The digital services tax provisions were passed on 7 December 2019 with no major changes to the November draft and will come into force in March 2020.
In a few words, the key elements of the Turkish DST are as follow:
- Tax rate = 7.5% on Turkish revenues.
- Services in scope:
- Digital advertising and technical services for the presentation of
advertising, including advertising control and measurement and management of
users
- Sales of audible, visual or digital content including computer programs,
apps, music, video, games and related, via a Digital Platform
- Provision and operation of a digital platform by which users may interact with each other, including for sell or facilitate goods or services among those users.
- Digital advertising and technical services for the presentation of
advertising, including advertising control and measurement and management of
users
- Intermediary services providing by a digital platform to the above in scope service providers do also fall in scope.
- Thresholds to be a taxpayer:
- A minimum of €750M total ww revenue
- Approx. €3,1 M from in scope digital services
- No physical presence is needed to fall in scope.
- Exemptions:
- Services for which the special communication tax is paid
- Banking law services
- Services created with local based intellectual property from legally defined R&D centers
- Payment services, including electronic
DET3 Comments
Most EU unilateral drafted or passed DSTs are tied to the core of the EU directive drafted in 2018.
The Turkish DST scope is sculpted around the 3 in scope core EU definitions, but goes far beyond in the tax rate and in neglecting many of the exempted services connected to digital content and software.
It is not clear if the DST is compatible for the recently passed withholding tax on digital advertising transactions, but nothing has been said against this potential duplication affecting this specific transaction.
Interestingly, the Turkish law recognizes the traditional heavy special taxes burden of the Telco sector by excluding it from the tax together with banking and payment services.
Nothing is said about platform distributing or intermediating in energy / utilities.
The strong economic and trade policy angle of this measure is confirmed when the passed regulation authorizes the Ministry to request the Communication Authority to bann the electronic activities of the digital and IT if no action has been taken by such companies to comply with the new DST obligations.
