In the face of the global digital economy’s accelerating growth, Turkey’s latest measure to tax the digital economy was the introduction of the DST, effective as of March 2020.
Turkey’s 7.5% DST covers digital service providers exceeding a global revenue threshold of EUR 750 million and local revenue of TRY 20 million. The tax is mainly applicable to revenue generated from online advertising services, digital content sales/services and digital platform services. However, since its introduction, Turkey’s DST has given rise to numerous debates and criticisms, mainly due to its broad and vague material scope and its high rate of 7.5% on gross revenue earned during a taxation period (i.e., one-month period) from in‑scope services.
Other factors generating discussion were the DST’s lack of an offset mechanism or any exemption for intragroup transactions (therefore, the DST could be levied twice on reseller structures within groups that exceed the applicable thresholds, once at the reseller level and once at the supplier level); lack of a group filing mechanism; and lack of any relief where two or more different national DSTs apply to the same transaction.
Source Baker & McKenzie
