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Turkey: New VAT liability for non-resident electronic service providers


On November 28 2017, Article 9 of the Turkish Value Added Tax (VAT) Law on the parties liable for tax was amended. The new amendment stipulates that VAT arising from services provided electronically by those without a residence, workplace, headquarters, or business centre in Turkey to individuals in Turkey who are not VAT taxpayers must be declared and paid by the non-resident e-service providers.

A draft communiqué (Draft Communiqué), which regulates the implementation of the new legislation, was also announced by the Turkish tax authorities. The main objective of the new legislation is to ensure the tax compliance of the foreign suppliers in terms of their VAT obligations and prevent VAT losses to Turkey as regards outbound payments of electronic services.

The scope of the new legislation covers only VAT liability arising from the provision of e-services through the internet or an electronic network in business-to-consumer (B2C) transactions. It applied as of January 1 2018 without a revenue threshold.

In terms of the inbound sale of e-services or physical goods sales in business-to business (B2B) transactions, the existing VAT withholding mechanism still applies. Accordingly, in such transactions Turkish business consumers are still obliged to withhold, declare and remit the VAT to the Turkish tax authorities on behalf of the foreign supplier.

Who is within the scope of the new legislation?

Under the new VAT legislation, foreign e-service providers falling within the scope of the VAT Law are obliged to declare VAT arising under the special VAT registration for electronic service providers.

In addition, the Draft Communiqué states that when the electronic services are provided via a telecommunication web, interface or portal, if the name of the e-service provider is not indicated in the agreement among the parties nor stated on the invoices or similar documents, VAT in relation to the e-services must be declared and remitted by the parties engaging in the telecommunication web, interface, or portal business.

How and when to declare the VAT return?

For cross-border e-services to be provided to individuals in Turkey, VAT Return No. 3 will be electronically submitted via the internet tax office.

In this regard, before submitting the VAT return for the first time, foreign electronic service providers must fill out the form available on the Turkish Revenue Administration's website.

In the Draft Communiqué, it is stated that the filing deadline is by the 24th day of the month following the taxation period (which is monthly according to the Draft Communiqué). There is no requirement to submit a tax return for periods where no services are supplied electronically.

Our observations

An intermediary VAT declaration mechanism, such as an interface, that declares merchants' actual VAT returns to the tax authorities, has not been recognised in the Draft Communiqué.

We believe that the monthly VAT declaration obligation without a sales revenue threshold would likely result in undesirable administrative burdens for both foreign taxpayers and the Turkish tax authorities.

In conclusion, we are informed that a revision of the Draft Communiqué by the Turkish tax authorities is expected in the upcoming weeks. Therefore, it is highly advisable that foreign e-service providers follow future developments and take the necessary actions so as not to be subjected to tax penalties.


Ramazan Biçer

Yasin Uslu

Ramazan Biçer ( and Yasin Uslu (

Centrum Consulting

Tel: +90 216 504 20 66


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