DST will apply on the revenues generated from services such as:
Intermediary services carried out in the digital environment regarding the aforementioned services are also subject to DST.
DST will be applicable for services which were provided in Turkey, meaning: services that were provided in Turkey, services that were benefitted in Turkey, services that were provided for the people in Turkey and services that were valued in Turkey.
Those who generated revenue from digital services in the previous accounting period of the related accounting period less than:
will be exempt from DST.
For consolidated groups (accounting view) the total revenues of the group being generated from those services will be taken into account.
With revenues increasing and exceeding the thresholds, the exemption will not be applicable and DST liability begins in the 4th taxation period following that related financial year.
For revenues diminishing below the thresholds, the exemption will be applicable as of the beginning of the following financial year after those two consecutive financial years.
Further exemptions apply to specific digital services:
Effective DST rate to be applied is 7.5% on the revenues generated from the above-mentioned services.
DST will be applied to digital service providers regardless of their tax residency status, i.e. full taxpayers or non-residents performing activities in Turkey through a permanent establishment or permanent representative.
For taxpayers without a residence, workplace or a registered place of business in Turkey or if otherwise necessary, the below-mentioned parties may be held responsible for the payment of DST:
The DST taxation periods are determined as a one-month period. Taxpayers and those who are held responsible shall submit DST declarations and make DST payments before the end of the month following the related taxation period.
The tax office which levies VAT will also be responsible for levying DST for digital service providers which do have a VAT obligation. If the digital service providers do not have a VAT obligation, the Ministry of Treasury will determine a tax office for tax levying purposes.
DST payments can be considered as tax deductible from the taxpayer’s taxable income regarding the personal income and corporate income taxes.
The tax office in charge for levying DST may issue a notice to the digital service providers or to their legal representatives who did not fulfill their obligations to submit a declaration and pay the respective taxes in due time. This will also be announced on the website of the Revenue Administration.
In the case of not fulfilling these declaration and payment obligations within 30 days after the notice, the Ministry of Treasury and Finance will notify the Information and Communication Technologies Authority to take necessary actions to block access to the services provided by these service providers until these obligations are fulfilled.
A 15% withholding tax was also introduced on cross-border online advertising services in accordance with the Presidential Decree No. 476, which became effective as of 1 January 2019, and the new DST will be applied to the online advertising services too.
The withholding tax on cross-border online advertising services can be considered within the scope of double tax treaties and can benefit from double tax treaty provisions in this respect. On the other hand, DST is an expenditure tax and, unlike cross-border online advertising services, it cannot be considered within the scope of double tax treaties and cannot benefit from double tax treaty provisions.
This situation creates a considerable tax burden for the companies which do provide cross-border online advertising services.
Furthermore, on 5 February 2020, the Ministry of Treasury and Finance announced a draft communique regarding Digital Services Tax which shall provide detailed explanations regarding the implementation of DST legislation and is envisaged to come into force simultaneously with Digital Services Tax as of 1 March 2020.
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