Turkish VAT on e-services

From 1 January 2018, foreign providers of electronic services to Turkish consumers are required to VAT register and charge Turkish VAT (General Communiqué No. 17 on the Value Added Tax Law (Law No. 3065)). This replicates reforms in the EU in 2015, and mirrors similar recent requirements in South Africa, Russia, Japan, Australia and many other countries.

The provider will be required to identify that the services were consumed in Turkey to apply Turkish VAT. This can be done through:

• Address of the customer
• IP address of the device used to access the content
• International dialling code
• Credit card or other payment method address

Fees from electronic services subject to Turkish VAT include:

• Streaming video, music or gaming;
• E-books;
• Hosting websites;
• Broadcast TV or radio; and
• Online telephony and data.

Foreign providers of e-services to Turkish resident VAT-registered businesses will not have to register for VAT. Instead, the Turkish business’ customer can report the transactions using their ‘reverse charge’ process in their own VAT return. There is no requirement for a cash payment for VAT.

There is no VAT registration threshold for non-resident providers of digital services. Companies may register online through MERSIS, the commercial registry.

There are no specific requirements for the maintenance of VAT records. Supplies to Turkish VAT registered customers are nil rated, reverse charge.

VAT filings are on a monthly basis, by the 24^th of the month following the reporting period. In the launch period, the first reporting period will be the first quarter of 2018, and the first return will due on 24 April 2018. Returns must detail VAT due in local liras, based on the exchange rate of the Turkish central bank at the time of the supply. In periods where there are no transactions, no return need be filed

Marketplaces for such services will be deemed liable for VAT compliance if the marketplace:

• Requests the consideration
• Sets the general terms and conditions of the service