Tax and Incentives for the Information and Communication Technologies Sector
According to the Information Technologies Industry Foundation’s data, the information and communication technologies sector grew by 14.4% in 2016 to TL 94.3 billion. The sector provides employment for 120,000 individuals. Its exports also grew at staggering rate of 32% to TL 3.1 billion.
Of course, there is still a vast room for improvement. The industry realizes that issues of innovation, R & D, and Industry 4.0 go beyond the lip service. Their translation to commercial products is the only way to success in the global market.
Recent years have witnessed not only a surge of sectoral and public interest in these topics but also an increase in the types of financial incentives provided by the government. In fact, these incentives evolved to be so varied that they became confusing and hard to follow.
Business people and entrepreneurs expect these incentives to be more accessible and easier to apply and to benefit from them with minimum bureaucracy.
“Visit, explain, facilitate”
We strongly believe that government institutions should explain the incentives, supports and opportunities to entrepreneurs in person and make the use of these resources as easy and smooth as possible. They should forsake the preventive focus of creating rules and regulations against one-in-a-million abuse of the system but rather adopt an active and rational auditing approach. In other words, the meticulous efforts employed in preparation of the incentives should continue during implementation and audit phases too.
This is precisely the approach we take in our articles published at the ICT Media Journal for the last 5 years. We try to explain tax and incentives in the information and communication technologies sector in as plain language as possible to facilitate interpretation and applications. We compare different incentive schemes to help entrepreneurs choose the best possible option for themselves. We believe this approach reflects the very mission of the journal to be accessible to all stakeholders in the information and communication technologies sector.
Tax Risk Management
Tax regulations in the information and communication technologies sector, like in any other sector, mean both risks and opportunities. While the reductions and exemptions provide opportunities, uncertainties and grey areas pose risks. In addition, it is increasingly more challenging for the traditional tax legislation written to regulate Industry 3.0 to embrace the realities of Industry 4.0. Legislators and tax administrators are constantly in search for replacements to traditional tax regulations that assumed businesses are operated at a fixed location. These regulations fail to achieve fair and effective ways of taxing mobile labor, capital, and intellectual property. Moreover, the increasing convergence in our sector—i.e., the blurring of traditional boundaries between products and services provided in information technology, broadcasting, and telecommunications—leads to widening of grey areas in tax regulations. All of these factors led us to tackle tax risk management issues in our writings. We believe a complete analysis is possible by simultaneously focusing on both tax-related opportunities and risks.
We took a further step in July 2017 by bringing together our work in this area in a coauthored book titled Bilişim Sektörü için Vergi ve Teşvikler (Tax and Incentives for the Information and Communication Technologies Sector). The book, published by Seçkin Publications, elaborates on tax problems and their solutions in the information and communication technologies sector. We aimed at providing a framework for understanding and implementing tax regulations in a new landscape that is continuously reshaped by new technologies. We also explained existing incentives and supports in an easy-to-follow manner. The resulting product, we believe, can provide a guide to both those working in the information and communication technology sector, and those who envision entering it.
We hope our efforts prove beneficial to all in the ICT world.
(Bilişim Sektörü için Vergi ve Teşvikler [Tax and Incentives for the Information and Communication Technology Sector], Bülent Taş & Nazmi Karyağdı, Seçkin Publications, Ankara, July 2017, 264 pages).