VAT withholding

Turkish VAT law moves part of the tax on certain domestic supplies from the seller to the buyer: the buyer declares and pays that share directly to the tax office and remits only the balance to the seller. Local practice calls the mechanism KDV tevkifati, and for a group used to one VAT amount travelling with the invoice it behaves unlike anything in the parent's chart of accounts. The document itself is explicit about it. Alongside the taxable base and the calculated VAT, a withheld amount and an amount to be collected are printed as separate lines, and the second of those, not the document total, is what the seller is owed. Read that way, the receivable equals the collectible amount and the incoming payment clears it exactly. The withheld share is not one fixed percentage either; it changes with the type of supply, so it has to be taken from each invoice rather than assumed once for a supplier.

Differences appear when the two sides use different bases for the same document. A local ERP hands over an account statement with debit and credit columns only, so the gross document total travels and the tax breakdown that explained it stays behind; a group template that books every invoice at face value produces the same effect from the other end. One ledger then holds the invoice at its gross total, the other at the collectible amount, and an amount-only matching rule refuses to apply the payment, leaving a residue that ages quietly in the receivables report as if it were unpaid. In a subsidiary reporting into a foreign parent this usually surfaces late, at consolidation or in an intercompany dispute, where the counterparty ledger and the local statement disagree by a figure nobody in the reporting chain recognises. Bulk payments make it harder still: one transfer can settle withheld and non-withheld invoices together, so it matches no single invoice exactly. The reliable test is to hold the size of the gap against the withholding line on the invoice, then record the match together with the reason behind it.

The most common misreading is to treat the shortfall as a discount or as short payment. The counterparty has settled its obligation in full; part of the money went to the tax authority instead of to you, which makes this a bookkeeping question rather than a collection question. A second is filing withholding gaps in the same bucket as exchange differences and rebates. All three break a balance, but their causes and their corrections are unrelated. A third is clearing the item by hand every period without writing down why, so the same question returns at the next audit or the next group review. Placing the withholding line from the e-invoice data, the ledger entry and the bank credit side by side separates the cause in a single glance. iFinances matches those three sources in one table, flags the difference and states the reason in writing; it does not keep your books and never closes a line on its own. Under continuous reconciliation the check does not wait for period end: as invoices and bank movements arrive, withholding differences collect in an exception bucket of their own, so the list left to clear at close is shorter.