Global e-commerce firms to be liable to pay tax in Turkey under draft law: Minister

ANKARA

Global e-commerce companies will be liable for taxes on goods sold directly to Turkish customers under a draft law proposed by Turkey’s government, Finance Minister Naci Ağbal said on Sept. 15.

He told the state-run Anadolu Agency that the budget deficit will be at around 60 billion Turkish Liras ($17.5 billion) by the end of the year.

“A global e-commerce company will be a taxpayer in Turkey if it sells products directly to consumers in the country continuously,” Ağbal stated.        

“Otherwise, we will make it a taxpayer automatically and seize their revenues received in Turkey,” he added.      

Ağbal earlier said his ministry launched a detailed examination into tax payments of global online portals, noting that tax avoiders were sent notifications demanding they pay their taxes.  

He then said the taxation of online portals has become a global issue and there are opposing views about to whom such companies pay their taxes, adding that the OECD is one of the leading organizations that has focused on placing standards regarding the issue. 


Budget results 

Ağbal also said the budget deficit in August stood at 874 million Turkish Liras (nearly $254.5 million) while the primary surplus was 4.6 billion liras ($1.34 billion).        

He said there was a significant increase in investment expenditures in the first eight months of the year, adding he expected a considerable increase in tax revenues, exceeding expectations.        

“Turkey’s budget is solid. Despite additional spending on defense and security, we manage to maintain a balanced budget,” Ağbal said. 

The minister said he projects the budget deficit to reach around 60 billion liras ($17.5 billion) at the end of the year.        

“If we had not taken measures, we would not have caught the rising trend of economic growth. Budget deficit will be 2 percent of the GDP at the end of this year,” Ağbal said.        

He also said that they will limit public expenditure, especially current expenditures, in 2018’s budget.        


Third quarter growth ‘to be higher’

Ağbal noted that Turkey’s growth rate will be higher in the third quarter of 2017 due to base affects compared to the same period of last year.     
  
Turkey’s economy grew 5.2 percent in the first quarter of this year and 5.1 percent in the second quarter, compared with the same periods of 2016, according to official data. 

“The third quarter of 2016 coincides with the defeated coup attempt,” Ağbal recalled.        

The finance minister stated that the acceleration in the growth rate will continue in the fourth quarter as well.        

“Leading indicators in production, investment, domestic and foreign demand are quite strong. Exports considerably support growth, along with pleasing developments in tourism,” Ağbal said.   
     
Recalling credit rating agencies’ outlook for the Turkish economy after the failed coup attempt, he said agencies such as Standard and Poor’s and Fitch expected Turkey to grow by 2-3 percent in 2017.     
  
“Everybody now starts to upgrade Turkey’s growth rate for 2017. International institutions mention rates like 4.7 or 5.3 percent,” he noted.        

“There is confidence in the Turkish economy in the market and it continues increasingly,” he added.