In Turkey’s jewellery sector, VAT is applied only to the portion of the sale price that exceeds the exempt bullion value of gold or silver, as defined under Article 17/4-g of VAT Law No. 3065. Jewellers must calculate the bullion value based on purity (“millyem”) and deduct it before applying the 20% VAT rate to the remaining taxable amount, with improper estimations risking penalties during tax audits.
In Turkey’s jewellery sector, VAT is applied only to the portion of the sale price that exceeds the exempt bullion value of gold or silver, as defined under Article 17/4-g of VAT Law No. 3065. Jewellers must calculate the bullion value based on purity (“millyem”) and deduct it before applying the 20% VAT rate to the remaining taxable amount, with improper estimations risking penalties during tax audits.
Turkey: VAT in the Jewellery Sector
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Turkey
Author: Ivana Picajkić
Category:
Fiscal subject related
General information
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14426
Content accuracy validation date:
15.07.2025
Content accuracy validation time:
11:41h
The application of Value Added Tax (VAT) in Turkey’s jewellery sector has some unique rules. VAT is not calculated on the full price of jewellery but only on the portion that is not exempt from VAT.
According to Article 17/4-g of the VAT Law No. 3065, certain items are exempt from VAT, including:
- Gold and silver bullion,
- Foreign currency,
- Money,
- Stocks, bonds, and other capital market instruments traded on Turkish stock exchanges.
In the jewellery sector, gold and silver bullion used in products are also exempt. This means that when a jeweller sells a gold product, they must separate the bullion value from the total price, and only apply VAT to the rest.
As of July 7, 2023, with Presidential Decree No. 7346, the VAT rates were updated to 1%, 10%, and 20%, depending on the product category. Jewellery falls under the 20% VAT rate, unless the bullion exemption applies.
To correctly apply the VAT exemption:
-
Jewellers must determine how much of the item's value comes from pure gold or silver (bullion),
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This is done using a “millyem” calculation, which expresses the purity of gold,
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For example:
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14-carat gold = 14 ÷ 24 = 0.583 millyem
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22-carat gold = 22 ÷ 24 = 0.916 millyem
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The bullion value is calculated using:
Millyem × market price of 1 gram of gold × total grams of gold in the item
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This bullion value is exempt from VAT,
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The remaining amount (sales price minus bullion value) is the taxable base,
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20% VAT is then applied only to this taxable base.
Many businesses estimate VAT instead of properly separating the bullion portion. However, tax authorities require the exact bullion value to be deducted, and VAT must be charged on the non-bullion portion. Failure to follow this process can result in tax issues during audits.
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