# New Era in E-Commerce: Withholding Tax Rate Set at 1% ## New Era in E-Commerce: Withholding Tax Rate Set at 1% **E-commerce** businesses in Turkey will soon see significant changes in how they pay taxes. According to the Presidential Decree published in the Official Gazette on December 22, 2024, **withholding (stopaj) tax on payments for goods and services sold through e-commerce platforms will be set at 1%**. This regulation takes effect on **January 1, 2025**. Below, we discuss why this 1% withholding tax rate matters, whom it affects, and what you need to know to comply with the new rules. --- ### 1\. Why Is the Withholding Tax Rate Important? Withholding tax ensures that **tax is collected at the source** of transactions. By setting the rate at **1%** for e-commerce transactions, the government aims to: * Increase predictability and transparency for businesses. * Streamline tax collection. * Reduce unregistered (informal) activities in the rapidly growing e-commerce sector. --- ### 2\. Under Which Law Was This Regulation Enacted? * The framework is provided by **Law No. 7524**, which amends certain aspects of the **Law on the Regulation of Electronic Commerce (No. 6563)**. * Under these amendments, **e-commerce intermediaries** will withhold 1% of the payment made to sellers (goods or services) in qualifying e-commerce transactions. --- ### 3\. Who Must Withhold the Tax? * **Intermediary Service Providers (ISPs)**: Entities (individual or corporate) that provide an electronic platform for others to conduct business activities. * **Electronic Commerce Intermediary Service Providers**: Marketplace platforms that facilitate the ordering or contracting of goods or services offered by e-commerce service providers. These intermediaries are now **obliged to withhold 1%** of any payment they process for goods or services within the scope of the Electronic Commerce Law. --- ### 4\. Who Will Be Subject to Withholding? * **Service Providers and E-Commerce Service Providers**: * Individuals or companies engaged in e-commerce activities. * Those who offer goods or services on their own e-commerce site or a marketplace (electronic commerce environment). When they make sales and receive payment through intermediary service providers (e.g., marketplace platforms), **1% withholding tax** will be deducted from the transaction total. --- ### 5\. When Does This Take Effect? This regulation **comes into force on January 1, 2025**. From that date onwards, all relevant e-commerce payments will have **1% withholding tax** applied. --- ### 6\. How Will the Withholding Tax Affect Sellers? Amounts withheld by intermediaries during the year count as **prepaid taxes**. Sellers (or service providers) can **offset** these amounts against their annual income tax or corporate tax liability when they file their tax returns. If there is an overpayment, it may be eligible for a refund, subject to approval from the tax authority. --- ## Frequently Asked Questions (FAQs) | **Question** | **Answer** | | --- | --- | | **1\. From which date does the 1% rate apply?** | January 1, 2025. Any transactions before this date are subject to previous regulations. | | **2\. Which payments are subject to this new 1% withholding tax?** | All payments for goods or services sold via e-commerce intermediaries or electronic commerce intermediary service providers, as defined by Law No. 6563. | | **3\. Who must perform the withholding?** | Intermediary service providers and e-commerce intermediary service providers (marketplaces). | | **4\. How do I recover or offset this withheld amount?** | The withheld amount can be deducted from your annual income or corporate tax liability. If any excess remains, it may be refunded by the tax authority following the usual procedures. | | **5\. What is the advantage of setting the withholding rate at 1%?** | A lower rate (1%) helps reduce the cash flow impact on businesses while maintaining a structured approach to tax collection. It also aims to curb informal transactions in e-commerce. | | **6\. Does the regulation cover only the sale of goods or also services?** | It covers **both** goods and services sold via electronic platforms. Any revenue earned from e-commerce activities (goods or services) will be subject to 1% withholding if processed through intermediaries. | --- ## Conclusion The **e-commerce sector** in Turkey has been growing rapidly, and these tax adjustments aim to: * Support fair competition. * Simplify compliance and collections. * Ensure that all parties operate within a clear, predictable tax framework. Starting **January 1, 2025**, a **1% withholding tax** will be applied to payments for goods and services facilitated by **e-commerce intermediary platforms**. This change serves as an **upfront partial tax payment** to be credited against your final tax liability. 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