What İs The Scope Of Service Exports?

 

Let's look at the basics. According to the Turkish Language Association, service means performing a task for someone or engaging in an activity that benefits another person. The Value Added Tax Law defines service as all activities other than deliveries, deemed deliveries, and the import of goods.

 

Thanks to technological advancements, service delivery today can be carried out without the need for the service provider and recipient to physically meet. Services provided through the internet, social media, and digital platforms are the most concrete examples of this transformation.

 

Information technology services, software development, database management, digital consulting, accounting, engineering, architecture, and legal consulting are among the services that can be offered online.

 

As a result of these developments, the service sector has gained a global character. For example, a software developer living in Turkey can provide services remotely to a company located in a different country.

 

 

What is Service Export?

 

 

Export, in general, is the sale of goods or services produced in one country to other countries. While export is often associated only with the sale of goods, the provision of services abroad is also considered an export.

 

Service export is the sale of services instead of goods to individuals or organizations abroad. For example, a construction company operating in Turkey undertaking a project abroad and providing services is considered a service export.

 

 

For an activity to be considered a service export, certain conditions specified in the Value Added Tax Law must be met simultaneously:

 

 

• The service must be provided to a customer located abroad,

• The invoice or similar document must be issued in the name of the customer abroad,

• The service must be utilized abroad.

 

 

The Criterion of Utilization of the Service

 

 

One of the most debated issues in service exports is where the service is utilized. Because a service is an intangible element, determining the place of utilization may not always be clear.

 

For example, if a website prepared for a customer abroad is accessible from all over the world, including Turkey, the Ministry of Finance does not consider this service as a service export.

 

Similarly, if a commercial filmed in Turkey is sold to a foreign company, but the film is also broadcast on platforms accessible to Turkish internet users, the service is considered to have been utilized in Turkey as well. In this case, the service is not considered within the scope of the service export exemption, and VAT must be calculated.

 

With the recently published VAT General Circular, the conditions for benefiting from the VAT exemption in service exports have been clarified more clearly, and uncertainties in practice have been resolved with examples.

 

It is not mandatory to bring the foreign currency income obtained from service exports into the country and convert it into Turkish Lira. However, if a VAT refund is requested, the condition of bringing the service fee into Turkey in foreign currency and documenting it with a foreign currency purchase document remains in effect.

 

There are government supports aimed at encouraging service exports in some sectors. Health tourism, information technology, education, film production, and management consultancy are among the leading areas in this regard. Some of the support measures for foreign exchange-earning service trade include:

• Product and service registration support,

• Trademark registration and international protection support,

• Reporting and consultancy support for foreign company acquisitions,

• Certification support,

• Advertising, promotion and marketing support,

• Support for overseas offices and units,

• Consultancy and agency commission support,

• Translation and patient travel support,

• Training and domestic promotion support,

• Support for computer game and mobile application development and market entry,

• Film marketing, studio and set usage support,

• Support for fairs, trade delegations, events and competitions.

 

 

Exceptions and Advantages Provided for Service Exports

 

 

One of the advantages provided for companies exporting services is the special stamped passport application. It is possible to issue green passports to company executives operating in certain sectors and meeting the necessary conditions.

 

The main service areas included in this scope are:

 

• Telecommunications,

• Computer and information services,

• Overseas contracting activities,

• Education and health services,

• Tourism, travel and transportation services,

• Entertainment and cultural services,

• Financial and consulting services,

• Advertising, fair, congress and organization services,

• Market research and public relations activities,

• Architecture, engineering and technical consulting services,

• Maintenance, repair, leasing and operational leasing services.

 

Thanks to new technologies, service exports have become an area offering the opportunity to access global markets at low costs. In particular, IT and software services, which do not require high capital, will create significant income opportunities for many individuals and businesses in the future.