{"id":144431,"date":"2019-12-23T09:12:25","date_gmt":"2019-12-23T09:12:25","guid":{"rendered":"https:\/\/beta.paksoy.av.tr\/?p=144431"},"modified":"2024-07-27T04:50:38","modified_gmt":"2024-07-27T04:50:38","slug":"turkey-introduces-digital-service-tax-and-other-new-taxes-makes-significant-changes-to-tax-laws","status":"publish","type":"post","link":"https:\/\/paksoy.av.tr\/en\/2019\/12\/turkey-introduces-digital-service-tax-and-other-new-taxes-makes-significant-changes-to-tax-laws\/","title":{"rendered":"Turkey introduces Digital Service Tax and other new taxes, makes significant changes to tax laws"},"content":{"rendered":"<p>Turkey introduced three new taxes \u2013 the Digital Service Tax (\u201c<strong>DST<\/strong>\u201d), Accommodation Tax (\u201c<strong>AT<\/strong>\u201d) and Valuable Property Tax (\u201c<strong>VPT<\/strong>\u201d) with Law No. 7194 (the \u201c<strong>Law<\/strong>\u201d). Apart from the new taxes, the Law also brings several amendments to tax laws.<\/p>\n<p><strong>1. Digital Service Tax<\/strong><\/p>\n<p>Effective from 1 March 2020, the DST will be levied at a flat rate of 7.5% based on digital service providers\u2019 Turkey-sourced revenues. This is designed as gross-basis taxation over the income resulting from the provision of the following services in Turkey:<\/p>\n<p>\u2022 All types of digital advertising services<\/p>\n<p>\u2022 Sale of any audio, video or digital content<\/p>\n<p>\u2022 Digital services that enables digital content to be listened to, watched, played or recorded\/downloaded<\/p>\n<p>\u2022 Online platforms that allow users to interact with each other<br \/>\nProviders of digital services will be subject to the DST regardless of whether they are tax residents of Turkey, or whether such services are provided through their Permanent Establishments (\u201c<strong>PEs<\/strong>\u201d) in Turkey. Under the Law, only large-scale digital service provider companies with (a) annual worldwide revenue of EUR 750 million or more during a given year, and (b) total taxable revenues from digital services obtained in Turkey in excess of TRY 20 million will be subject to digital service taxation.<\/p>\n<p><strong>2. Accommodation Tax<\/strong><\/p>\n<p>Another tax called Accommodation Tax will be collected on a monthly-basis from the tourism enterprises (e.g., hotels, motels, holiday villages, guesthouses) in Turkey. It will be in force as of 1 April 2020, and the flat rate of 2% (temporarily 1% until the end of 2020) will apply to all kinds of services (e.g., foods, beverages, pool services, sports) provided in such enterprises.<\/p>\n<p><strong>3. Valuable Property Tax<\/strong><\/p>\n<p>Effective from 1 April 2020, the residential real estate properties located within the borders of Turkey with a value exceeding TRY 5 million will be subject to a new tax called \u2018valuable property tax\u2019. The value is determined by the General Directorate of the Land Registry.<\/p>\n<p>The rates will be as follows:<\/p>\n<p>\u2022 Properties valued between TRY 5 million and TRY 7.5 million will be taxed at a rate of 0.3% (three per thousand);<\/p>\n<p>\u2022 Properties valued between TRY 7.5 million and TRY 10 million will be taxed at the rate of 0.6% (six per thousand); and<\/p>\n<p>\u2022 Properties with a value exceeding TRY 10 million will be taxed at a rate of 1% (one per cent).<\/p>\n<p>The tax will be paid by property owners every year in two equal instalments (i.e., in February and in August). Note that the property owners who (i) only own one property, and (ii) prove that they have no income are exempt from taxation. The absence of income does not need to be established by persons under 18 and dependents.<\/p>\n<p><strong>4. Amendments to tax laws<\/strong><\/p>\n<p>Our key takeaways from the latest amendments are as follows:<\/p>\n<p>\u2022 In principle, salary payments made to employees are subject to gross-basis local income taxation through withholding i.e., via payroll accounting, at the level of the employer. The individual income tax must be withheld on a monthly-basis, and paid over to the relevant tax office by employers for the account of their employees. The Law increases the income tax rate for the highest income bracket to 40%, for individuals who earn more than TRY 500,000 in one calendar year \u2013 previously, the highest rate was 35%.<\/p>\n<p>\u2022 Furthermore, it will now be a requirement for individuals with a salary income of more than TRY 500,000 to file an annual income tax return. This means that, subject to certain limitations, this new salary taxation scheme enables the deduction of several expense items from the gross income, e.g., insurance premium, education and health-related expenses covering the family, or certain donations.<\/p>\n<p>\u2022 A banking and insurance transactions tax (\u201cBITT\u201d) of 0.1% (one per thousand) has been applicable since May 2019 to foreign exchange sale transactions that are facilitated by banks and authorised establishments in Turkey. The Law increases the BITT rate from 0.1% to 0.2% (two per thousand).<br \/>\nThe followings will continue to be taxable at the rate of zero per cent under the BITT regime:<\/p>\n<p style=\"padding-left: 40px;\">&#8211; Transactions between banks and authorised establishments<br \/>\n&#8211; Sale of foreign currency to the Turkish Ministry of Treasury and Finance<br \/>\n&#8211; Sale of foreign currency to the borrowers of foreign currency-denominated loans by the lender banks or the intermediary banks facilitating the payment<\/p>\n<p>\u2022 Certain restrictions are now imposed in relation to deductible expenses made for company cars in the year 2020 and onwards \u2013 there had been no restriction so far.<\/p>\n<p>\u2022 An limited exemption is introduced for salary (income) taxation in respect of public transportation payments \u2013 this is a new exemption with a limit of TRY 10.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Turkey introduced three new taxes \u2013 the Digital Service Tax, Accommodation Tax and Valuable Property Tax with Law No. 7194. Apart from the new taxes, the Law also brings several amendments to tax laws.<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[281],"tags":[],"class_list":["post-144431","post","type-post","status-publish","format-standard","hentry","category-publications"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Turkey introduces Digital Service Tax and other new taxes, makes significant changes to tax laws | Paksoy Attorneys at Law<\/title>\n<meta name=\"description\" content=\"Turkey introduced three new taxes \u2013 the Digital Service Tax, Accommodation Tax and Valuable Property Tax with Law No. 7194. 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