Tarih: 20.3.2020


NO: 2020/4

Subject: Digital Services Tax Application General Communique- In Force

Digital Services Tax (“DST”) Application General Communique (“ The DST Communique”/ “The Communique”) was published on the Official Gazette dated 20 March 2020 and No. 31074 and entered into force retroactively from 1 March 2020.

What is the Subject of DST ?

The Communique provided further explanations to clarify the scope of digital services that fall within the scope of DST. The DST will be imposed on revenues generated from the following digital services that are performed in Turkey;

  1. All types of online advertising services,
  2. 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 electronical devices,
  3. The provision and management services of the digital environments that allow the users to interact with each other (including the services that are performed to mediate or facilitate the sales of goods or services among the users),
  4. The intermediary services performed in the digital environment in relation to the aforementioned services.

Within this context, some highlights can be summarized as below;

  1. The scope of online advertising services is broadly defined,
  2. The sale of tickets in the digital environment that represent the right to benefit from a physical performance such as cinemas, theatres, concerts, museums, sports events, buses, trains, airplanes etc. is NOT considered as a digital content.
    Additionally, the activation or the download of the softwares is NOT considered as a sales of a digital content in the digital environment provided that such software is mandatory for the use of a good, the software is constituted in the good by the seller at the time of the sale and no additional fees are charged for such activation or download.
  3. The revenues derived from the sales of goods or services in the digital environment is not within the scope of DST. Still, for the transaction to be classified as a sales of goods or services and not as a mediation for such sales, it is required that the sales obligations are fulfilled by the sellers and the responsibilities that may stem from the legislation relating to the protection of the consumer rights are also borne by the sellers.

Under What Conditions is a Digital Service considered to be performed in Turkey ?

Such digital services will be performed in Turkey if any of the following conditions are met;

  1. The services are performed in Turkey,
  2. The services are benefited from in Turkey,
  3. The services are perfomed targeting at the persons located in Turkey,
  4. The services are accounted for in Turkey (If the payments in return for the services are made in Turkey or if the payments in return for the services are made outside Turkey but recorded or deducted in the Turkish books, such services will be deemed to be accounted for in Turkey. Online advertising services that are performed targeting at persons located outside Turkey are excluded.)

What is the DST rate?

The DST will be imposed at a rate of 7,5% on revenues generated from digital services that fall within the scope of DST.

The President is authorized to reduce the rate down to 1% or increase by twofolds for each type of digital services.

Who is the Taxpayer ?

The taxpayers of the DST are those who are performing the digital services regardless of whether or not they are tax residents in Turkey or whether or not such services are performed through their Turkish Permanent Establishments (PEs) in case the service provider is a non-resident.

Additionally, it is stated that in case the service provider is a non-resident, the Ministry of Treasury and Finance (the Ministry) may hold those, who are parties to such transactions or those who act as an intermediary of such transactions or payments, liable of payment of the taxes. (The Communique provided no further clarifications on the concept of Tax Responsible.)

Are there any Exemptions ?

Only those with annual worldwide revenue of €750 million or more (TRY equivalent is considered) AND a Turkish revenue of exceeding TRY20 million from the digital services during the previous calendar year (2019) will be subject to DST.

The President is authorized to reduce the thresholds down to 0 or increase by three folds for each digital service type either separately or collectively.

In the case of entities belonging to a group, the thresholds above shall be established by reference to the group. A consolidated group refers to all the entities that take place in the consolidated financial tables as per the International Financial Reporting Standards or Turkish Financial Reporting Standards.

If both of the thresholds are exceeded in the relevant fiscal 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 thresholds are exceeded. In the determination of whether or not the thresholds are exceeded, the quarter-end digital service revenues shall be considered on a cumulative basis. On the other hand, DST liability will start again beginning from the subsequent fiscal year, if either of the two thresholds is not met in two consecutive fiscal years.

Apart from the aforementioned thresholds, revenues generated from specified services such as;

  1. Services subject to the treasury share payment under The Telegraph and Telephone Law;
  2. Services subject to the special communication tax;
  3. Services delivered within the scope of banking activities;
  4. The sale of products created as a result of R&D activities conducted in R&D centers as per Law on Supporting Research and Development and Designing Activities and services offered exclusively through such products; and
  5. payment services under the Law No. 6493.

are excluded from DST.

The Communique provided further explanations with regards to the R&D activities that will be excluded from DST. The revenues generated from these services will NOT be considered in the computation of the aforementioned thresholds.

How is the DST Base Computed ?

The DST base is the revenue generated from the digital services that fall within the scope of DST.

  1. VAT is NOT included in the tax base,
  2. No deductions of expenses, costs or taxes will be allowed from the tax base,
  3. Revenues derived from any services that are a part or complementary to these digital services will be added to the tax base,
  4. Any delay charges, price differences, foreign currency differences, interest payments, premiums etc that relate to these digital services will be added to the tax base of the taxation period in which they occur,
  5. Any foreign currency losses realized upon the collection of the fees will be considered in the tax base of the taxation period in which such losses are incurred.
  6. Arm’s length discounts will be considered in the tax base provided that they are shown on the invoices/similar documents issued for the digital services. Any subsequent discounts made following the taxation period in which the relevant revenue is generated will not be considered in the computation of the tax base.
  7. The refund by the DST payer of the part of the revenues derived from the mediation services for the sales of goods or services in the digital environment due to the refund of the buyer’s (consumer’s) payment for the goods refunded to the sellers or the non-performance of the services within the scope of the withdrawal right of consumers as per Law on Consumer Protection, will be considered in the tax base of the taxation period in which the refund is realized.

Compliance and Other Obligations

The taxpayers are required to meet all the notification and documentation requirements within the due dates following the announcements of the Ministry. Unless such requirements are duly fulfilled, the service provider will not benefit from the said exemption.

The DST will be declared on a monthly basis. The Ministry is authorized to determine the taxation period on quarterly basis depending on the type and volume of the digital services. The DST tax returns will be declared and paid until the end of the following month.

In case tax filing and payment obligations are not fulfilled within the due dates, the Ministry will notify the digital services providers or their legal representatives in Turkey to fulfill their obligations and this status will also be announced on the official website of Directorate of Revenue Administration. If the obligations are not fulfilled within 30 days starting from the date of the announcement, the Ministry is authorized to decline the access to such services of digital services providers until the date their obligations are duly fulfilled. Accordingly, the Ministry will inform the Information and Communication Technologies Authority (ICTA), followed by the notification by ICTA to be made to the relevant digital service providers. The access will be declined within 24 hours starting from the notification by ICTA.


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