As it is widely discussed, Turkey is taking aggressive steps for taxation of digital companies.

You can find below the short summaries of the steps taken so far.

I. VAT III Liability

 a.  Legal Framework

VAT III liability is introduced with Law No. 7061 which entered into force on January 1, 2018. Tax administration released VAT Communiqué No.17 to present explanations and clarifications on implementation of VAT III liability system on January 31,2018.

 b. Scope/Subject

Under VAT III liability, services provided by those whose residences, workplaces, legal headquarters, and principal offices are not located in Turkey to non-VAT registrant Turkish residents is subjected to VAT, on the basis that such services are considered to have been provided in Turkey.

 c. Taxpayer

Electronic service providers and intermediaries (in case where electronic service provider cannot be identified)

 d. Tax Base

The total value of the transaction that falls under the scope.

 e. Tax Rate

General VAT rate in Turkey is %18, reduced rates of %8 or %1 are also applicable for certain services and goods.

 f. Registration

For registration, electronic service providers should fill out the form available on the . After the approval of this form, a VAT registration will be made on behalf of the non-resident service provider before the Large Taxpayers Tax Office in Istanbul.

 g. Declaration and Payment

Declaration should be made until 24th day of the month following the monthly taxation period. Payment should be made until 26th day of the month following the monthly taxation period.

 h. Other Considerations

  • In VAT Communique 17, it is clearly explained that it is allowed for a non-resident taxpayer of digital services to deduct VAT from VAT payable if services and goods are obtained from those who have VAT liability in Turkey and VAT is shown on invoices and similar documents if VAT is related to the declared services under the special VAT liability of non-resident taxpayer of electronic services.
  • No explanation is provided for the position of the carry forward VAT.

II. Advertisement Withholding Tax

 a.  Legal Framework

By relying on the authority given by article 11 of Tax Procedural Code No.213, Presidential Decree No. 476 was issued and entered into force on its publication date to be applicable to payments made as of January 1,2019.

 b. Scope/Subject

Payments made for advertising services provided through the Internet to the providers of this service or to those who act as an intermediary for the provision of this service will fall under the scope of the withholding tax liability, regardless of whether the payee is a taxpayer.

 c. Taxpayer

Electronic advertising service providers and intermediaries.

Since this taxation is formed as withholding, parties who pay for the services that fall under the scope to service providers or intermediaries who transfer the amount to service providers should withhold, declare & pay this the tax amount as tax responsible.

 d. Tax Base

The total value of the transaction that falls under the scope.

 e. Tax Rate

The withholding tax rates applicable to payments made for advertising services provided through the Internet to the providers of this service or to those who act as an intermediary for the provision of this service as follows:

  • 15% for payments made to real persons within the scope of Article 94 of the Income Tax Code,
  • 15% for payments made to nonresident entities in Turkey within the scope of Article 30 of the Corporate Income Tax Code,
  • 0% for payments made to corporate taxpayers resident in Turkey within the scope of Article 15 of the Corporate Income Tax Code.

 f. Registration

No registration is required.

 g. Declaration & Payment

Declaration and payment by tax responsible should be made until 26th day of the month following the monthly taxation period.

h. Other Considerations

To apply this withholding tax to the income derived from Turkey by the non-resident digital service providers is mostly challenged before courts in consideration of the double taxation treaties and definition of "place of business". 1

III. Digital Service Tax

 a.  Legal Framework

The Law No. 7194 on Digital Service Tax and the Amendment of Certain Laws and Law Decree No. 375 ("Law No. 7194") introduced a new digital service tax ("DST"). The DST related provisions of the Law No. 7194 entered into force in the beginning of March 2020.

 b. Scope/Subject

The revenue obtained from the following services offered in Turkey are subject to DST:

  1. a) All kinds of advertising services offered in digital environment (including advertisement control and performance measurement services, data transmission and management related to users, and technical services related to the delivery of advertising)
  2. b) Audible, visual or any digital content (including computer programs, applications, music, video, games, in-game applications and the like) for sale on digital environment and services provided on digital environment for listening, watching, playing or recording of such content on electronic devices or for use on such devices
  3. c) Services for the provision and operation of digital environments where users can interact with each other (including services provided to sell or to facilitate the sale of a product or service between users)

The revenue from the intermediary services provided by digital service providers in the digital environment for the services mentioned in the first paragraph are also subject to the digital service tax.

The term "provided in Turkey" is also explained as " providing the service in Turkey, making use of the service in Turkey, performing the service for people in Turkey, or evaluating the service in Turkey (the purpose of the evaluation is to pay the service in Turkey or, if the payment is made abroad, to transfer the payment to the accounts of the payer or on behalf of the payer or its reservation from its profit. On the other hand, the service is not considered to be evaluated in Turkey if the advertising service offered in digital environment is performed for people who are not in Turkey.)"

 c. Taxpayer

Digital service provider regardless of their tax liability status in Turkey.

The Ministry of Treasury and Finance may hold those who are parties to the taxable transactions and those who mediate the processing and payment in order to secure the payable tax in case of the absence of the taxpayer's residence, work place, legal and business centers in Turkey, responsible for the payment of the tax.

 d. Tax Rate

Current DST rate is 7.5%. However, the President has the authority to reduce the rate to 1% or double the rate (namely, 15 %) in accordance with the service types.

 e. Tax Base

Revenue generated due to services subject to the tax.

No deduction is accepted from the tax base under the name of expense, cost and tax.

On the other hand, DST paid by resident companies can be deducted from the CIT tax base of those companies.

 f. Important Exemptions

In the period prior to the relevant accounting period, those whose revenues in Turkey are less than 20 million Turkish Lira or whose worldwide revenues are less than 750 million Euro or equivalent foreign currency equivalent Turkish Lira for the services mentioned are exempt from DST.

 g. Registration

For registration, digital service providers should fill out the form available on the

 h. Declaration &Payment

Declarations should be submitted and paid by the end of the month following the monthly taxation period by digital service providers.

 i. Other Considerations

  • Current rate of 7,5% (that may also be raised to 15%) is the highest tax rate available globally for digital services. Also, since the tax base is (gross) revenue, its monetary effect is higher.
  • The President is authorized to make drastic changes in the rate and exemption thresholds of the DST.
  • Scope of the Turkish DST is rather extensive. Almost all kinds of digital services fall under the scope. On a side note, online advertising falls under the scope of both DST and advertisement WHT.
  • Tax exemption for those who are below any of the limits mentioned in exemptions for two consecutive accounting periods, starts again from the following accounting period. This means that, once you reach a position to pay DST in Turkey, you have to pay DST for 2 more years regardless of your revenue in these two years.
  • Noncompliance to Turkish DST is the complete blocking of access to the Turkish market.


1. For further information on the status of this WHT application please see:

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.