Taxation of the exchange rates differences dilemma in the context of VAT in Turkey

Abstract

Exchange rate differences, which involve negative or positive value changes to a particular currency unit against another during the buying and selling exchange process, might as well involve gaps or deficiencies in legal arrangements that in turn result in different interpretations and applications. Controversies regarding this issue are observed particularly in the context of Value Added Tax Legislation.

It is observed that there exists an ongoing conflict between the Council of State and taxation authorities on whether or not the exchange rate differences should be included in determining VAT. This also causes academics, experts and implementers to pursue diverse interpretations and applications. A number of intelligible arrangements regarding the taxation of exchange rate differences with respect to VAT should be made urgently to amend the gaps in law.