AMENDMENT TO THE VALUE ADDED TAX GENERAL IMPLEMENTATION COMMUNIQUÉ

(Seri No: 49)

ARTICLE 1- The following section, along with its title, has been added after section (I/B-15.) of the Value Added Tax General Implementation Communiqué published in the Resmi Gazete dated 26/4/2014 and numbered 28983.

"16. VAT Application in the Sale of Gift Cards, Voucher Codes and Similar Items

General Explanation

Gift cards, voucher codes and codes (activation codes, e-pin codes, game codes, digital product codes, wallet codes, gift cards/vouchers, and similar ones) can be used to obtain products and services such as computer programs, games, applications, music, broadcasting, and entertainment, marketed in virtual environments (such as streaming platforms, gaming sites, application stores) as well as for secure shopping in virtual or physical stores. These gift cards, voucher codes and codes can be sold either in virtual environments or physically.

The mentioned gift cards, voucher codes, and codes can represent the purchasing power for buying a specific product or service, even if they have not been activated, with the ability to be used for virtual purchases.

16.2. VAT Application on Gift Cards, Voucher Codes and Codes Representing a Specific Product or Service

Some gift cards, voucher codes, and codes represent a specific product or service, and even if they have not been activated yet, it is not possible to obtain another product or service with them. The import of these gift cards, voucher codes and codes from abroad or their sale in Turkey, whether in virtual environments or physical stores, is subject to VAT. For these gift cards, voucher codes and codes:

If obtained by residents in Turkey from foreign companies, the VAT related to this transaction must be declared and paid by the residents in Turkey using VAT Declaration Form No. 2,

If obtained by individuals resident in Turkey who are not VAT taxpayers from electronic service providers resident abroad, the VAT related to this transaction must be declared and paid by the foreign company using VAT Declaration Form No. 3,

In case of sales in Turkey, the calculated VAT must be declared by the selling companies using VAT Declaration Form No. 1.

Examples related to the subject are provided below."

Example 1: Tax consultant (B), who is a VAT taxpayer in Turkey, purchased an e-pin code issued by the foreign resident company (A) for access to a professional document editing program. The

transaction of purchasing the code that enables access only to this program from the foreign resident company (A) is subject to VAT. The VAT related to this transaction must be declared and paid by the tax consultant (B) using VAT Declaration Form No. 2, in their capacity as the responsible party.

Example 2: (K) Ltd. Co., a resident company in Turkey providing publishing services in electronic media, sold a coupon code (C) that grants membership for 6 months to access its service to (C). The sale transaction of the code, which is designated as the right to access the publishing service, is subject to VAT. The VAT related to the sale of this code must be declared by (K) Ltd. Co. using VAT Declaration Form No. 1.

Example 3: Mr. (N) purchased a card from a technology store in Turkey for a 3-month subscription to a music platform to obtain membership. The sale of this card is subject to VAT, and the calculated VAT must be declared by the technology store using VAT Declaration Form No. 1.

Example 4: (M) Joint-Stock Company, engaged in the electronic code purchase/sale activity in Turkey, sells codes providing access to the game (Y). Since the sale of this code is related to granting access

(activation) to a specific game, this code sale is subject to VAT. The calculated VAT must be declared by (M) JSC using VAT Declaration Form No. 1.

Example 5: Mr. (Ç), a non-VAT taxpayer residing in Turkey, purchased a card from the foreign

resident electronic service provider (L) for a 1-year subscription to the film/series platform. The VAT related to the sale of this subscription card must be declared and paid by the film/series platform (L) using VAT Declaration Form No. 3.

16.3. VAT Application on Gift Cards, Voucher Codes, and Codes That Do Not Represent a Specific Product or Service

Some gift cards, voucher codes, and codes represent a virtual purchasing power for future purchases of goods or services to be delivered or provided later. When used, these gift cards, voucher cards and codes do not result in obtaining a specific product or service but rather create a right to purchase in virtual or physical environments.

16.3.1. VAT Application on the Sale of Gift Cards, Voucher Codes and Codes That Do Not Represent a Specific Product or Service

The sale of gift cards, voucher codes and codes that are sold in virtual or physical environments under names like wallet codes but do not represent the equivalent of a specific product or service, and create a right to purchase within the issuing company when used, is not subject to VAT. Therefore, the acquisition of these gift cards, voucher codes and codes from abroad or their sale within Turkey will not be subject to VAT.

Examples related to this topic 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, and he can use this wallet balance to purchase products and services through the application. The sale of this e-pin code, representing a right to make a purchase in the (A) shopping application, by the (Z)

store to Mr. (H) will not be subject to VAT.

Example 2: Mr. (Y) purchased a gift card worth 2,000 TL from a store of (B) Ltd. Co. This gift card,

which can be used to obtain products and services from all stores of (B) Ltd. Co., does not represent a specific product or service, so no VAT will be calculated on the sale of the gift card.

Example 3: (T) company, engaged in the sale of game codes in Turkey, purchased e-pin codes that can be used as wallet codes in the games or applications of a game developer company based in

Singapore, from that company's website. Mr. (A), a resident in Turkey, also entered the website of (T) company and purchased a wallet code of 500 TL that he can use on the mentioned website. Since the codes sold by both the Singapore-based company and (T) company represent a purchasing power that can be used on the game developer company's website, no VAT will be calculated on the sale of these codes. However, it is natural that VAT will be calculated on the sale of e-pin codes if they grant access (entry rights, memberships, subscriptions) to a specific game.

16.3.2. VAT Application on Procuring Products or Services Using Gift Cards, Voucher Codes and Codes That Do Not Represent a Specific Product or Service

The general provisions of VAT apply when products or services are obtained using gift cards, voucher codes and codes sold in virtual or physical environments that do not represent the equivalent of a specific product or service, either by using or activating them. For these products and services:

If obtained by residents in Turkey from foreign companies, the VAT related to this transaction must be declared and paid by the residents in Turkey using VAT Declaration Form No. 2.,

In case of obtaining from companies in Turkey, the calculated VAT must be declared by the selling companies using VAT Declaration Form No. 1.

Examples related to this topic are provided below.

Example 1: Mr. (D), a resident in Turkey who is not a VAT taxpayer, purchased a balance card worth 250 TL from the foreign resident electronic service provider (V) company. Since this balance card

serves as a payment tool, this purchase transaction is not subject to VAT. However, if Mr. (D) uses the balance card to watch a movie on the company's film/series platform, this transaction is subject to VAT, and the VAT related to this transaction must be declared and paid by the (V) company using VAT Declaration Form No. 3.

Example 2: Mr. (E), a resident in Turkey who is not a VAT taxpayer, purchased a gift card worth 700 TL from a virtual platform, which can be used in the store of (R) company in Turkey and all stores of its affiliated companies. Since the sale of this gift card is not subject to VAT, Mr. (E) purchased “a shirt from the store of (R) company for 500 TL using part of the gift card, and the calculated VAT related to this shirt sale must be declared by (R) company using VAT Declaration Form No. 1.

16.4. VAT Application on Fees for Gift Card, Voucher Code, and Code Sales and Other Sales

In practice, gift cards, voucher codes and codes can be sold in virtual or physical stores. In addition, products developed within virtual games by individual players (such as game characters, power, features, levels) can also be sold in virtual environments. Whether or not they represent a specific product or service, intermediary services provided in Turkey for the sale of gift cards, voucher codes, codes and other products in virtual or physical stores are subject to VAT. The VAT calculated on the fees received under names such as service fees or commissions for these sales must be declared by the providers of intermediary services.

ARTICLE 2- The expression "2,000 TL" in section (II/A-1.2.2.) of the same Communiqué has been changed to "10,000 TL."

ARTICLE 3- The expression "100 TL" in the second paragraph of section (II/A-5.3.) of the same Communiqué has been changed to "1,000 TL."

ARTICLE 4- The fourth paragraph of section (II/C-1.1.) of the same Communiqué has been changed as follows: "For taxpayers to benefit from the exemption, they must have a valid authorization

document issued in their name in accordance with the relevant legislation governing the conduct of international transportation activities during the period they engage in transportation activities.

Since the vehicles used in transportation activities must be registered on a single vehicle document attached to the authorization document, it is possible to carry out this activity with owned or leased vehicles registered on the attachment to the authorization document."

ARTICLE 5- The expression "If it is mandatory to obtain an authorization document according to the relevant legislation for the conduct of international transportation activities, this document (This document is given only once with no changes in the document.)" in the first paragraph of section

(II/C-1.3.) of the same Communiqué has been changed to "Authorization document and attached vehicle document obtained according to the relevant legislation for the conduct of international transportation activities."

ARTICLE 6- This Communiqué enters into force at the beginning of the month following its publication.

ARTICLE 7- The provisions of this Communiqué shall be executed by the Minister of Treasury and Finance