The tax obligations related to opening a branch in the customer’s country abroad can be summarized as follows:
Invoice Issuance: It is possible to issue invoices in the name of the branch abroad, and these transactions must comply with the tax laws of the country where the branch is located.
Transfer Pricing: Transactions with the branch must be priced at arm’s length. A transfer pricing report should be prepared by the parent company in Turkey for the branch’s activities, and there is no need for the branch itself to prepare a separate report.
VAT Exemption: Export deliveries are exempt from VAT. However, any tax paid by the branch abroad cannot be deducted from the VAT calculated in Turkey.
Source: Revenue Administration of Republic of Türkiye
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 Karen Audit 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.
