This article discusses stamp tax in Turkey, focusing on why VAT is excluded from the taxable base and whether other indirect taxes should be too.
Stamp tax in Turkey plays a critical role in determining the tax obligations that arise from official documents. While VAT has been excluded from the stamp tax base since 1997, the treatment of other indirect taxes—such as Special Consumption Tax (SCT)—remains legally ambiguous. This article examines the inconsistencies in administrative practices and court rulings regarding the scope of the stamp tax base in Turkey.
Overview of Stamp Tax Practice in Turkey
Stamp tax in Turkey is applied to official documents that create monetary obligations. The 30th Stamp Tax Communiqué, issued in 1997, clearly excluded VAT from the stamp tax base following consistent court rulings. However, the tax authority’s later approach—including other taxes such as Special Consumption Tax (SCT) in the base—raises significant concerns. This article explores whether such inclusion violates the principle of tax legality and contradicts both the intent of the communiqué and constitutional principles in Turkey.
Legal Framework for Stamp Tax in Turkey
The primary legislation governing stamp tax in Turkey is Law No. 488 on Stamp Tax. Article 1 defines the scope of taxable documents as those listed in the annexed Schedule (1), which are subject to stamp tax if they are issued and signed—either with a physical signature or its electronic equivalent—and presented to prove or document a legal matter.
It is important to note that the mere drafting and signing of a document are not sufficient for taxation; the document must also be used to prove a transaction or serve as legal evidence. Additionally, Article 10 of the same law sets out the valuation method, stating:
“Stamp tax is levied either as a fixed amount or ad valorem. For ad valorem tax, the taxable base is the specified monetary amount in the document, depending on its nature.”
The phrase “specified monetary amount” is critical in determining the stamp tax base. However, the law does not clearly state whether other components—such as indirect taxes—are included in that amount. This ambiguity has led to divergent interpretations, both in administrative practice and legal scholarship.
While this section summarizes the legislative background, the specific focus of this article is on how this vague definition has impacted the inclusion of VAT and other taxes in the stamp tax base in Turkey.
Exclusion of VAT Under Turkey’s 30th Stamp Tax Communiqué
The 30th Stamp Tax Communiqué, published in 1997 by Turkey’s Ministry of Finance, was issued in response to growing legal disputes regarding whether VAT should be included in the stamp tax base for contracts and similar documents.
The communiqué clarified that stamp tax must be calculated based only on the contract value excluding VAT. This followed consistent rulings by Turkish courts, which held that VAT is not part of the actual consideration paid for goods or services, and that taxing VAT would result in “taxing a tax”—a practice contrary to basic principles of taxation.
The communiqué explicitly states:
“Given the consistent court decisions indicating that VAT is not part of the consideration for the contracted service or goods, and that its inclusion would mean double taxation, from now on the stamp tax shall be calculated only over the value excluding VAT.”
This marked a turning point in Turkey’s stamp tax practice. However, it is notable that the communiqué did not mention other indirect taxes such as SCT (Special Consumption Tax), creating a legal grey area that continues to cause confusion in administrative practice.
Turkish Court Rulings on Taxes Other Than VAT
While Turkish courts have clearly established that VAT should be excluded from the stamp tax base, their reasoning can also be extended to other types of indirect taxes, such as the Special Consumption Tax (SCT). Key decisions by the Council of State (Danıştay) provide insight into how the tax base should be determined in light of constitutional principles.
For example, in its 1998 ruling (E. 1997/2496, K. 1998/669), the 7th Chamber of the Council of State emphasized that stamp tax in Turkey must be calculated on the actual payment for goods or services rendered—not on the VAT amount, which is ultimately transferred to the government and does not constitute income for the service provider:
“Value Added Tax is borne by the end consumer, and its amount is transferred directly to the tax office. Therefore, it cannot be considered part of the payment received by the contractor. Including VAT in the stamp tax base leads to taxing a value that does not increase the contractor’s wealth.”
In another ruling (E. 1997/2459, K. 1998/106), the same chamber confirmed that including VAT in the stamp tax base would violate the basic principles of taxation and the intent of the Stamp Tax Law. The court reasoned that unless the law explicitly includes taxes like VAT or SCT in the base, they should not be considered part of the taxable amount.
Although these rulings primarily address VAT, their logic—particularly regarding the principle of taxing actual economic gain—can be extended to other taxes not explicitly covered in law, such as SCT.
Administrative Practice and Private Rulings in Turkey
Despite the clarity brought by the 30th Stamp Tax Communiqué regarding the exclusion of VAT, the Turkish Revenue Administration has continued to include other taxes—such as the Special Consumption Tax (SCT)—in the stamp tax base through private rulings and administrative interpretations.
A notable example is a private ruling issued by the Ankara Tax Office in 2011. The ruling addressed whether SCT should be included in the stamp tax base for procurement contracts involving government agencies. The administration concluded that, because no explicit provision excluded SCT in the same way as VAT, it must be included in the taxable amount.
“Since the legislation and the 30th Stamp Tax Communiqué do not explicitly exclude other taxes like SCT, stamp tax should be calculated on the total amount including SCT.”
This position contradicts the legal rationale behind the exclusion of VAT, particularly the court-established principle that taxes passed directly to the government (and not retained by the contracting party) should not form part of the taxable base.
The inconsistency between the treatment of VAT and other taxes reveals a contradiction in the administrative approach, undermining the principle of legal certainty and the rule of law in Turkey’s tax system.
The Constitutional Court and the Principle of Tax Legality in Turkey
At the core of the ongoing debate lies the ambiguity in Article 10 of Turkey’s Stamp Tax Law regarding what constitutes the “tax base.” While the term “specified monetary amount” is mentioned, its scope remains undefined, leaving room for interpretation and inconsistent application.
Numerous rulings from the Constitutional Court of Turkey emphasize that, under the principle of tax legality and the rule of law, any tax burden must be imposed through clear and explicit legal provisions. The Court states:
“Under the principle of legal certainty, legislation must be clear, accessible, and predictable for both taxpayers and the administration. The scope of taxation must be explicitly determined by law, and no interpretation should extend tax obligations beyond what the law provides.”
This principle, when applied to stamp tax in Turkey, supports the exclusion of indirect taxes—such as VAT and SCT—from the tax base unless expressly included by statute. Courts have consistently ruled that taxes passed on to the government do not constitute part of the contractor’s income and, therefore, should not be taxed again through stamp duty.
By disregarding this principle and relying on silence in the 30th Communiqué to justify including SCT, the tax authority effectively bypasses the requirement of legal clarity and creates a risk of arbitrary taxation.
Final Evaluation and Conclusion
As discussed throughout this article, the lack of clarity in Article 10 of the Stamp Tax Law in Turkey has resulted in divergent interpretations regarding whether indirect taxes, other than VAT, should be included in the stamp tax base.
While the 30th Communiqué explicitly excludes VAT, it remains silent on other taxes. The Turkish Revenue Administration interprets this silence in its favor by including other taxes in the base. However, this approach contradicts both the spirit of the communiqué and the consistent rulings of Turkish courts, which emphasize the importance of legal clarity and the constitutional principle of tax legality.
In modern tax systems, including Turkey, the tax base must be clearly defined by law to ensure foreseeability and legal security for taxpayers. For example, Article 24 of the VAT Law in Turkey provides a comprehensive list of what should be included in the tax base. If the legislature intended for other taxes like SCT to be part of the stamp tax base, such an inclusion should have been stated explicitly in the Stamp Tax Law.
The current administrative practice of including SCT and similar taxes in the stamp tax base lacks a clear legal foundation and contradicts the legal reasoning used for the exclusion of VAT. Until a legislative amendment or binding judicial ruling clarifies the issue, including such taxes in the base risks violating the constitutional principle of tax legality in Turkey.
Properly planning your stamp tax exposure in Turkey not only ensures tax compliance but also protects your company from potential legal and financial risks.
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References
- 30th Stamp Tax Communiqué (Turkey)
- Law No. 488 on Stamp Tax (Turkey)
- Kuran, Mustafa & Karagöz, Ayhan. “The Term ‘Specified Monetary Amount’ in Stamp Tax According to Private Rulings and Court Decisions,” Lebib Yalkın Legal Journal, Issue 146, February 2016
- Official Gazette of Turkey, dated 20/04/2017, Issue No. 30044
- Official Gazette of Turkey, dated 07/04/2015, Issue No. 29319