In this article, you will find information about VAT implications for Turkish properties.

In this article:

Summary

According to the Turkish Value Added Tax (VAT) Law, Agoda, as a non-resident supplier of electronic services in Türkiye, is required to register for VAT-3. As a result, Agoda will be registered for VAT in Türkiye effective as of 1 April 2023.

In accordance with Presidential Decision No. 7346, the VAT rate increased from 18% to 20% as of 10 July 2023 and therefore the following rule shall be applied:

  1. If you are registered for VAT in Türkiye, Agoda is not required to charge you the 20% VAT on service fee/commissions, because you are subject to self-assess the 20% VAT and pay it directly to the Turkish tax authority (GIB), via the so-called reverse charge mechanism.
  2. If you are not registered for VAT in Türkiye, Agoda is required to charge 20% VAT on service fee/commissions to you.

If you are already registered for VAT in Türkiye and have not yet provided us with your VAT registration number, please update your VAT registration number on YCS by following the navigation below:

Property setting page >> Additional regional settings >> Property tax/VAT ID >> Save

FAQs

1. When properties provide a VAT ID, will there be some kind of validity check? Will there be any impact to properties if properties enter an invalid, incorrect or expired VAT ID?

The VAT ID is a 10-digit unique number granted to Partners that have registered for tax in Turkey.

Currently, Agoda can only ensure that any VAT ID accepted in Agoda’s systems is in the correct format i.e., 10 digits, and all numeric. Consequently, Agoda is requesting all Partners to perform this validity check themselves through this website. In accordance with the terms and conditions of the agreements, Partners are responsible for providing true and up-to-date information to the best of their knowledge. Agoda shall perform under the assumption that they have provided the correct information.

If and where a partner has entered an invalid, incorrect or expired VAT ID, there should be no immediate impact for the Partner. However, if Agoda is audited for taxes, the authorities may assess any VAT (and any related penalties and interest) on the commission charged to those Partners which did not have a valid VAT ID. Where this is the case, Agoda may be able to reclaim this VAT on past transactions from the Partner (assuming valid VAT ID for the relevant period can’t be provided).

2. Will Agoda automatically submit sales amount information to the local tax authority in relation to those properties that provided Agoda with their VAT ID? If Agoda does not submit sales amount information to local tax authority for those properties that provided VAT ID to Agoda, does it mean that properties themselves will need to submit sales amount information to the local tax authority?

Agoda will only be required to report and pay 20% VAT on the services it performs to Partners that have NOT provided Agoda with a valid VAT ID.

With regards to the Partners that have provided Agoda with their VAT IDs, Agoda is not required to report transactional data. These Partners will, however, be required to self-assess the 20% VAT on Agoda’s commission under what is called the reverse charge mechanism. Essentially, Partners will need to self-calculate and report the 20% VAT on Agoda’s commission and report this in their VAT return as payable. In principle, a partner with a valid VAT ID, should also be able to report this VAT amount as reclaimable in the same VAT return without creating an additional cost to them. Notwithstanding the foregoing, Partners are responsible for their own tax compliance (including paying tax on the Sell Inclusive booking amount). We strongly recommend to our Partners that they review their own tax position, and where appropriate consult with their tax advisor or accountant, as Agoda cannot provide Partners with any tax advice.

3. For the properties that are VAT-registered, when should they start filing their tax (i.e., applicable start month). Do properties need to file tax for 3 months? Is there a guideline about this?

We strongly recommend and encourage our Partners to review their own tax position, and where appropriate consult with their tax advisor or accountant, as Agoda cannot provide Partners with any tax advice.

4. How will Agoda collecting VAT impact Homes properties, since they are generally not VAT registered?

We recommend that Home Partners confirm their tax status with a local tax professional or accountant, as the requirement to VAT register in Turkey may also apply to Home Partners.

If and where a Turkey-based Partner is not required to register for VAT (e.g. as the Partner does not exceed the local registration threshold), Agoda will apply the 20% VAT on the commission charged for its (electronic) reservation services. The Partner will then receive a commercial statement plus 20% VAT to the Partner for this purpose. The VAT will be charged on top of the commission amount and withheld from payout to the Partner. As such, VAT will be an additional cost to those Partners which are not VAT registered.

5. When will Agoda start sending the commercial statement and how often can the property expect to receive these statements? Will it be a statement per booking or a consolidated statement?

Agoda began charging the VAT and issuing its commercial statements to non-VAT registered Partners as of 1 April 2023.

Agoda will issue the commercial statements on a bi-weekly basis (i.e., every two weeks). The first statement will be sent on the 16th of every month for bookings with check-in dates ranging from the 1st through the 15th of the month. The second statement will be sent on the first of the following month for bookings with check-in dates from the 16th through the end of the month.

Example: For the month November 2023, statements will be sent on: (1) December 16, 2023, for bookings with check-in dates between 1-15 of November 2023; and (2) January 1, 2024, for bookings with check-in dates between the 16-31 of December 2023.

6. Can a property make use of the hotel booking voucher for claiming back the VAT on commission?

Agoda will send commission statements which shows the additional 20% VAT only to Partners who do not have a valid VAT ID (i.e. are not VAT registered). As such, these Partners shall not have any right to deduct input VAT. The 20% VAT charged on top of Agoda’s commission will then add an extra cost to those Partners who are not VAT registered.

Agoda will also send commission statements without the 20% VAT to Partners who have a valid VAT ID (i.e. are VAT registered). For these Partners, Agoda is not required to collect the 20% VAT, but such Partners are required to self-calculate and report the 20% VAT on Agoda’s commission and report this in their VAT return as payable based on the reverse charge mechanism. In principle, the Partner should also be able to report this VAT amount as reclaimable in the same VAT return, therefore not imposing an added cost to a Partner.

Partners shall remain responsible for their own tax compliance, including paying applicable taxes on the Sell Inclusive booking amount). We strongly recommend to our Partners that they review their own tax position, and where appropriate consult with a tax advisor or accountant.

7. Please provide the specific tax regulation that has resulted in the change.

The legislation regulating the implantation of VAT in Turkey has been in effect since 1 January 2018. However, Agoda has been registered since April 2023 with a retroactive effective date since 1 January 2018.

Additionally, the VAT rate has been updated since 10 July 2023 to be 20%.

You can obtain more details on the language of the regulations through the following links:

  1. Tax Procedure Law (TPL) (link);
  2. The Value Added Tax Code in Turkey (link)
8. Why is this change only being implemented now and how will this impact the property in terms of back tax?

The implementation was directly impacted by Agoda’s registration for VAT in April 2023. As such, Agoda will only charge VAT on bookings where the check-in date is from 1 April 2023 onwards.

Regarding VAT registration on 1 April: For any VAT applicable to commissions earned from non-VAT registered Partners during the past and transitional periods, Agoda will bear the tax cost and will not seek to recover any tax from the Partners.

Regarding the VAT change from 18% to 20% on 18 March: For bookings made prior to 18 March 2024, but with check-in dates from 10 July 2023 onwards to which a VAT of 18% is already applied, Agoda will absorb the VAT difference on our commission.

9. What actions does the property/hotel need to take, other than validating and confirming its VAT ID? Are there any system-related updates for the property/hotel to action?

The only action and/or next step required by Partners is to provide Agoda with their valid VAT ID (if applicable).

Note that for certain Partners, Agoda already prepopulated a VAT ID on YCS/HostManage where this information was made available to Agoda via YCS/HostManage and/or another source. Such Partners are required to check and confirm this number as per the instructions provided in our communication. It is important to note that if a prepopulated VAT ID is not changed and/or deleted from YCS/HostManage after the period providing to Partner for confirmation, Agoda will take such VAT ID as valid for that Partner.

If there are any changes to the VAT ID, Partners should inform Agoda immediately.

For new properties/hotels, please ensure that you indicate your valid VAT ID upon registration. If you have not done so, please update your VAT ID on YCS>>Property setting page >>Additional regional settings>>Property tax/VAT ID.

10. Who will receive the commission statements?

Any Partner that has contracted to receive reservation facilitation services from Agoda. Generally, the commission statements will be sent to the email address noted in Agoda’s systems as the financial contact person. For Partners that are on YCS, the commission statements will also be available on the Extranet.

11. What happens if the hotel partner refuses to accept Agoda’s collection of tax on commission?

Under Turkey VAT law, Agoda is legally obligated to register, charge, and remit VAT to the Turkish Revenue Administration, also known as Gelir İdaresi Başkanlığı (GİB). Moreover, under the provisions of the VAT Code, Properties are obligated to pay such VAT to Agoda. Hence, where a Partner refuses to agree on payment of this VAT, this will most likely lead to suspension of the Partner on Agoda’s platforms.

12. What operational change does this mean for us?

There are no operational changes. In accordance with the General Terms and Conditions between you and Agoda, as well as Agoda’s commission business model, Agoda shall deduct its commission from the amounts collected from booking customers and remits net amounts to you/the Property/Partner.

The only change (although not operational) is that Agoda will start charging VAT to non-VAT registered Partners.

Contact us

Still looking for a solution? Contact us via the YCS Need Help Button or other methods. 

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