Turkey’s value-added tax (VAT) exemption on domestically sourced inputs under the inward processing procedure expired at the end of 2025 and is no longer in force, according to local media reports.
Introduced in 1998 via a temporary clause in the VAT Law, the exemption allowed exporters to procure inputs from domestic suppliers without paying VAT upfront, provided the final product was exported.
With the exemption’s expiry, suppliers must now charge VAT on domestic sales made under inward processing certificates, shifting the cash-flow burden to exporters, who will need to seek refunds from the tax authorities.
Istanbul Ferrous and Non-Ferrous Metals Exporters’ Association board member Ali Bakaner warned that non-renewal could strain exporters’ finances, particularly given lengthy VAT refund timelines.
Market sources said the impact is likely to be felt most by smaller firms with limited liquidity, while larger companies may manage the change more easily. The VAT exemption on imports under the inward processing regime remains in place.
