Turkey Tax for Foreign Mobile Apps: VAT, Digital Services Tax, Withholding & PE (2026–2027)

Map the revenue first: five common payment flows

1. VAT: B2B venue subscriptions are not automatically “VAT3”

For a non-resident digital platform providing paid electronically supplied services to non-VAT-registered consumers in Türkiye, the special non-resident electronic-services VAT mechanism can apply (the framework commonly associated with VAT Return No. 3), provided the relevant statutory conditions are satisfied and there is no local establishment changing the regime. This is fundamentally different from a Turkish VAT-registered venue purchasing a service from abroad. In that B2B situation, a Turkish customer may have reverse-charge VAT responsibilities under the applicable domestic rules.

Determine customer VAT status, the actual supply, place of use, contractual principal and whether the foreign company has a Turkish establishment. Do not assume all app subscription revenue requires the same return or that a free consumer app creates B2C VAT without consideration.

Official explanation: Turkish Revenue Administration – VAT General Implementation Communiqué, 17th amendment (electronically supplied services).

2. Digital Services Tax: 5% in 2026, 2.5% from January 2027 under current law

Law No. 7194 covers specified Turkish digital revenue categories, including certain digital advertising, online sales of digital content and specified digital platform/intermediary services. A nightlife discovery app is not automatically liable simply because users can view nearby venues. Classify the actual fees and functions before concluding that sponsored placements or an intermediary function falls within DST.

DST is based on qualifying gross covered-service revenue, with statutory mechanics different from VAT and corporate-income tax. The label “digital platform” alone cannot establish taxability. Review the group’s relevant worldwide revenue, related entities, current-year threshold crossings and start-date rules.

Official source: Digital Services Tax Law No. 7194, including updated 2026/2027 rate wording.

3. Internet advertising withholding: can a Turkish venue have to withhold tax?

Turkish tax rules provide a separate withholding regime for certain payments for online advertising services and intermediation. Payments to non-resident corporate providers can attract 15% withholding under the relevant domestic decision, subject to the legal characterisation of the payment, the identity/status of the payer and recipient, and potential application of an appropriate tax treaty.

A B2B SaaS administration portal, licensing arrangement and display advertising campaign may have different classifications. Do not mechanically apply the advertising withholding rule to every service labelled “premium”. For example, a venue pays for:

• Profile-management software: analyse software access / services and treaty characterisation.
• Sponsored visibility in search results: digital advertising can trigger a different withholding and DST analysis.
• Tickets or event booking: understand agency and payment flows first.

Source: Revenue Administration – Corporate tax withholding rates and online advertising payments.

4. Corporate income tax: when can local agents create a PE?

Even if all platform invoices are issued by a UAE company, a corporate-tax risk may arise when it operates through a fixed place of business or a dependent person in Türkiye. Contracts signed “abroad” do not, by themselves, eliminate this possibility where substantive sales activities and commercial authority are exercised in Istanbul.

Review the Türkiye–UAE tax treaty (including its PE provision and any applicable treaty modifications), along with domestic workplace and permanent-representative rules. Assess whether the foreign enterprise has an office at its disposal, how regularly Turkish agents negotiate/conclude contracts, whether they can bind the foreign principal, and what operations actually take place locally.

The two key questions are whether a taxable presence exists and, if it does, how profits are attributable to it. A contractual commission fee does not itself demonstrate that no other Turkish profit is attributable to a local PE.

Reference: Revenue Administration ruling discussing Türkiye–UAE treaty and the fixed-place / PE analysis. Read our local commission-agent guide for operational tests.

5. What if the UAE parent owns the brand and app intellectual property?

App ownership in the UAE is relevant but not decisive. Determine whether the Turkish venue buys access to an online service, a separately licensed copyright/software right, a marketing campaign, or a right to use other intellectual property. The classification affects contract drafting, source-of-income questions, withholding and double-tax treaty analysis. Retaining IP offshore does not itself remove a tax PE created by actual local activities.

6. Recommended market-test structure before local incorporation

What a proper written tax opinion should contain

1. Exact transaction map for free/paid features and the contracting/invoicing entity.
2. Factual analysis of local agent authority and possible permanent establishment.
3. VAT treatment by payer and revenue stream (B2B, B2C and merchant of record).
4. Withholding, digital advertising and DST applicability/threshold tests.
5. Treaty residence documentation and any relief/administrative procedures.
6. Decision triggers for Turkish registration, including practical staffing/scale assumptions.
7. A table of questions requiring specialist consumer, KVKK or advertising legal counsel.

Frequently asked questions

Does a foreign company have to register for Turkish VAT to invoice Turkish business venues?

Not automatically under the non-resident B2C electronic-services mechanism. Tax treatment depends on the service and recipient, and the Turkish business customer may need to account for VAT under a reverse-charge regime.

Is Turkish DST 7.5% in 2026?

No. Under the enacted December 2025 amendment, the rate is 5% from 1 January 2026 and 2.5% from 1 January 2027. Thresholds, scope and effective dates must still be tested.

Does a UAE company avoid Turkish withholding when it invoices from Dubai?

Not by location alone. The type of payment, Turkish payer’s obligations and treaty documentation determine the result.

Can a company create a Turkish permanent establishment without opening a subsidiary?

Yes. Taxable presence can arise from the underlying onshore activities even where the legal entity is formed abroad.

Should a startup incorporate immediately?

That is a commercial and legal decision based on local work, invoicing, staff, risk and scale. A low-cost cross-border pilot may sometimes be possible, subject to a properly documented fact-based review.