New Digital Services Tax Provisions

The provisions of the Digital Services Tax introduced by Law No. 7194 will come into effect in Türkiye on September 1, 2024. The key elements are as follows:

Subject

The Digital Services Tax is a tax levied on revenue generated from certain digital services provided in Türkiye. The services covered by this tax include:

• Digital Advertising Services: Includes services such as ad control and performance measurement, transmission and management of user data.
• Digital Content Services: Includes the sale, listening, viewing, playing, and recording of digital content such as computer programs, applications, music, videos, and games on electronic devices.
• Digital Interaction Services: Includes the provision and operation of digital environments where users can interact with each other, and digital platforms for the sale of goods or services.

Scope

The Digital Services Tax applies to revenue generated from the aforementioned services in the following cases:

– When the services are provided in Türkiye;

– When the services are utilized in Türkiye; or,

– When the services are directed at users in Türkiye.

Tax Rate and Base

The Digital Services Tax rate is set at 7,5%. The tax base is the revenue generated during the relevant period. If the revenue is calculated in foreign currency, it is converted to Turkish Lira based on the Central Bank of Türkiye’s buying exchange rate. The tax is calculated directly on the revenue with no deductions.

Exemptions and Exceptions

There are certain exemptions and exceptions in the Digital Services Tax:

• Exemptions: Those who generated less than TRY 20 million in Türkiye and less than EUR 750 million worldwide in the previous fiscal year are exempt from the digital services tax.
• Exceptions: Certain services are exempt from the digital services tax, such as telecommunication services, banking services, and the sale of products produced in R&D centers.

Presidential Authority

The President has the authority to reduce the exemption thresholds to zero or increase them up to three times according to the type of service.

Declaration and Payment of Tax

The Digital Services Tax is levied monthly based on the taxpayer’s declaration and must be paid within the declaration period. The tax is declared and paid to the tax office to which the taxpayer is affiliated. Access to digital services may be restricted for taxpayers who fail to meet their declaration and payment obligations on time.

Tax Security

As part of tax security, digital service providers who do not fulfill their tax obligations may be warned, and their situation may be announced on the Revenue Administration’s website. If obligations are not met, access to the services may be restricted.