303 TAX LAW Withholding Tax Issue in Digital Advertising Services* Tutku Şen Introduction For startup companies, adjusting technology to needs, or creating new needs with the products and services they offer, and gearing up in our country day by day, one of the key elements is undoubtedly digital advertising activities. With the impact of the Covid-19 pandemic, visibility in digital environment has become the golden rule of being able to operate. The 64% increase in electronic commerce volume1 may indeed be considered as an indicator of this rule. Companies utilize the digital platforms incorporated abroad, mainly to the big three, Google, Facebook, and Twitter, in order to receive advertising services. At this point, we face the issue of taxing the digital advertising revenue collected from almost all of the players in the market and that is transferred abroad. While taxation of the digital economy is being discussed fiercely in the international arena, Turkey, through its recent legal regulations, has a stable position on the taxation of income earned through digital advertising activities in Turkey. This article examines the issue of withholding taxes in digital advertising services, which has led to many debates in terms of international tax law. Resolution of the President No. 476 Through the amendment of Tax Procedural Law No. 213 (“TPL”) in 2016, the President has been authorized to deduct taxes from those who are parties or intermediaries of taxable transactions, regardless of whether the persons paid are taxpayers, whether the payers or in- * Article of January, 2021 1 E-Commerce Department of the Ministry of Commerce, E-Commerce Data of the First 6 Months of 2020 Announced, 19.08.2020, https://www.eticaret.gov.tr/ haberler/10040/detay.
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