Tax Treaty Case Law around the Globe 2021

S. 82I. Introduction

Turkish legislative efforts to tax digital services rendered to Turkish consumers by digital giant companies without a physical presence in Turkey started by introducing a new registration obligation for foreign digital enterprises with the result that the Turkish Government began collecting VAT on services provided by remote digital enterprises to domestic individual consumers in Turkey. The law was effectively applied from 1 January 2018. Since then, non-resident digital service provider enterprises register for and pay VAT with a special VAT return in respect of the digital services they provide to Turkish individual consumers who are not VAT taxpayers. The second attempt was to introduce an income withholding tax on digital advertisement service payments made to non-resident digital companies (or individuals) applicable whether the non-resident online advertising service providers are taxable persons in Turkey or not. The law authorized the president for the implementation of the law. The president used his authority in 2018 and imposed a 15 % withholding tax (WHT) on the online advertising services income of non-resident individuals and companies for the first t...