Calculating VAT line by line: do you pay, or does it carry forward?

Zeynep Hanım the deli owner's scale

At the end of the counter in Zeynep Hanım's delicatessen stands an old scale with two pans. It is no longer used for weighing; it is there as decoration. But there is no better tool for understanding VAT.

On one pan you put the VAT you collected on sales, on the other the VAT you paid on purchases. If the sales pan is heavier, you pay the difference to the state. If the purchases pan is heavier, you pay nothing that month; the surplus stays for the next month.

You saw what VAT is in the article What is VAT? (in Turkish), and what happens on your side in the VAT month in the lesson The VAT return month. In this lesson we fill the pans line by line.

First a check: under simplified taxation you do not collect VAT on sales and you do not file a VAT return (VAT Law art. 17/4-a). This lesson is for VAT taxpayers, that is, those who file a VAT return every month. If you don't know which method you are under, see the lesson Simplified taxation or real taxation?.

Three rates, three lines

VAT is not the same on every product. The rates in force for 2026 are 1%, 10% and 20%. The general rate is 20%; on some goods and services 10% or 1% applies. Your mali müşavir (accountant) knows which product falls under which rate; because rates can change by Presidential decision, ask them about any product you are unsure of.

Zeynep Hanım's shelves have all three rates. We have rounded the figures so the calculation is easy to follow; in a real delicatessen most sales are food, so the share of lower-rate sales is usually larger. Her sales in October 2026 (excluding VAT):

Output VAT (hesaplanan KDV) is the tax you collect from the customer on a sale. It went into the cash box, but it isn't yours. After the VAT you paid on purchases is deducted, you pay the rest to the state by the 28th of the following month; until that day it is money held in trust, waiting in your cash box.

In retail sales the price on the receipt includes VAT. To find the VAT inside it, you divide the price by (1 + rate): on a 20% product, of a 120 lira sale, 100 lira is the goods themselves and 20 lira is VAT. The VAT calculator (in Turkish) does this calculation for you.

The other pan: deductible VAT

What Zeynep Hanım bought in the same month (excluding VAT):

Deductible VAT (indirilecek KDV) is the tax you paid on purchases and are able to deduct from the VAT on sales. Its name in the law is deduction (indirim) (VAT Law art. 29). Not every purchase's VAT can go onto this pan: there are conditions, such as the document being in your name and the purchase being business-related. We go through them one by one in the next lesson, Deductible VAT: which document reduces your VAT?.

Note: the rate on a purchase does not have to match the rate on a sale. You pay 20% VAT on rent, but the product you sell may be a 1% one. The calculation is done on the month's total, not product by product.

The scale: the October calculation

There was 1,000 lira of VAT carried forward from September. The calculation goes like this:

Zeynep Hanım pays the 1,700 lira for October's VAT on 30 November 2026 at the latest: because the last day, 28 November, falls on a Saturday, the payment moves to the first working day. All the days are in the lesson A month's calendar.

November: the scale tips the other way

In November Zeynep Hanım bought a new refrigerated cabinet: 60,000 lira plus 20% VAT, that is, 12,000 lira of VAT. Sales and other purchases stayed the same as in October.

The purchases pan was heavier. No VAT is paid for November. The 9,300 lira difference becomes VAT carried forward (devreden KDV): it appears again as a line in December's calculation and is deducted from that month's VAT. If it isn't used up in December either, it moves on to January. As a rule it is not refunded in cash; it is used in later months. There are exceptions listed in the law: for example, if a large part of your sales are 1% or 10% products, a refund route may open at the end of the year for the VAT that could not be deducted during the year. Your mali müşavir knows the conditions, the lower limit and whether the VAT on fixed assets such as the cabinet counts towards this calculation.

So in a month when you make a big purchase, ask your mali müşavir in advance how your VAT will be affected. The VAT on the cabinet is not wasted, but it does not come back to you as cash straight away either.

Do you have to do the calculation yourself?

No. Your mali müşavir prepares the return. But knowing the logic of this calculation helps in two ways. First, when your mali müşavir says "your VAT came to 1,700 lira this month", you understand where the figure comes from. Second, you can make a rough estimate in the middle of the month and have the money ready.

Every month, ask your mali müşavir for three figures and write them in a notebook: output VAT, deductible VAT, and VAT carried forward to the next month. After six months you will know your business's VAT pattern by heart.

Zeynep Hanım pinned a small note next to the scale on the counter: "Sales pan, purchases pan, left over from last month." On the 15th of every month she fills in the three lines.