SOFTWARE SECTOR EXPORTS

The software and IT sector is a rapidly growing sector on a global scale. The software sector, which has a higher added value than other sectors, leads the export of services by establishing production efficiency without consuming the country’s natural resources and using domestic capital. The software sector closely affects all sectors and business lines.
In the software sector, exports are when companies operating in one country in one of the areas covered by the service sector, such as software or consultancy, receive payment for the services they provide to companies in other countries.
The software industry grew by more than 70% last year. It accounted for more than $50 billion of the information and communication technologies industry. Representing approximately 45% of the world’s industry, this sector made the largest contribution to total exports of TL 17.5 billion with 19%. According to PwC’s Turkey’s Future Trends Survey, the software industry is among the top 5 sectors expected to lead Turkey’s development.
Exporting in the service and software sectors is a more comprehensive process than selling products. The most important factor for software exports is to respond to customer needs in the most appropriate way. Therefore, how software exports should be carried out is an issue that needs attention.
POINTS TO BE CONSIDERED IN SOFTWARE EXPORT

1. In line with the needs of the customer, it is essential to make a sales plan that will cover both visible and invisible needs. For this reason, it is necessary to know the social and cultural characteristics of the country to which software will be exported.
2. Working with an experienced and professional team, technology should be used in the most accurate way during the service phase.
3. In this sector with high added value, very high prices should not be given to ensure that sales are sustainable.
4. While carrying out software export activities, budget planning should be done very carefully. Small mistakes will cause very high costs.
5. PR activities should be given importance in the area where software will be made, and references should be shared up-to-date. In this way, customer confidence is gained.
   WHY IS IT IMPORTANT FOR TURKEY TO EXPORT SOFTWARE?
6. The added value of the software sector is very high. This situation affects Turkey’s profit over foreign currency.
7. It is a sector that gains momentum day by day with the digital transformation in the world and provides sustainability.
8. Since software is needed in every field, there are many options.
9. The consumption rate in Turkey is increasing very rapidly and software has been developed in every field to meet this. It will be easy to export these developed software to countries above Turkey’s standards.
   
   INCENTIVES FOR SOFTWARE EXPORTS
   There are tax incentives for software exports within the scope of service exports in order to increase the international competitiveness of the country’s economy, to create areas for export, to create employment opportunities and to maintain employment in Turkey with a qualified workforce.
   There is a 50% Income and Corporate Tax advantage for services such as design, software and engineering provided abroad. For example, if software services are provided to a customer abroad, tax is calculated and paid on half of the earnings for that year. In addition, companies that provide software services do not need to pay VAT as they are included in the scope of service exports. The obligation to pay tax is a situation that needs to be examined depending on the laws, agreements between countries and your contract with your company. If the company does not operate in Turkey and does not generate income, if the company pays your tax to the country to which it is affiliated and if your money is in an account abroad, no tax is paid.
   SOFTWARE EXPORT MODELS
   Apart from establishing a company, there are some models that can be applied to sell the software developed;
10. License Sales Model; In this model, the software provides the customer with either indefinite or limited usage rights. As a revenue model, you can generate revenue in exchange for maintenance, updates and similar services.
11. Service Model; This model, known as SaaS (Software as a Service), is a model that provides services to your customers in addition to the infrastructure they can use the software. In this model, continuity is essential as customers will always need you.

Since there is no issue that requires customs clearance for software, which is considered a digital product, there is no action to be taken by the Ministry of Customs and Trade. However, since it can be imported and exported, it is considered within the 8523 HS code. According to this
8523 HS code import table in the world is as follows;

The export table of 8523 HS code in Turkey is as follows;

At the point of achieving the 2023 targets set for the conversion of production potential into exports, the Service Exporters’ Association will continue to take initiatives in public, private sector and NGO-like institutions and organizations at home and abroad to increase service export items, develop products and projects and promote the sector for the software and IT sector. In the digitalizing world, the software industry, which directs many industries from health to tourism, from transportation to textiles, has great opportunities for young talents.
In conclusion, Turkey’s software exports have increased significantly in recent years. This increase has been driven by the ability of Turkish software companies to compete in the international market and offer quality products. For Turkey to progress further in this area, it needs to invest more and offer innovative products and services. Thus, Turkey’s software exports will continue to increase in the future.
As BM Foreign Trade Consultancy and Project Development, we provide Export Consultancy and Export Department services in the Software Sector and contribute to the companies operating in this sector both to increase their sector experience and to increase their export volumes. With our professional team that has gained experience in this sector, we lead the companies we consult to become leading brands in this sector. If you are operating in the Software Sector, if you want to start exporting or increase your existing exports, you can review our Export Consultancy and Autonomous Export Department services and contact us at our contact addresses.