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 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.