Contents 8 sections
E-commerce withholding tax will come into effect as a new regulation for businesses. With this practice, tax is planned to be withheld at source on the e-commerce income of sole proprietorships, limited liability companies and joint-stock companies. The withholding rate may vary by company type, and the deduction will be applied to the sales amount excluding VAT. The regulation covers only sales made on marketplaces and online food ordering platforms. Businesses and individuals transacting on these platforms will be subject to withholding. With this e-commerce withholding, to be offset against the business owners' income or corporate tax, payments will be brought under tax withholding.
E-Commerce Withholding Calculation Method
Withholding is calculated on the amount of sales excluding VAT. Calculation examples for different business types are given below:
Withholding Calculation for a Sole Proprietorship
On a sale of TL 30,000 excluding VAT made by a sole proprietorship, a 1% withholding is applied.
- Calculation:
TL 30,000 x 1% = TL 300
Amount remaining to the business: TL 29,700
Withholding Calculation for a Limited Liability or Joint-Stock Company
On a sale of the same amount, a 1% withholding is applied for limited liability and joint-stock companies.
- Calculation:
TL 30,000 x 1% = TL 300
Amount remaining to the business: TL 29,700
Sample Calculation
Suppose a sale of TL 50,000 excluding VAT is made:
For a sole proprietorship:
- TL 50,000 x 1% = TL 500
- Net amount remaining to the business: TL 49,500
For a limited liability/joint-stock company:
- TL 50,000 x 1% = TL 500
- Net amount remaining to the business: TL 49,500
With this regulation, businesses can track the withholding deductions arising from their income more easily, while the aim is to increase tax transparency across the sector.
What Is Withholding Tax?
Withholding is a method of paying tax through a deduction made on certain earnings. It refers to deductions at specified rates from earnings subject to income and corporate tax. The payments subject to these deductions are clearly set out in the Income Tax Law and the Corporate Tax Law.
Withholding makes tax collection faster and more reliable, helping the state receive its revenue on time. At the same time, this method prevents tax losses and makes it more practical for both employers and employees to fulfil their obligations.
Withholding Tax in E-Commerce
A new regulation introduces withholding tax for the e-commerce sector. Under this regulation, withholding will apply to sales made through e-commerce platforms. Platforms will make the withholding on behalf of businesses and transfer this tax directly to the state. A deduction at a specified rate on each sale will be applied on a company basis.
According to the regulation published in the Official Gazette, a 1% withholding is planned for income and corporate tax payers. This regulation will come into effect as of 1 January 2025 and will cover sole proprietorships and institutions that sell through marketplaces and online platforms.
Under the new system, withholding tax will be calculated not on the business's total income or periodic earnings, but on the amount of each unit sale excluding VAT. In addition, different withholding rates are planned depending on the type of business. However, these rates have not yet been finalized.
Unless any changes are made before the regulation comes into effect, which businesses withholding tax covers, the calculation method, deduction amounts, and declaration and payment processes have been clearly defined. This new regulation aims to make the taxation process in the e-commerce sector more systematic and reliable.
Who Will Be Covered by the Tax?
E-commerce withholding tax covers sole proprietorships, limited liability companies and joint-stock companies that sell through e-commerce platforms. This deduction will be applied to all taxpayers who sell through intermediary service providers such as Trendyol, Hepsiburada, Amazon and N11 and through electronic commerce platforms.
In addition, businesses that sell through their own website and use intermediary service providers for payment processing will also be subject to withholding tax. In short, e-commerce withholding covers all electronic commerce transactions that sole proprietorships, limited liability companies and joint-stock companies carry out through intermediary service providers.
Who Is Exempt From the Tax?
E-commerce withholding tax will not apply to the following groups:
- Tradespeople exempt from tax,
- Taxpayers taxed under the simplified method,
- Individual sellers who are not taxpayers,
- Social media content creators whose earnings are treated as subject to tax withholding.
Although there is not yet clear information about individuals who receive a salary from abroad, domestic and foreign investors who own a business in Türkiye are expected to be directly affected by withholding tax.
Declaration and Payment of the Tax
With the new regulation, withholding tax in e-commerce will be declared through e-commerce platforms and transferred directly to the state. In this context, e-commerce platforms are expected to include the withholding in their store terms.
The withholding tax regulation also increases the responsibility of e-commerce platforms to report their users' sales transactions. Marketplaces and online sales platforms will submit the information of persons and institutions subject to withholding as follows:
- They will submit regular reports to the Revenue Administration through a withholding tax return.
This innovation aims to make economic transactions more transparent and reduce the informal economy. All businesses that earn income through e-commerce, regardless of whether they are large or small, have been brought within the scope of withholding tax. When these businesses use an intermediary service provider for payment processing, the tax deduction and declaration will be carried out by those service providers.
With the new regulation, e-commerce marketplaces will request tax returns from suppliers and will collect and transfer withholding tax on behalf of the Ministry of Finance. This process supports digital commerce moving to a more orderly and registered structure.
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The growth of the e-commerce sector in Türkiye brings with it new regulations to control tax losses and the informal economy. In this context, the Ministry of Finance has put the e-commerce withholding tax on the agenda. The main goals are to minimize unregistered transactions, increase tax revenue and ensure a fair tax system in the sector.
With the implementation of e-commerce withholding tax, the following aims are targeted:
- Ensuring Tax Oversight: More effective monitoring of the income of companies operating in the e-commerce sector.
- Reducing the Informal Economy: Detecting unregistered activities to increase economic transparency.
- Tracking Sales Revenue: Monitoring transaction volume on a regular basis.
- Reaching Tax Revenue Faster: Speeding up tax collection processes.
- Creating a Transparent Tax Process: Putting in place regulations that enable businesses and platforms to fulfil their tax obligations.
- Raising Tax Awareness: Improving businesses' awareness of tax matters.
- Ensuring Tax Fairness: Creating a fair economic order by taxing everyone according to their earnings.
This regulation will lead to significant changes for e-commerce platforms and businesses and will contribute to a more orderly structure in the sector.
E-Commerce Withholding Tax: Which Transactions Will It Cover?
E-commerce withholding tax covers the activities of businesses that sell both on e-commerce platforms and through individual websites. All brands and businesses selling online will be included in this taxation.
Transactions outside the scope of withholding tax are:
- Personal sales made by individuals who are not taxpayers
- Collections made by cash on delivery
- Payments made using a POS device
Withholding is planned to be applied to all online purchases other than the transactions listed above.
The Role of Marketplaces: Once withholding is put into effect, marketplaces will be responsible for preparing returns on behalf of sellers and submitting them to the relevant state offices.
Those Selling Through Their Own Website: Brands will be obliged to arrange and pay, through their accounting departments, the withholding arising from sales on their own sites. This will ensure that businesses fulfil their tax obligations in an orderly and transparent way.
Frequently Asked Questions (FAQ)
E-Commerce Withholding Tax: Who Is Covered?
E-commerce withholding tax covers sole proprietorships, limited liability companies and joint-stock companies that sell through marketplaces such as Trendyol, Hepsiburada, Amazon and N11 and other online sales platforms. In addition, businesses that sell through their own website and use an intermediary service provider for payment processing are also liable for this tax.
E-Commerce Withholding Tax: What Is Its Purpose?
E-commerce withholding tax aims to increase transparency across the sector, reduce unregistered transactions and create a fair tax system. While it lets the state collect tax revenue faster, it also allows businesses to be taxed in line with their earnings. It is also an important step toward minimizing the informal economy in the sector.
Are Withholding Tax Rates the Same for All Businesses?
Under the current regulation, a 1% withholding is planned for sole proprietorships, limited liability companies and joint-stock companies. However, different rates may be set depending on the type of business. It is stated that rates may change with the details to be published in the Official Gazette.
E-Commerce Withholding Tax: When Does It Start?
E-commerce withholding tax will come into effect as of 1 January 2025. Marketplaces and online platforms will make the withholding deductions arising from sales and transfer them directly to the state. During this process, businesses will be able to offset the withholding tax against income or corporate tax. This regulation aims to ensure transparency in the sector and prevent tax losses.
