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October 25, 2019
Turkey introduces Digital Services Tax
On 24 October 2019, the Turkish Government submitted an initial bill which introduces a Digital Services Tax (DST) into Turkish tax legislation. The bill proposes a DST at the rate of 7.5% on revenue and sets forth the scope of the tax, the taxpayers and exemptions.
According to the initial bill, revenues derived from the provision of the following services are subject to DST:
The tax base for the DST is revenue derived from the provision of the respective services during the related tax period. The taxation period for the DST is one-month periods of the calendar year.
The tax rate is 7.5%. The President has the authority to reduce the rate to 1% or double the rate of 7.5%, based on service type, separately or altogether.
Taxpayers subject to this proposed tax will be the providers of these digital services. Their state of being fully liable, or not, as per the Income Tax Law No. 193 and the Corporation Tax Law No. 5520, under limited liability status, does not affect the tax liability for digital services. Neither does the question of whether they are dealing with the concerning activities through a place of business or permanent representatives in Turkey play a role. In situations where the taxpayer has no residency, legal and/or business center in Turkey and other situations where it is deemed appropriate, the Ministry of Treasury and Finance may determine the taxpayer to be the parties to the transaction subject to taxation or the ones who mediate the transaction and payment.
Taxpayers exceeding a revenue threshold of €750 million in global revenues and TRY20 million in local revenues are subject to DST.
According to the initial bill, revenues derived from the provision of the following services are exempt from DST:
The provisions of the bill regarding the DST will be effective in the third month following publication of the Law in the Official Gazette.
For additional information with respect to this Alert, please contact the following:
Kuzey Yeminli Mali Müsavirlik ve Bagimsiz Denetim A.S. Istanbul