Turkey Considering DST Increase for Foreign Digital Service Providers

Current Framework

• Turkey currently imposes a 7.5% DST on gross revenues from digital services such as advertising, content sales, and platform operations.
• The tax applies to companies with global revenues over €750 million and local revenues over TRY 20 million.
• Additional withholding taxes (up to 15% on digital advertising and proposed 25% on e-commerce) further increase the tax burden. [itif.org]

Proposed Changes

• The Nationalist Movement Party (MHP), a key ally of President Erdoğan, has submitted a bill to raise the DST for foreign companies from 7.5% to 12.5%, while keeping the rate for domestic firms unchanged. [turkishminute.com], [internatio…alists.org], [en.haberler.com]
• The bill aims to:
  • Support domestic media and tech platforms.
  • Address concerns over data privacy and capital outflow.
  • Create a two-tier tax system favoring Turkish companies.

Scope of the Tax

• The hike would apply to:
  • Streaming services (Netflix, Spotify, YouTube)
  • Social media platforms (Facebook, TikTok, Instagram)
  • Gaming and app stores (Steam, Google Play, Apple App Store)
  • Digital advertising and content subscriptions

⚠️ Implications for Foreign Firms

• Higher operational costs likely to be passed on to consumers via increased subscription and ad fees.
• Legal concerns over potential discrimination against foreign companies, possibly conflicting with OECD and EU principles. [internatio…alists.org]
• Compliance challenges due to overlapping tax obligations and lack of double taxation relief. [advocateturkey.com]

Political and Economic Context

• The proposal aligns with Turkey’s broader push for digital sovereignty and media control.
• Comes amid economic volatility, regulatory unpredictability, and increasing geopolitical tensions. [ainvest.com]

Other Source

• Orbitax

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