Law on the Digital Service Tax and Amendment made to Certain Laws and Decree Law Numbered 375 ("the Law") numbered 7194 and dated December 5, 2019 has been published in the Official Gazette dated December 7, 2019 and numbered 30971.1

Developments and innovations in information technology have increased the pace of globalization in the social, cultural and economic area, and it has also allowed multinational companies offering digital services to engage in commercial activities in countries where they are not resident without significant physical assets even sometimes without any physical assets.

Although it is the basic principle of tax law that businesses operating in the digital service sector shall contribute a fair contribution to the public revenues of the countries in which they operate, a common taxation regime around the world has not been established since countries cannot respond to developments at the same pace.

Digital Service Tax in Worldwide

In the United Kingdom ("UK"), from April 2020, the government will introduce a new 2% tax on the revenues of search engines, social media platforms and online marketplaces which derive value from UK users.2 The Digital Services Tax will apply to businesses that provide a social media platform, search engine or an online marketplace to UK users.

France is the first European Union Member State to have implemented a Digital Service Tax. Such tax has entered into force on January 1, 2020. The Digital Service Tax in France has been named the "GAFA tax" for Google, Apple, Facebook and Amazon which are US based companies. However, the French GAFA tax does not only implement US groups but also other international groups including French, Chinese, German, Spanish and English groups.3

In Italy, Italian Budget Law No.160 dated December 27, 2019 introduced a 3% digital service tax ("Italian DST") on revenues which includes advertising services, intermediation and marketplace, and data transmission. Italian DST applies to organizations whose total worldwide revenues equal to or greater than €750 million and total revenues from domestic digital services equal to or greater than €5.5 million beginning January 1, 2020.4

Digital Service Tax in Turkey

Digital Service Tax has been regulated between Article 1 and Article 7 of the Law. Accordingly, digital service tax includes as follows;

- All kinds of advertisement services provided to users in digital platform

- Digital services provided any audible, visual or digital content and such content to be listened, watched or recorded via electronic devices

- Providing and operating digital interface which allows users to interact with others, including for the delivery of goods or services between users

Revenues to be earned by brokerage services in digital platforms regarding the services mentioned above that are subject of digital service tax will also be subject to the digital services tax.

Companies -no matter whether the company Turkish or foreign- that provide at least one of the above taxable digital services in Turkey are within the scope of this digital service tax liability.

Companies whose revenues from taxable digital services remains below 20 million Turkish Liras for taxable digital services supplied in Turkey or €750 million for taxable digital services supplied worldwide are exempt from digital service tax.

Digital service tax is determined as a revenue earned by digital services that are given in a specific period of taxation, and tax rate of digital service tax is determined as 7.5%.5

As per the proposal, digital service providers who do not meet their reporting and payment obligations will be warned by the Ministry of Treasury and Finance via e-mail, notification or all other means communication and will be given 30 days to fulfill their tax responsibilities. After 30 days, if no action is taken by the company, the Ministry of Treasury and Finance may order block of access to the services of such providers.


The law aims to excise the local and international digital service providers which serving in Turkey and earned high amount of revenue. Comparingly, the digital service tax has entered into force on January 1, 2019 in France that considered as a precedent legislation regulates that digital services tax rate of 3%, considering the tax rate of 7.5% in Turkey, it may be observed that such rate is higher than the comparable European countries. Finally, companies which may be within the scope of the digital service tax shall begin assessing the extent to which such new tax may affect their organizations.


1 Law on the Digital Service Tax and Amendment made to Certain Laws and Decree Law No. 7194

5 Dijital Hizmet Vergisi İle Bazı Kanunlarda Ve 375 Sayılı Kanun Hükmünde Kararnamede Değişiklik Yapılması Hakkında Kanun Law no. 7194

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