Turkey is the 9th largest source of revenue when it comes to country rankings in Apple’s App Store for iOS, and the Turkish treasury wants a piece of the pie. The $200m revenue has been entirely untaxed.
The trio of hungry wolves comprises the Ministry of Finance; Ministry of Transport, Maritime Affairs and Communications; and Mobile Service Provider Businessmen’s Association (MOBİLSAD). An official from the internal revenue service said: “The source of the problem is that the body liable for VAT is a foreign entity. Since the foreign entity is not obliged to pay taxes here, the person who downloads the content should declare and pay the amount of VAT resulting from the transaction.” Exactly how this procedure ought to work was not outlined.
In a more reasonable statement, the MOBİSAD Chairman Kerem Alkin hinted that they were working with the Ministry to encourage the Turkish content developers. “There should either be a taxation mechanism, or a mechanism to contribute to the development of the internet infrastructure,” Alkin said.
Turkey wanted a piece of Google’s advertising revenue in the past, and went as far as blocking access to various Google services nationwide to extort a slice. Whether Apple will be asked to register as a company in Turkey and pay local taxes remains to be seen. Unlike the Google case, no censorship threats are looming. Yet.
The story is bigger than Apple’s iOS, of course. The application market is projected to reach $35b by the end of 2014, and Turkey is not the only country bemoaning the difficult question of taxation online. Nonetheless, perhaps Obama should rise to the defense of the American innovators, and in reiteration of his Virginia speech, remind us that, this lucrative business – we didn’t build that. Somebody else made that happen.