by logging into GEKSIS.