VAT declaration on virtual and physical cards of the Revenue Administration

The Revenue Administration clarified whether the use of cards, passwords and codes sold in a virtual or physical environment will be subject to value added tax (VAT).

The Presidency opened to public opinion the Draft Communiqué on Modifications to the General Communiqué on the Implementation of the Value Added Tax.

The draft statement aims to determine the principles of application of VAT regarding cards, passwords and codes.

Accordingly, cards, passwords and codes (such as activation code, e-PIN code, game code, digital product code, wallet code, gift card/voucher) are used to provide products and services such as games , applications, music, publications and entertainment marketed in the virtual environment, as well as for secure purchases in virtual or physical stores.

Cards, passwords and codes can represent a reward for a certain product or service, as well as virtual purchasing power for the acquisition of products or services by those who issue them.

DETAILS OF CARDS SUBJECT TO VAT

Although some cards, passwords and codes represent a certain product or service, it is not possible to obtain another product or service with them, even if they have not yet been activated. The import of these cards, passwords and codes from abroad or their sale in Turkey is subject to VAT.

If these cards, passwords and codes are obtained from companies residing abroad, the VAT related to this transaction is declared and paid as responsible by residents in Turkey, and if they are provided by real persons who are not VAT taxpayers from service providers resident electronics. abroad, the VAT related to this transaction must be declared and paid by the company resident abroad.

If sold in Turkey, it is important that the selling companies declare the calculated VAT.

DETAILS OF THE CARD, SALES OF WHICH WILL NOT BE SUBJECT TO VAT

The sale of cards, passwords and codes, which are sold in a virtual or physical environment but do not represent the equivalent of a specific product or service, and which constitute a purchase right in the eyes of the card issuing company , password and code when used, and which constitute a means of payment, are not within the scope of VAT.

In this context, the supply of these cards, passwords and codes from abroad or their sale within Turkey will not be subject to VAT.

Providing products or services in exchange for these cards, passwords and codes through the use or activation of cards, passwords and codes that are sold in a virtual or physical environment but that do not represent the equivalent of a specific product or service will be subject to VAT within of the framework of general provisions.

If these products and services are purchased from companies residing abroad, residents in Turkey will be required to pay VAT related to this transaction. If it is provided by non-VAT taxpayers from electronic service providers residing abroad, the VAT related to this transaction will be paid by the company residing abroad.

THOSE WHO PROVIDE INTERMEDIARY SERVICES WILL DECLARE

If these products and services are provided by companies in Turkey, the selling companies must declare the calculated VAT.

Intermediation services provided in Turkey for the sale of cards, passwords, codes and other products in virtual or physical stores, whether or not there is a specific product or service in exchange, will be subject to VAT.

Those who provide intermediation services will declare the VAT calculated on the fees received under names such as service fee or commission in respect of these sales. (AA)