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Digital services tax our view, companies producing own contents/programs and
selling these programs on their own websites/cloud account,
then these services should also be excluded from scope of
Turkish tax authority has focused on digital taxation in recent
two years. Accordingly, on 5 December 2019 Law No: 7194 DST considering law's preamble.
has been enacted by Turkish Parliament that introduce
Digital Services Tax (“DST”) and the law was published in the Meaning of “providing of services in Turkey”
Official Gazette on 7 December 2019. Law will be in force as
of the date of 1 March 2020. The article 2 titled “Definitions” of the Law has clarified on
meaning of “providing of services in Turkey” stated in the
On 5 February 2020, the Draft General Communiqué on Law.
the Implementation of the Digital Services Tax (“Draft
Communiqué on DST”) was published on the website of the Definition of “providing services in Turkey” has been made as
Turkish Revenue Administration. The Draft Communiqué (ii) the service should be provided in Turkey, (ii) utilizing from
on DST makes some explanations and clarifications on the services should be in Turkey, (iii) the services should be
procedures and principles to have better understanding on perform for people living in Turkey, or (iv) payments for the
the implementation of the DST. services provided should be made in Turkey or the payment
is made outside of Turkey but transferred to the accounts
However, still there are some unclear parts which are open to of the payer (or the party which payment has been made
question and these issues and dilemmas need to be clarified on behalf of) in Turkey or is recognized as an expense in the
and resolved in future. accounts of a Turkish payer.

Which services have been covered in DST? Tax base and rate

Below services “provided in Turkey” are defined within the The base of the DST is the gross revenue generated during
scope of DST. a taxation period. If the revenue is denominated in a foreign
currency, it must be converted to Turkish lira. The DST would
➢• All types of digital advertising services, including be applied as 7.5% over the gross revenue.
services such as advertisement control and performance
measurement services, services relating to data The President of Turkey may reduce the rate to 1% or
transmission and user management (i.e., the sale of user increase it to 15%, either per type of digital service
data), and technical services relating to the display of separately, or for all types of digital services together.
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Exemptions
➢• The sale of audio, visual or digital content in digital
format, as well as services provided in digital format for One of the exemptions provides that in the accounting period
listening, viewing, playing or recording digital content or before the relevant accounting period, regarding the services
using such content in digital format (including computer indicated in Article 1 of the Law, companies with revenue
programs, applications, music, video, games and in-game in Turkey of less than 20 million Turkish Lira (TL) or with
applications, among others) worldwide digital revenue of less than 750 million Euro, or

➢• Digital intermediary activities that allow users to interact the TL equivalent in foreign currency, are exempt from DST.
with other users, include digital intermediary activities that The accounting period refers to the calendar year.
can facilitate the sale of goods and services between users
In case the thresholds mentioned above are exceeded, then
➢• Intermediary services provided in a digital environment for in order to be exempt from DST again, taxpayer should have
the above categories of services revenue less than thresholds for 2 accounting periods.

As it is seen, scope of the DST is defined very broadly, and Below services are also exempt from DST:
should we compare the DSTs applied in other countries, we
can exactly say that Turkish DST has the most extensive ➢• Services that are subject to Turkish Treasury Duty, paid in
scope. accordance with the Telegram and Telephone Law

The Draft Communiqué on DST, some of the services have ➢• Services that are subject to the special communication tax
been excluded from scope of DST, for example, revenue ➢• Services that are in scope of Article 4 of the Banking Law
generated from the sale of services mentioned in first bullet No. 5411
above, only through electronic recording tools, such as
CDs, DVDs, external memory and by physical delivery, is not ➢• Payment services within the scope of Article 12 of the Law
considered within the scope of revenue generated by the on Payment and Securities Settlement Systems, Payment
services described in this section. Services and Electronic Money Institutions
➢• Sales of products and services provided exclusively
However, once we look at the application from a practical through products developed through research and
point of view, it is possible to say that the majority of development (R&D) activities in R&D centers in Turkey
companies producing computer programs have not been as defined under Article 2 of the Law on Supporting
already selling in this way for many years. With the recent Research, Development and Design Activities.
developments on technology, these sales can now be
delivered to the users quickly via on cloud. Accordingly, in

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