The Revenue Office will take steps to tax social networking sites and implement other regulations related to e-commerce. After the implementation of this regulation, all such virtual sites will be deemed as "work places" and the advertisers of social networking sites will also be deemed as "electronic tax payers." Moreover, the new amendment will stipulate that the incomes earned by social networking sites that do not have offices in Turkey will also be taxable. With this new step to be taken by the Ministry of Finance to amend the Tax Procedure Law, any company that advertises on Twitter, which has resisted opening an office in Turkey, will also be taxed.
While e-commerce currently exceeds TL 40 billion ($15 billion) annually, the Revenue Office is currently monitoring social networking sites as well as e-commerce sites. Notifications have been delivered to those earning their income through e-commerce, and income earned online will be included in the Income Tax Law's scope.
The term "electronic workplaces" will be included in the law and accordingly, any ads placed on such websites by Turkey-based companies will also be taxed. The taxpayers will pay VAT to the Revenue Office as a "reverse charge VAT."
The Revenue Office is also supervising the online advertising market, and is warning companies who are trying to evade taxes through e-commerce. Furthermore, any e-commerce site that does not have the required level of security is being blocked until they make the required amendments.
While the online market in Turkey is worth around $1 billion, most of it is transferred abroad without being taxed. Social networking sites such as Google, Facebook, Twitter, LinkedIn and others receive the fees they charge for ads by credit card companies. According to the agreements for preventing double taxation, they do not pay taxes in countries they earn the income from and in countries where their headquarters are located. According to the Revenue Office's examination, while Google's online advertising income is around $45 billion, half of it is from European countries and approximately $1.5 to $2 million is from Turkey. With this new step, online advertising income will be included within the scope of service income.
The Revenue Office is examining credit card transaction information it received from banks and reaching companies through their logistics and courier companies. Along with physical follow-up, through a digital program called Xenon, e-commerce companies are being monitored, and the program automatically records the online transactions of any kind of company performing such act. With the new amendment, those who take photos and place ads for their houses or land online will have to pay the tax for such sales.
Commercial character will be determinedExperts at the Revenue Office will determine whether the products sold are commercial or non-commercial. Who purchased what from these sites and how much has been earned is also being monitored, and notifications are being sent out to those who earn income from online sales.
OECD is also taking a stepThe first chapter of the Organisation for Economic Co-operation and Development (OECD)'s "Action Plan for Base Erosion and Profit Shifting" is "taxing the digital economy." The plan, which will be completed at the end of this year, analyzes whether the digital economy threatens the international tax structure. In turn, new taxation structures and regulations will be applied at points determined to be problematic.