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Legal Alerts

Turkey Introduces New “Digital Service Tax”

Legal Alerts

Recent Development

The Law No. 7194 on Digital Service Tax and the Amendment of Certain Laws and Law Decree No. 375 (“Law No. 7194“) was published on the Official Gazette dated December 7, 2019 and No. 30971 and introduced a new digital service tax (“DST“). The DST related provisions of the Law No. 7194 will enter into force in the beginning of March 2020.

What Does the Law Say? 

The DST’s scope

  • Revenues generated from the following services provided in Turkey are subject to DST:
  1. a) Any and all kinds of advertising services provided through digital media (including advertising control and performance measurement services, services such as data transmission and management regarding users, as well as technical services regarding the advertising);
    b) Sale of audio, visual or digital content through digital mediums (including computer programs, applications, music, videos, games, in-game applications and the like) and services provided through digital media aimed at listening, watching, playing or recording these contents via electronic devices through digital mediums or the use of those contents via such devices; and
    c) Services of the provision and operation of digital media enabling users to interact with each other (including services aimed at the sale or facilitation of sale of goods or services between users).
  • Intermediation services provided by digital service providers through digital media regarding the above services are also subject to DST.

Tax base and rate

  • The DST is calculated as 7.5% on the revenue generated from services falling within the scope of the DST in the relevant taxation period.
  • The DST prohibits deductions from (i) the tax basis under the name of expenses, costs or taxes, and (ii) the calculated DST. The DST cannot be indicated on the invoices or documents substituting invoices separately.
  • The President of Turkey is authorized to reduce the DST rate to 1% separately, for each service type, or collectively, or to increase the rate up to 15%.

Taxpayer and tax responsible

  • The DST taxpayers are the digital service providers. The tax residency status of the digital service providers (i.e. whether they are considered full taxpayers or non-residents performing activities in Turkey through a permanent establishment or permanent representative) has no impact on the tax liability.
  • In cases where the taxpayer does not have any domicile, workplace, legal/registered or business headquarters in Turkey, and in other cases deemed to be necessary, the Ministry of Treasury and Finance may hold those who are parties to the taxable transactions and those who intermediate the transaction or payment liable for the payment of the DST in order to secure the tax receivables.


  • Those who generated revenues from digital services in the previous fiscal period that are below (i) TRY 20 million generated in Turkey or (ii) EUR 750 million generated globally or the Turkish lira equivalent thereof will be exempt from DST. In the event that the taxpayer is a member of a consolidated group in terms of financial accounting, the total revenues of the group as generated from the services falling within the scope of DST will be taken into account in the implementation of such limits.  In terms of financial accounting, a “consolidated group” means all enterprises in the consolidated financial statements as per the International Financial Reporting Standards or Turkish Financial Reporting Standards.
  • Revenue generated from certain services provided in the digital media that is listed in the Law No. 7194 are exempt from the DST. These services include services subject to the treasury share payment under The Telegraph and Telephone Law No. 406 (such as mobile electronic communication services); services subject to the special communication tax (such as telecommunication services); services delivered within the scope of banking activities; the sale of products created as a result of R&D activities conducted in R&D centers; and services offered exclusively with respect to such products and payment services under the Law No. 6493.

Declaration and payment

  • The taxpayers and those held responsible to withhold taxes from their payments are obligated to submit their DST returns to the relevant tax offices by the end of the month following the taxation period (one-month periods).
  • The tax office where the service providers are registered for VAT purposes and the tax office designated by the Ministry of Treasury and Finance assesses DST for those that are not VAT taxpayers.
  • Taxpayers who are obligated to submit DST returns and those held liable for withholding taxes will pay the DST within the DST return submission period.
  • Digital service taxpayers can deduct the paid DST as expenses in the determination of the net profit for the income tax and corporate income tax calculation.

Blocking access to services

  • The Ministry of Treasury and Finance can decide to block access to services provided by digital services providers if they fail to duly comply with the DST declaration and payment requirements within 30 days from receiving a warning from the tax administration.


The aim of the digital service tax introduced by the Law No. 7194 is to ensure that the revenue derived from digital services provided by multinational companies without a fixed place of business or any physical presence in Turkey is taxed in Turkey.

However, the DST’s scope is broader than other countries’ DST applications, and Turkey introduced the highest DST rate among other countries. In addition, as the Law No. 7194 does not include any offset mechanism or does not provide any exception for intragroup transactions, the DST may trigger new controversies regarding double taxation issues.

We expect that the principles and procedures regarding the DST will be clarified through a communiqué to be published by the Ministry of Treasury and Finance.