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Digital Service Tax in Turkey


published on 21 April 2020 | reading time approx.  6 minutes


Recent developments and innovations in technology have overcome the borders of countries, thus companies are able to engage in commercial activities over internet with other countries, where they are not resident. In the light of these developments, it is obvious that a new industry in digital environment arises all over the world.





Over last few years, international organizations such as OECD strive to make a common decision in the taxation of this area without causing any loss of income for service providers and service recipient. However, a generally accepted taxation procedures has not been reached yet. Therefore, some countries like France, Spain, Italy, Austria, Malesia, Singapore, or Israel do not want to lose their potential tax revenues. Thus, they implement new tax regulations in their local legislation until a common solution is found.


In that sense tax authority in Turkey, intend to levy taxes on services, which were provided in digital environment. Therefore, law no. 7194 came into force on 07.12.2019 and the Communiqué was published on 20.03.2020 by the Ministry of Treasury and Finance in Turkey. According to the respective law Digital Service Tax (DST) will be levied for taxpayers and respective law entered into force retroactively from 1 March 2020.


Subject of Tax

The DST will be imposed on revenues generated from the following digital services that are performed in Turkey:

  • All types of online advertising services.
    For example in the event of Television broadcast, which is simultaneously broadcasted in a digital media, the revenue obtained due to the advertising services not included in the content of the respective broadcast stream is also included in the subject of the tax.
  • The sale of audio, video or any digital content in the digital environment; or any services performed in the digital environment that enable such content to be listened, watched, played in the digital environment; recorded or used in the electronic devices,
  • Services for providing and operating digital environments where users can interact with each other,
  • The intermediary services performed in the digital environment for the services listed above


If the services above provided in Turkey, the respective service is subject of DST. What it meant is that:

  • the service receiver has to benefit the service in Turkey
  • the service has to be performed for the people in Turkey
  • The service has to be intended to be used in Turkey

In accordance to that, if service is performed in presence of any condition above, it is considered that the service is provided in Turkey.


Below it will be clarified with few examples:

The revenue of a Spanish company, which provides online gaming services in digital environment, from the sale to the people, who are resident in Turkey in subject to the DST.


An intermediary service of a Turkish company on digital platforms for sales of goods of another company is considered as subject of the DST.


A broadcasting company in US who generates revenues due to the sales of live broadcast stream to the people in Turkey is subject to the DST.


If a company in Germany performed an intermediary service for the people in Turkey for renting real estate in Germany, this service considered as provided in Turkey.

Taxpayer and Tax Responsible

The taxpayers of the DST are the service providers of services above mentioned regardless of whether they are limited or unlimited liable taxpayer in Turkey. In other words regardless of a legal person or an individual person registered or non-register in Turkish tax administration, if someone provide the services above, they will be considered as a taxpayer. In that sense, to be limited or unlimited liable and registered or unregistered in Turkish Tax Administration does not affect the digital service liability.


In addition, it is stated that in case the service provider is a non-resident, the authorities may hold those, who are counter parties to such transactions or those who act as an intermediary of such transactions or payments, liable of payment of the taxes.

Exemption from Digital Service Tax

It is stated that, if someone has a revenue amount less 20 million TL in Turkey, or has a total revenue amount less than 750 million Euro or equivalent in foreign currencies in previous financial year, those are considered exempt from DST. In other words, only those with annual worldwide revenue of 750 million Euro or more and a Turkish revenue of exceeding 20 million TL from the digital services during the previous calendar year will be liable for DST. During the determination of the total revenue the revenues in Turkey is also added.


If the taxpayer is a member of a consolidated group in terms of financial accounting, the total revenue that the group receives regarding the services subject to tax is taken into consideration in the implementation of these terms.


Those who obtained a revenue amount 20 million TL in Turkey and 750 million Euro in total, are liable for DST as of first of the March.


Table below summarize the exemptions scenarios of taxpayer:


Moreover, if both of the limits are exceeded in the relevant financial year, the exemption will cease to exist and DST will start to apply starting from the fourth taxation period following the taxation period in which the limits are exceeded. It should be also noted that quarterly revenues in cumulative basis shall be checked in order to determine the excess of limits.


For the taxpayers tax exemption will start, when revenues remain below at least one of the respective limits for two consecutive financial year. In other words if someone liable for DST in financial year 2020, the exemptions start at the earliest in beginning of financial year 2023.


For example, a service provider that exceeded both limits in the first quarter of 2020 could be exempted from earliest in 01.01.2023 even if it falls below both limits in following 11 quarters (2020, 2021 and 2022).

Apart from these, an abroad located digital service provider, who exceeds the revenue limits in Turkey but do not register the Turkish Tax Administration should document their exemption from DST. This related documentation will be done with an independent audit report, which is issued by an independent auditing firm operating in at least five countries. It is also required that this documentation will be done by the end of June of the following financial year.

Tax Base, Tax Rate and Calculation

The base of the DST is the revenue obtained due to the services included in the tax subject in the relevant taxation period. In case of obtaining revenue in foreign currency, the respective transaction will the changed into Turkish Lira on the date of transaction with buying exchange rate that announced by the Turkish Central Bank.


Table below shows an example to how the tax base in foreign currency calculated:


Various revenues such as maturity difference, price difference, exchange rate difference, interest, premium, and all kinds of benefits, services and values provided under the service and similar names are included in the tax base.


The DST will be levied at a rate of 7,5 percent on revenues generated from digital services that fall within the scope of DST. Moreover, it is stated that DST is not shown separately in invoices. The DST is calculated by applying the tax rate to the tax base.

Period of Taxation, Declaration and Payment

According to the tax law, the period of taxation is one month. The DST will be declared on a monthly basis. The Ministry of Treasury and Finances is authorized to determine the taxation period on quarterly basis depending on the type and volume of the digital services.


The potential taxpayer in this scope must register on Turkish Revenue Administration's website of http://www.digitalservice.gib.gov.tr. The tax return will be filled electronically on the respective website. Digital service taxpayers are obliged to submit their digital service tax returns until the evening of the last day of the month following the taxation period. It must be underlined that taxpayers are obliged to submit declarations regarding these periods even if they do not generate any revenue in a taxation period.


The payment can be made to the to the tax offices, authorized banks or via website of Revenue Administration www.gib.gov.tr with the debit card or credit card of authorized bank. It must be underlined that payment has to be done within the period of filing the declaration.


It is also stated that DST can be considered as a deductible expense by registered income and corporate tax payers in Turkey.

Failure to Fulfill the Obligations

In case of failure to fulfill the obligation in this scope, tax authority could introduce various sanctions. First, digital service providers who do not fulfill their obligations to submit their statements and payments regarding the DST could be notified by the tax authority with the written notification, e-mail or all other communication instruments.


After the notification made by the tax office, this will be announced on the website of the Revenue Administration (www.gib.gov.tr). If these obligations are not fulfilled within 30 days of the announcement, it is decided to prevent access to the services offered by digital service providers until these obligations are fulfilled and this decision is sent to the access providers. In sum, the process follows following steps:



Over the last few years, tax authorities in Turkey impose new taxes. Some of these taxes such as digital service tax or VAT for electronic service providers concern foreign companies, who conduct commercial activities over internet in Turkey. Moreover, we experience that Revenue Administration in Turkey starts to conduct tax audit on the non-resident companies.


According to the new legislation, digital services provided in Turkey are subject to the new tax. In addition, this newly introduced tax is declared electronically on the website of Revenue Administration. The DST will be levied on the turnover of digital services in percentage of 7, 5 percent.


It is obvious that the digital services overcome the borders of the countries. Introducing new tax in this developing industry could create conflict in avoidance of double taxation agreements. In general, the main purpose of avoidance of double taxation agreements is to prevent double taxation by preventing the earnings from the same source from being taxed by both contracting countries. Since the tax authorities do not want to lose their potential tax revenue, it can be observed that countries are act unilaterally about the taxation of the digital economy. Yet according to our opinion, the newly introduced taxes in various countries and lack of commonly accepted tax procedures causes deterioration of equality among taxpayers at the international level and leads to changes in open market dynamics.


In beginning of 2018, a new VAT had been introduced. According to that, digital services provided by those that have no residency, business place, legal center and business center in Turkey to non-VAT registered individuals are subject to VAT. In addition, over the last few months the Turkish tax administration has started to conduct tax audits to many foreign resident companies operating in a digital environment. Afterwards a new digital services tax has been imposed. In the light of these measures and new regulations we can predict that Turkish tax authority intend to reach companies, who are operating in digital environment, and make them to be a registered taxpayer in Turkey.


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