Tax Certainty · Turkey Emissions Trading System
Carbon Allowance Accounting & Tax Review in Turkey
A CPA-led review of how your Turkish company should account for, tax and invoice carbon allowances under the Turkey ETS — written for CFOs, group controllers and tax teams, not for environmental engineers.
Request an assessment Read the Turkey ETS guideWhat this service is. The Turkey ETS Tax & Accounting Review is a written professional opinion on the finance side of Turkey’s Emissions Trading System. It covers carbon allowance accounting under TFRS/IFRS and the Turkish statutory books, corporate tax deductibility, VAT on allowance trades, intra-group transfers, EPİAŞ collateral and payment workflow, and CBAM cost documentation. It does not cover emissions monitoring or verification.
The Questions CFOs Are Asking About the Turkey ETS
Companies rarely look for “ETS consulting”. They look for answers to specific finance questions. These are the ones this review answers, applied to your installation and group structure.
How are carbon allowances accounted for in Turkey?
No IFRS standard deals specifically with emission allowances, so each group must adopt and document an accounting policy — usually intangible asset (IAS 38) or inventory, with a provision for the surrender obligation (IAS 37). In Turkey, that policy must also be reconciled with the Tax Procedure Law (VUK) valuation rules used in the statutory books.
Are ETS costs deductible for Turkish corporate tax?
Costs incurred to keep an installation operating are, in principle, business expenses under Corporate Tax Law No. 5520. The open questions are timing (purchase, emission or surrender), the tax base of free allowances, and how default interest charged by EPİAŞ is treated. The Revenue Administration has not yet issued specific guidance.
Is there VAT on the sale of carbon allowances in Turkey?
The EPDK market regulation (Official Gazette No. 33407, 21 October 2026) adds the current VAT rate to trade value and fees in its collateral formula, and requires secondary-market sellers to invoice EPİAŞ. This points to VAT applying to allowance trades. Recovery mechanics and the treatment of free allocation still need a documented position.
Is our company within the scope of the Turkey ETS?
An installation carrying out an Annex 1 activity is in the trading scope if it emits more than 50,000 tCO2e a year (Category B or C). The 2026–2027 pilot covers electricity generation, cement, iron and steel, aluminium and fertiliser. Smaller installations keep monitoring and reporting duties.
How much extra cost will CBAM and the Turkey ETS create for us?
The answer depends on the shortfall between verified emissions and free allocation, the allowance price, and how much of the Turkish carbon price your EU customers can credit under Article 9 of the CBAM Regulation (EU) 2023/956. We model these together, per installation and per export product.
What the Review Covers
1. Carbon Allowance Accounting Policy (TFRS/IFRS and statutory books)
A policy for initial recognition, free allocation, purchases, sales, banking and the surrender provision, aligned with your group’s EU ETS policy where one exists, and a reconciliation to the VUK statutory treatment.
Deliverables: written accounting policy memo · sample journal entries · group-to-local reconciliation table
2. Corporate Tax & VAT Opinion
A written opinion on deductibility and timing, the tax base of free allowances, VAT on purchases and sales, e-invoice obligations for secondary-market sales, and the treatment of EPİAŞ fees and default interest. Where the position is uncertain, we say so and assess whether a ruling request (özelge) under Article 413 of the Tax Procedure Law is warranted.
Deliverables: CPA-signed opinion with law citations · risk rating per issue · draft ruling request where appropriate
3. ETS Financial Impact & Cash-Flow Model
A model of allowance shortfall, purchase timing, collateral requirements (including VAT under Article 35 of the market regulation), EPİAŞ fees and the two-business-day payment cycle, built into your budget calendar.
Deliverables: scenario model (price and allocation sensitivities) · collateral sizing note · carbon cash calendar
4. CBAM & Turkey ETS Cost Analysis for EU Exporters
A per-product view of embedded emissions, the carbon price effectively paid in Turkey, the free-allocation adjustment and the documentation your EU importer needs to claim the Article 9 reduction.
Deliverables: product-level cost table · evidence checklist for the EU importer · intra-group pricing note
5. Foreign-Owned Subsidiary Carbon Review
For Turkish subsidiaries of foreign groups: group reporting alignment, related-party allowance transfers under Corporate Tax Law Article 13, local payment authority, bank guarantee structure (including foreign-bank counter-guarantees) and EPİAŞ registry access documents.
Deliverables: gap report for group finance · transfer pricing addendum · registry and collateral readiness checklist
6. Always-on Compliance: Ongoing ETS Finance Support
Monthly or quarterly support covering invoice and VAT review of allowance trades, year-end provisions, the 30 April and November calendar, and coordination with your verification body and environmental advisers.
Deliverables: periodic review notes · year-end carbon schedule · compliance calendar
Who This Review Is Designed For
| Client | Typical trigger | Best starting point |
|---|---|---|
| Cement, iron and steel, aluminium, fertiliser and power companies in Turkey | Pilot-phase reporting in 2026; first priced year 2027 | Corporate Tax & VAT Opinion + Accounting Policy |
| Manufacturers exporting to the EU | EU customers requesting CBAM data and carbon price evidence | CBAM & Turkey ETS Cost Analysis |
| Turkish subsidiaries of foreign groups | Group IFRS policy must be applied locally; parent treasury must approve collateral | Foreign-Owned Subsidiary Carbon Review |
| Companies trading allowances between group entities | Bilateral transfers, invoices and transfer pricing | Corporate Tax & VAT Opinion |
How the Review Works
- Scoping call. Installation category, sector, group structure, export exposure and existing group policy.
- Document request. Permit, monitoring plan, latest emissions report, group accounting policy, intercompany agreements, bank lines.
- Analysis. Accounting, tax, VAT and cash-flow analysis under current Turkish legislation.
- Written deliverable. A CPA-signed opinion or report, in English, with a Turkish version available for the local finance team and auditors.
- Follow-up. Update when the Carbon Market Board, EPDK or the Revenue Administration issues new decisions.
What We Do Not Do
Emissions monitoring plans, greenhouse gas verification and engineering measurement require accredited verification bodies and environmental engineers. We do not provide them. Where needed, we coordinate with your verifier or environmental adviser so that the finance figures and the verified emissions match. We also do not trade allowances on your behalf or give investment advice on carbon prices.
Why a CPA, and Why Now
From the 2027 system year, carbon in Turkey has a price, an invoice, VAT, collateral and a payment deadline. Those are accounting and tax events. Large audit firms cover the policy level; this review focuses on the specific Turkish questions — VUK books, VAT on EPİAŞ invoices, intra-group transfers, lira collateral — that decide whether your local numbers are right. Fees are confirmed privately after scoping.
Frequently Asked Questions
Is this an environmental consultancy service?
No. The review covers the accounting, tax, VAT, cash-flow and reporting consequences of the Turkey ETS. Emissions monitoring and verification are carried out by accredited verification bodies and environmental engineers, with whom we coordinate where needed.
We are not yet buying allowances. Is it too early?
2026 is a reporting-only year, but the 2026 verified data feeds free allocation, and the accounting policy, VAT handling and collateral arrangements need to be ready before the first priced year (2027). Setting the policy before amounts become material is easier to defend in audit.
Can you work with our group auditors?
Yes. The deliverables are written to be shared with group and local auditors, with law citations and a clear statement of open issues where Turkish guidance has not yet been issued.
Do you guarantee the tax treatment?
No. Where Turkish legislation or guidance is silent, the opinion sets out the supportable position, the risk and the option of a ruling request. We do not present uncertain treatments as settled.
In which languages is the opinion delivered?
English, with a Turkish version available for the local finance team, auditors and tax authority correspondence.
Request a Turkey ETS Tax & Accounting Assessment
Tell us your installation category, sector, group structure and whether you export to the EU. We will come back with a scope and a fee proposal.
Request a proposalOr write to info@ozmconsultancy.com · +90 216 352 29 61 · WhatsApp +90 506 682 96 55
CPA Evren Özmen · TÜRMOB Reg. No. 35675 · Verification · Wikidata
Disclaimer. This page describes a professional service and is not tax, legal or accounting advice. Turkey ETS parameters are still being set by the Carbon Market Board and EPDK, and treatment depends on each company’s facts.
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Evren Özmen, CPA (SMMM) · TÜRMOB Reg. No. 35675 · We reply in English, usually within one business day.