The Ministry of Treasury and Finance has announced the new VAT refund threshold for transactions subject to reduced rates. According to the regulation published in the Official Gazette on December 31, 2025, the non-refundable limit for the 2026 calendar year has been increased to TRY 164,000. This update is a critical development for taxpayers in Türkiye who provide goods or services at reduced VAT rates, as it directly determines the portion of VAT that can be claimed as a refund. What is the Reduced Rate VAT Refund? Under Article 28 of the Turkish VAT Law, certain sectors operate with reduced VAT rates. If the VAT paid on expenses (input VAT) exceeds the VAT collected on sales (output VAT), taxpayers are entitled to a refund. However, a specific “lower limit” is set each year; only the amount exceeding this threshold is eligible for refunding. 2026 Threshold: TRY 164,000 2025 Threshold: TRY 130,700 Effect: Taxpayers can only claim a refund for the portion of their cumulative VAT receivables that exceeds TRY 164,000 in 2026. Historical Context and Revaluation The refund threshold has seen a significant upward trend, especially in recent years, due to annual revaluation rates. Here is a brief look at the threshold’s progression: 2024: TRY 90,800 2025: TRY 130,700 2026: TRY 164,000 Important Deadlines and Procedures To successfully claim a VAT refund in Türkiye, taxpayers must adhere to strict procedural timelines: Declaration: Refund claims must be declared within the VAT return periods from January to November of the year following the transactions. CPA Reports: If the refund is requested based on a Sworn-in Certified Public Accountant (YMM) report, the report must be submitted within six months after the end of the year following the transaction. Risk of Inspection: Failure to submit the required documentation or CPA reports within the legal timeframe may lead to the refund claim being referred for a formal tax inspection. Scope of Application The treatment of VAT depends on the transaction type: Fully Exempt Transactions: VAT that cannot be recovered through deduction is eligible for a refund (following the TRY 164,000 threshold). Partially Exempt Transactions: Incurred VAT cannot be refunded; instead, it is recorded as an expense or cost. Non-VAT Transactions: These are excluded from VAT returns entirely. Conclusion for Businesses The increase to TRY 164,000 means that businesses will need to carry a higher amount of “input VAT” before becoming eligible for a cash or offset refund. Companies should update their 2026 tax planning and cash flow projections to account for this new limit. Source: TurkStat Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.