- The Ministry of Treasury and Finance, through Series No: 49, announces amendments to the General Value Added Tax Implementation.
- Section 16 outlines VAT application on sales of cards, passwords, and codes, specifying scenarios for specific and non-specific products or services. Examples illustrate VAT implications on transactions involving residents, foreign companies, and electronic service providers.
- Section 16.3.2 details VAT application on cards, codes, and passwords without specific product representation.
- Section 16.4 covers VAT on fees for intermediary services in card and code sales.
- The announcement includes amendments to monetary values in related sections.
- The changes are effective the month following publication and are overseen by the Minister of Treasury and Finance.
Source Resmigazete
Unofficial translation
ANNOUNCEMENT
From the Ministry of Treasury and Finance (Revenue Administration):
AMENDMENT TO THE GENERAL VALUE ADDED TAX IMPLEMENTATION ANNOUNCEMENT
(SERIES NO: 49)
ARTICLE 1- The following section is added after section (I/B-15.) of the General Value Added Tax Implementation Announcement published in the Official Gazette dated 26/4/2014 and numbered 28983, with its title:
“16. Application of VAT on Sales of Cards, Passwords, Codes, and Similar Items
16.1. General Explanation
Cards, passwords, and codes (activation codes, e-pin codes, game codes, digital product codes, wallet codes, gift cards/vouchers, and similar items) can be used to obtain products and services such as computer programs, games, applications, music, broadcasts, and entertainment, both in the virtual environment (such as publishing platforms, game sites, application stores) and for secure shopping in virtual or physical stores. These cards, passwords, and codes can be sold either in the virtual environment or physically.
These cards, passwords, and codes can represent the value of a specific product or service or create virtual purchasing power at the issuer’s end.
16.2. VAT Application on Cards, Passwords, and Codes Representing a Specific Product or Service
Some cards, passwords, and codes represent a specific product or service, and even if not activated yet, they cannot be used to obtain another product or service. The import of these cards, passwords, and codes from abroad or their sale in Turkey is subject to VAT.
For these cards, passwords, and codes:
- If acquired by those resident in Turkey from foreign companies, the VAT for this transaction must be declared and paid by those resident in Turkey as a responsible party using VAT Return Form No. 2.
- If acquired by individuals resident in Turkey who are not VAT taxpayers from foreign electronic service providers, the VAT for this transaction must be declared and paid by the foreign company using VAT Return Form No. 3.
- If sold in Turkey, the calculated VAT must be declared by the selling companies using VAT Return Form No. 1.
Examples related to this issue are provided below.
Example 1: A VAT taxpayer in Turkey, a tax consultant (B), purchased an e-pin code issued by a foreign resident company (A) for accessing a professional document preparation program. Since this e-pin code, which allows access only to this program, was purchased by tax consultant (B) from the foreign resident company (A), this transaction is subject to VAT. The VAT for this transaction must be declared and paid by tax consultant (B) as a responsible party using VAT Return Form No. 2.
Example 2: (K) Ltd. Şti., a company located in Turkey providing online publishing services, sold a coupon code to (C) for 6 months of membership, allowing access to its services. The sale of this code, which is designated for access to the publishing service, is subject to VAT, and the VAT for the sale must be declared by (K) Ltd. Şti. using VAT Return Form No. 1.
Example 3: Mr. (N) purchased a card for a 3-month subscription to a music platform to use in Turkey from a technology store. The sale of this card is subject to VAT, and the calculated VAT must be declared by the technology store using VAT Return Form No. 1.
Example 4: (M) Corporation, engaged in the purchase/sale of electronic codes, sells codes that provide access to the game (Y). Since these codes represent access to a specific game (when activated), the sale of these codes is subject to VAT, and the calculated VAT must be declared by (M) Corporation using VAT Return Form No. 1.
Example 5: Mr. (Ç), a non-VAT taxpayer residing in Turkey, purchased a card from a foreign electronic service provider (L) for a 1-year subscription to its film/series platform. The VAT for the sale of this subscription card must be declared and paid by (L) film/series platform using VAT Return Form No. 3.
16.3. VAT Application on Cards, Passwords, and Codes That Do Not Represent a Specific Product or Service
Some cards, passwords, and codes represent virtual purchasing power for future deliveries or services. These cards, passwords, and codes do not result in obtaining a specific product or service when used; instead, they create a virtual right to purchase in a virtual or physical environment.
16.3.1. VAT Application on Sales of Cards, Passwords, and Codes That Do Not Represent a Specific Product or Service
The sale of cards, passwords, and codes sold in virtual or physical stores with names like wallet codes that do not represent a specific product or service is not subject to VAT. As such, the import or sale of these cards, passwords, and codes from abroad or within Turkey is not subject to VAT.
Examples related to this issue are provided below.
Example 1: Mr. (H) purchased an e-pin code issued by the (A) shopping application from the (Z) store. When Mr. (H) uses this code, he will have a wallet balance within the (A) shopping application, allowing him to purchase products and services through the application. The sale of this e-pin code, representing a right to purchase within the (A) shopping application, is not subject to VAT.
Example 2: Mr. (Y) purchased a gift voucher worth 2,000 TL from the store of (B) Ltd. Şti. This voucher can be used to obtain products and services from all stores of (B) Ltd. Şti., but since it does not represent a specific product or service, no VAT is calculated for the sale of the voucher.
Example 3: (T) Corporation, engaged in selling game codes in Turkey, purchased e-pin codes from a game developer company located in Singapore. Mr. (A), a resident in Turkey, also purchased a wallet code for 500 TL from (T) Corporation’s website. Since these codes represent a purchasing power that can be used on the game developer company’s website, no VAT is calculated for the sale of these codes. However, if the purchased e-pin codes provide access rights (entry, membership, subscription) to a specific game, VAT will be calculated for the sale of these codes.
Section 16.3.2: Application of VAT in the Procurement of Goods or Services Using Cards, Codes, and Passwords that Do Not Represent a Specific Product or Service
Virtual or physical cards, codes, and passwords sold in virtual or physical environments, which do not represent the equivalent of a specific product or service, are subject to VAT when used or activated to obtain goods or services within the general provisions.
For these goods and services:
- If obtained by residents in Turkey from foreign companies residing abroad, the VAT related to this transaction must be declared and paid by the residents in Turkey, acting as the responsible party, through VAT Declaration Form No. 2.
- If obtained by residents in Turkey who are not VAT taxpayers from electronic service providers residing abroad, the VAT related to this transaction must be declared and paid by the foreign resident company through VAT Declaration Form No. 3.
- If obtained within Turkey, the calculated VAT must be declared by the selling companies through VAT Declaration Form No. 1.
Examples related to this matter are provided below.
Example 1: Mr. (D), a resident in Turkey who is not a VAT taxpayer, has purchased a balance card worth 250 TL from the electronic service provider (V) company located abroad. As this balance card serves as a means of payment, the VAT does not apply to this purchase transaction. However, when Mr. (D) uses the balance card to watch movies on the company’s film/streaming platform, the transaction becomes subject to VAT, and the VAT related to this transaction must be declared and paid by the (V) company through VAT Declaration Form No. 3.
Example 2: Mr. (E), a resident in Turkey who is not a VAT taxpayer, has purchased a gift voucher worth 700 TL from a virtual platform, valid in the store of the (R) company and all the affiliated stores of this company. The sale of this gift voucher is not subject to VAT. Mr. (E) has purchased a shirt from the (R) company’s store for 500 TL using the gift voucher. The calculated VAT related to the sale of the shirt must be declared by the (R) company through VAT Declaration Form No. 1.
Section 16.4: VAT Application on the Fees Received for Intermediary Services for Card, Code, and Password Sales and Other Sales
In practice, cards, codes, and passwords can be sold in virtual or physical stores. In addition, products developed within virtual games by individual players (such as game characters, power, features, level, etc.) can also be sold in virtual environments.
Whether representing a specific product or service or not, intermediary services provided in Turkey for the sale of cards, codes, and passwords along with other products in virtual or physical stores are subject to VAT. VAT related to these sales, collected under names such as service fees or commission, must be declared by those providing intermediary services through VAT Declaration Form.
Article 2: The amount “2,000 TL” in section (II/A-1.2.2.) of the same Communique is changed to “10,000 TL.”
Article 3: The amount “100 TL” in the second paragraph of section (II/A-5.3.) of the same Communique is changed to “1,000 TL.”
Article 4: The fourth paragraph of section (II/C-1.1.) of the same Communique is changed as follows: “In order for taxpayers to benefit from the exemption, they must have a valid authorization certificate issued in their name in accordance with the relevant legislation regulating international transportation activities during the period they conduct transportation activities. Since the vehicles used in transportation activities must be registered on a single vehicle document attached to the authorization certificate, it is possible to carry out this activity with own or leased vehicles registered on the attached vehicle document.”
Article 5: The first paragraph of section (II/C-1.3.) of the same Communique is changed to: “In cases where it is mandatory to obtain an authorization certificate according to the relevant legislation for the conduct of international transportation activities, the document (This document is issued only once with the condition that there is no change in the document.) obtained according to the relevant legislation for the conduct of international transportation activities, and the attached vehicle document.”
Article 6: This Communique will enter into force at the beginning of the month following its publication.
Article 7: These provisions shall be executed by the Minister of Treasury and Finance.
