Digital Service Tax in the European Union and Turkey Practice

Abstract

The development of information and communication technologies has led to a serious transformation in the economy. Before this change, which accelerated with the 21st century, the economy was based on brick and mortar trade, while today it is increasingly based on bit and byte technology. This situation has caused the system to not work properly as the tax system is based on concrete and physical jobs. International organizations such as the OECD, IMF and EU are working towards joint action since unilateral measures taken by states may cause tax wars. Hovewer, it is difficult to reconcile countries with very different interests in a common solution. In this study, the Digital Services Tax (DST) proposed by the EU to implement interoperability between EU countries as a temporary solution, was examined and the Digital Services Tax reflections in Turkey was interpreted. Unilateral taxes have begun international tax wars, even though they are still in their infancy. While the majority of states recognize the necessity of a fundamental and long-term solution, they are introducing new types of taxes or taxation methods to protect their taxation rights. The Digital Service Tax is one of them.For Turkey, rather than short-term applications, it is recommended that the tax system be made compatible with digital technologies. The process of enacting Digital Service Tax has been criticized is being too fast and The Digital Services Tax does not have an independent code. It is stated in the doctrine, as cited in this study, that the tax rate is much higher than the EU examples. How to ensure compliance with taxation has been put forward as an important problem. The imposition of internet access restrictions on digital service providers that do not comply with taxation by executive decision has been identified as an advanced legal study. As a result, it is concluded that regulatory impact analysis of the Digital Services Tax Code is unsatisfactory in Turkey.