The scope of e-bookkeeping and e-invoice obligation expands in Turkey

Diyadin Yakut* - ISTANBUL

Bookkeeping, as an indispensable part of general accounting and taxation, has been employed from its very inception, no matter how primitive it was, as a tool to record financial transactions and other information pertaining to a business entity on a day-to-day basis. The core function of any type of bookkeeping in any period of history has been, unmistakably, to ensure that records regarding each and every individual financial transaction are accurate, up-to-date and comprehensive.

An invoice, on the other hand, is a document with commercial, legal and financial implications and issued by a seller to a specific buyer, indicating a certain financial transaction that include the sale of a good or service in exchange for a price determined in monetary terms.

Being well aware of the vital significance of bookkeeping and invoices for the soundness and efficiency of the taxation system in general and the collection of taxes in particular, and more importantly for the relations between the Tax Administration and taxpayers, e-bookkeeping was adopted by the government as an inherent part of the massive initiative to computerize public services under the name of the so-called “e-government project,” which was envisioned to exploit electronic devices and telecommunication technology to reduce associated costs, simplify civil service procedures and facilitate the active participation of citizens from all walks of life, civil society organizations of every political persuasion and business circles in the name of efficiency, transparency and good governance.

Generally speaking, the transition to e-bookkeeping can be considered as a major step forward in the decade-long endeavor to bring the Turkish bookkeeping system and accounting profession in line with international best practices.

To satisfy this mounting need, a number of primary and secondary legislative steps were taken by the government.

To this end, the reiterated Article No.242 of the Turkish Tax Procedure Law that regulates the details with respect to mandatory books was amended with a brand-new section which defines e-bookkeeping as an aggregation of all electronic records that the mandatory and conventional books have to contain.

As pointed out in the reiterated Article No/242 of the Tax Procedure Law, the technical aspects of devising the e-bookkeeping system is left to the Revenue Administration, a semi-autonomous and Finance Ministry-affiliated institution tasked and authorized to carry out virtually all tax-related affairs nationwide to arrive at the ultimate goal of a fully-fledged automated electronic tax office within the wider context of the e-government project. In this regard, the Revenue Administration has drafted and published various secondary legal documents and general communiqués constituting the vast majority, the most recent of which being the General Communiqué No.454 dated June 20.

Previous general communiqués

The original introduction of e-invoices to the Turkish tax system happened with the publication of General Communiqué No.397 and effective on March 5, 2010, which designated e-invoices as a voluntary option to be used by joint stock and limited liability companies.

Later on Dec. 13, 2011, the preparation of mandatory books electronically was introduced with the General Communiqué No.1 on e-bookkeeping, which provided some taxpayers that meet certain criteria with the opportunity to voluntarily employ e-bookkeeping as an alternative.

Further, the provisions of the aforementioned General Communiqué No.397 were accordingly amended with the promulgation of General Communiqué No.416 on June 28, 2012, to allow taxpayers other than joint-stock companies and limited-liability companies to use electronic invoices, provided that these taxpayers meet certain criteria specified in the relevant legislation. 

For the first time with General Communiqué No.421, which was promulgated on Dec. 14, 2012, the “voluntary scheme” was left behind and keeping electronic books and using electronic invoices was made mandatory for some groups of taxpayers such as companies holding lube oil trade licenses within the context of Turkish Petroleum Market Law, certain taxpayers with a minimum specific annual gross revenue that have purchases from these “license holding” companies and other companies manufacturing or importing goods mentioned in the List No.(III) Attached to the Excise Tax Law.

Recent regulation

Lastly, after sharing a draft communiqué to receive feedback from the general public, business circles and professional associations, the Revenue Administration proceeded to publish the General Communiqué No. 454 on June 20, as its last and most comprehensive step in a row of administrative efforts to expand the scope of the responsibility to keep electronic books and invoices by compelling more taxpayers, in addition to those obliged by the previous communiqué, that meet certain criteria to keep electronic books and invoices. 
According to this last piece of legislation, the following taxpayers are included, besides previously mentioned ones, within the scope of the so-called “mandatory scheme” regarding e-bookkeeping and e-invoices:

a) Taxpayers with gross revenues over 10 million Turkish Liras in 2014 or the following fiscal periods,
b) Taxpayers who get authorizing licenses from the Energy Market Regulatory Authority (EMRA) due to production, imports, delivery etc. of the goods specified in the List No.(I) attached to the Excise Tax Law, 
c) Taxpayers who produce, construct and import the goods mentioned in the List No.(III) attached to the Excise Tax Law.



* Diyadin Yakut is a tax inspector at the Finance Ministry