Turkey - Country Commercial Guide
Türkiye - Digital Economy
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Overview

Türkiye’s digital transformation has been a strategic priority for the government, aiming to leverage digital technologies for economic growth and development. The Turkish government launched the “National Technology Initiative” and “Digital Türkiye” strategy to enhance digital infrastructure, boost innovation, and foster digital skills among its population. These strategies are designed to position Türkiye as a leader in digital technologies and ensure the country remains competitive in the global market. The focus areas include e-government services, digital economy regulations, and public-private partnerships to support digital transformation.

Türkiye’s digital economy is poised for significant growth, driven by increasing internet penetration, a young tech-savvy population, and supportive government policies. The competitive environment includes major players such as Turkcell, Vodafone Türkiye, and Türk Telekom, which dominate the telecommunications sector. Emerging trends include the rapid adoption of e-commerce, fintech solutions, and advancements in AI and IoT technologies. The digital economy’s contribution to Türkiye’s GDP is expected to rise substantially, fueled by investments in 5G infrastructure and smart city projects.

Market Challenges

Regulatory Environment and Digital Trade Barriers

Foreign vendors find it increasingly difficult to operate in Türkiye due to the existing digital services tax (DST), local content requirements, and restrictions on social media platforms. However, Türkiye has agreed to transition away from its existing 7.5 percent DST to a new international tax framework under the OECD/G20 Inclusive Framework’s Two-Pillar solution. The United States and Türkiye are among the 134 jurisdictions to have joined the 2021 OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting Statement to address tax challenges arising from the digitalization of the world economy. Further, the United States and Türkiye issued a joint statement in November 2021 on a transitional approach to existing Unilateral Measures until Pillar 1 of the OECD Inclusive Framework is implemented. The U.S. Department of Treasury and the U.S. Trade Representative continue to monitor implementation of the political agreement and the transitional approach as provided in the joint statement.  

Additionally, regulatory challenges include strict data privacy laws modeled after the EU’s GDPR, evolving AI regulations, and restrictions on cross-border data flows. Compliance with these regulations can be complex and costly for businesses.

The regulatory environment is further complicated by stringent cybersecurity laws and measures aimed at combating online threats, which affect social media platforms and digital content providers. Developing and aligning digital standards with international norms remain a priority but also a challenge. Foreign companies face bureaucratic hurdles for market entry and often require local partnerships to navigate the regulatory landscape. Public sector procurement processes are also challenging for new entrants.

Several barriers impact digital trade in Türkiye, including data localization requirements that mandate data be stored within national borders, without explicit consent of data subject upon the existence of one of the conditions referred to in Article 5(2) and Article 6(3) of the Law and if in the country where personal data are to be transferred adequate protection is provided.  Regulatory controls on internet service providers and online platforms limit market dynamics, and geopolitical considerations influence digital trade policies and market access conditions.

  • AI Regulation - On June 24, 2024, Türkiye’s Grand National Assembly introduced the Artificial Intelligence Law (2/2234). This law aims to create clear rules for developing and using AI technology. It sets out key principles for security, transparency, fairness, accountability, and privacy that developers must follow.
  • Cross Border Data Flows - The Law on Protection of Personal Data No. 6698 requires companies and organizations to receive explicit consent before transferring data to countries that have not been deemed by the Data Protection Board (the decision-making organ within the KVKK – the data protection authority) to have adequate data protections in place. Türkiye has not released the list of “adequate” countries yet, so companies are still required to receive explicit consent before transferring data over borders. Türkiye seeks to harmonize its personal data protection regulations with that of the EU’s General Data Protection Regulation (GDPR). As a step towards that objective, the KVKK implemented amendments to the Personal Data Protection Law (No. 6698) on June 1, 2024, allowing data controllers to process and transfer abroad personal data for rights protection or to meet obligations in employment, health, safety, and social security.  These amendments provide for four alternatives for the transfer of personal data abroad:  1) adequacy decisions for countries, international organizations and sectors within the country, 2) non-international agreements between public institutions, 3) Binding Corporate Rules, and 4) Standard Contractual Clauses.
  • Content Moderation - In 2022, Türkiye’s Grand National Assembly amended its Internet Law 5651 with provisions aimed at stopping the spread of false information. The law covers information and communication technology firms, with fines that could reach up to 3 percent of global revenue and throttling of bandwidth by up to 95 percent. As of December 2023, implementing regulations were still being drafted. The amended law criminalizes publishing what the Turkish Government considers disinformation on social media (e.g., the law requires social media apps to block content that violates Turkish morals or traditions before it’s published) and raises potential privacy concerns and risks for third-party social media companies. The law builds on existing legislation that defines a social network provider (SNP), requires SNPs to appoint a local representative, sets procedures for content removal, requests reports from SNPs every six months, sets data disclosure obligations for companies, and requires user data to be stored within Türkiye. Regulation also mandates social networks to link accounts to phone numbers, remove fake accounts, and limit user time on platforms. Penalties for noncompliance include escalating fines, blocking of advertisement, and restricting bandwidth.
  • E-Commerce Law - The Regulation of Electronic Commerce Law No. 6563 was amended with the law Amending the Law on the Regulation of Electronic Commerce (the “Amendment Law”) adopted by the Turkish Parliament on 1 July 2022. This was due to concerns that in its current state, the law was inefficient in addressing the problems created in the face of rapidly changing digitalization and technology. Influenced by the European Union’s Digital Markets Act and the Digital Services Act, the amendments brought fundamental changes to the E-Commerce Law.

The amended law poses a number of challenges for industry players, including: an e-commerce license fee, which requires companies with a transaction volume exceeding 65 billion Turkish liras to pay a license fee of 25% of the transaction volume exceeding 65 billion Turkish liras and a decreasing license fee for the remainder of the transaction volume; advertising restrictions, which  limit the ability of certain companies to reach consumers through advertising and restricts the ability of certain companies from providing consumers with information about lower-cost alternatives; prohibits companies from selling their own brands, meaning that certain companies, based on their size, cannot sell lower priced private labeled products.  

Digital Trade Opportunities

Despite these challenges, significant opportunities exist in Türkiye’s digital economy. The size of the communication technologies market grew from $13 billion in 2022 to $16.1 billion in 2023, while the information technologies market reached $16.9 billion in 2023, up from $11.7 billion the previous year. Employment in information technologies increased by 8% to 185,000, and by 23% to 52,000 in communication technologies. Cross-sector enabling technologies offer numerous opportunities. Investments in 5G and beyond, including sub-sea cables, are crucial for improved connectivity. Advanced computing, cloud services, high-performance computing, and innovations in human-machine interfaces and AI are driving productivity and efficiency across multiple industries. Local telecom operators and municipalities are accelerating IoT solutions and smart city projects, further enhancing the country’s digital economy.

Specific Industry Sub-Sectors

Key digital sub-sectors include quantum technologies, with emerging interest and investment in quantum computing for advanced problem-solving capabilities. The fintech ecosystem includes numerous startups and innovations in digital payments, blockchain, and lending. Cybersecurity remains a top priority, with significant investments to protect against cyber threats. Network security, email and web security, cyber governance, and mobile and system security are focal points. The government has increased expenditures on hardware and software to battle cyber threats, with agencies like the Communications and Information Authority (BTK), the Ministry of Transport and Infrastructure, and the Turkish National Police continuously updating their cybersecurity technologies.

Türkiye’s e-commerce market is growing rapidly despite economic challenges. Following record growth of 90% in 2019, the market grew an additional 30% in 2020 and 2021, and 10% in 2022, reaching $48.3 billion. Virtual marketplaces such as Trendyol, Hepsiburada, and Getir have expanded significantly. Istanbul’s startup ecosystem is also thriving, with the city ranking 14th among “Global Emerging Ecosystems” and creating $17 billion in ecosystem value over the past 2.5 years.  

Starting August 21, 2024, a new Presidential Decree increased taxes on goods shipped by mail or fast cargo. For items coming from the EU, the tax went go up from 20% to 30%, and for items from all other countries, it rose from 30% to 60%. An additional 20% tax will apply to ‘luxury’ goods subject to the Special Consumption Tax. The decree also lowers the minimum value for declaring goods with fast cargo companies to 30 euros.

Digital Economy-Related Trade Events

Türkiye hosts several key events that highlight its digital economy initiatives and opportunities. These include the ICT Summit, organized since 2000 and showcasing ICT innovations and trends; Türkiye AI Summit, focusing on the latest AI technologies, as well as the discussion of AI’s immediate and long-term effects; Mobilefest Eurasia, showcasing advancements in telecommunications, digital services and  mobile solutions; and Istanbul Fintech Week, bringing together fintech innovators, investors, and stakeholders to explore the future of financial technologies.

The Department of Commerce in collaboration with the Ministry of Trade also leads the annual U.S.-Türkiye Digital Dialogue, a forum for exchanging best practices and addressing potential entry barriers.  

For more detailed and updated information, referring to the specific sections on Trade.gov and the U.S. Department of Commerce’s reports would be beneficial.

Helpful Resources