- In Türkiye, companies use forward contracts with banks to hedge exchange-rate risk or seek profit, and tax authorities have recently started assessing VAT on earnings from these contracts.
- Turkish banking law treats cash-settled forward contracts as derivative financial instruments, so they should be exempt from VAT and subject instead to Banking and Insurance Transaction Tax (BITT).
- VAT generally applies only to the supply of goods or services, and corporate customers entering forward contracts are not considered to be providing a taxable service to banks.
- Despite new VAT penalties and “invitation to explanation” procedures, Council of State precedents suggest that charging VAT on forward transactions is not legally appropriate.
Source: barlaskarabucak.av.tr
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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