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  • Digital Services

Turkey extends VAT to non-resident digital service suppliers

International digital service suppliers are now liable for Turkish VAT on supplies to consumers there after a pre-Christmas rule change by Turkey’s Revenue Administration.

Jan 4, 2018

International digital service suppliers are now liable for Turkish VAT on supplies to consumers there after a pre-Christmas rule change by Turkey’s Revenue Administration.

Turkey digital services tax

Turkey is the latest jurisdiction to extend its VAT system to cover cross-border digital services supplied by non-resident businesses. To date over 45 jurisdictions worldwide have introduced such rules. Indeed, at the turn of 2018 four tax jurisdictions — Turkey, Saudi Arabia, the UAE, and Belarus — all introduced new VAT rules aimed at non-resident digital service suppliers.

The Turkish move was officially announced via a Draft Communiqué released on December 5, and updated again on December 22. The new rules came into effect on January 1, 2018.

Impact on global digital businesses

As a result of this mid-December move by the Turkish tax authorities digital businesses with a global reach need to understand that they are liable for applying, collecting, and remitting Turkish VAT (current standard rate of 18%) on their supplies to customers there.

Among the affected supplies that are specifically mentioned in the Draft Communiqué include:

  • Software, including access, download and update, and all digitized products (anti-virus programs, ad blocking programs, device drivers, web sites including filters and security wall products, including sales)
  • Accessing or downloading of music, films and other sounds
  • Accessing or downloading electronic books and other electronic publications
  • Music, movies, games played through computers, mobile phones and similar devices (including games of chance, betting and gambling), political, cultural, artistic, sports, science and entertainment
  • Distance education services, e.g. eLearning
  • Radio and television broadcasting services

More detail here from the Turkish tax authority (in the Turkish language). Non-resident suppliers should note that the first return is due by February 24.

Taxamo content is created for guidance only, please consult your local tax advisor.