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Turkey: Legislative proposal for digital services tax

Turkey: Legislative proposal for digital services tax

Draft legislation proposes to introduce a digital service tax, to be imposed at a rate of 7.5% on Turkish revenues.


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A commission of the Turkish Parliament approved the draft legislation as presented by the Turkish government, and this version is to be presented to the general assembly of the Parliament for its consideration and vote. If passed, the bill would be presented to the president for signature, and then would be published in the official gazette as part of the legislative process prior to enactment.

What services would be within the scope of the digital services tax?

According to the draft legislation, revenue from the following services would be subject to the digital services tax:

  • Digital advertising services—including advertising control and performance measurement services, data transmission and management related to users, and technical services for the presentation of advertising
  • Sales of any audible, visual or digital content—including computer programs, applications, music, video, video games, in-game applications, etc., via a digital platform as well as services provided for listening, watching, playing or recording or using such content by use of electronic devices
  • Services for the provision and operation of a digital platform by which users may interact with each other—including services to sell or facilitate the sale of a good or service among these users

Intermediary services provided by a digital platform to "the digital service providers" for the services noted above would also be subject to the digital services tax in Turkey.

Who would be the taxpayer subject to the digital services tax?

The draft legislation provides that persons subject to the digital services tax (that is, the taxpayer) would be persons that, either individually or on a group-wide basis, meet both of the following conditions in the calendar year before the year when the taxable revenues are obtained:

  • Total worldwide revenue of not less than €750 million (or an equivalent amount)
  • Revenue of not less than TRY 20 million (approximately €3.137 million) obtained in Turkey from the digital services (as defined above)

The proposal includes measures regarding the taxpayers, and for these purposes, it would not be relevant whether these providers have full taxpayer status (pursuant to Turkey’s income tax law or corporate tax law) or whether they perform such activities through a registered office or permanent establishment in Turkey. Thus, regardless of the taxpayer's residence, a permanent establishment, registered head office or business center in Turkey could be held liable for the digital services tax.

What would be the tax base and rate of the tax?

The tax base of the digital services tax would be the amount of revenue obtained from the digital services during the relevant tax period. No deductions would be available for expenses, costs or tax.

The rate of the digital services tax would be 7.5%, but the president would be given authority to reduce this rate downward to 1% and to increase the rate of up to two-fold the applicable rate of 7.5%.

Would there be any exemptions from the tax?

In general, taxpayers that do not exceed the thresholds would not be subject to the digital services tax. The draft legislation also would allow for an exemption from the digital services tax for:

  • Services for which treasury shares are paid in accordance with article 37 of the Telegram and Telephone Law of 1924 and No. 406
  • Services for which a special communication tax is charged under article 39 of the Expense Tax Law of 1956 and No.6802
  • Services within the scope of article 4 of the Banking Law of 2005 and No. 5411
  • Sales of products created as a result of research and development (R&D) activities in R&D centres defined by article 2 of the Law on Supporting Research, Development and Design Activities of 2008 and No. 5746, and services provided exclusively with regard to these products
  • Payment services within the scope of article 12 of the Law on Payment and Securities Settlement Systems, Payment Services and Electronic Money Institutions of 2013 and No. 6493.

What are the payment periods?

The digital services tax would be levied upon a declaration made by the taxpayer or tax responsible party.

The tax period for the digital services tax would be one-month periods of the calendar year. However, the Ministry of Treasury and Finance would be authorized to determine a quarterly tax period instead of a one-month taxation period according to the types of services and the taxpayer’s volume. Taxpayers and tax responsible parties would be required to submit their digital service tax returns to the relevant tax office by the end of the month following the tax period and pay the amount of digital services tax within the same period.

Penalties or non-monetary sanctions for noncompliance?

The draft legislation provides that in situations of non-compliance, the authorized tax office would inform the digital service provider (or its authorized representative) and post a notice on the tax authority’s official website. This would trigger a 30-day period during which if non-compliance continues, the Ministry of Treasury and Finance would act to block the website of the digital service provider until such obligations are fulfilled.

KPMG observation

Tax professionals in Turkey believe that taxpayers may be able to challenge the digital services tax, after paying the tax, in actions before the Turkish tax court. One ground may be that the tax would violate certain provisions of an income tax treaty and/or measures of the Turkish Constitution.

Read a November 2019 report [PDF 238 KB] prepared by the KPMG member firm in Turkey

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