The e-commerce sector, in addition to being a rapidly growing and developing field, is also one in which businesses are subject to various tax obligations. One of these obligations is the withholding tax. Withholding tax is a type of tax that is directly deducted from certain earnings and payments and transferred to the state. So, what are the withholding tax rates in e-commerce? On which payments is withholding applied? In this article, we will examine in detail how withholding works in e-commerce and the current rates.
What is withholding tax?
Withholding tax is a type of tax collected by the state through direct deductions from certain incomes in order to facilitate tax collection. Employers are obliged to make withholding deductions on various payments such as salaries, rent, and freelance payments, and to deposit the corresponding amounts to the tax office.
In Which Cases Is Withholding Tax Applied in E‑Commerce?
E‑commerce businesses are obliged to pay withholding tax in the following situations:
Rent Payments: When businesses lease physical spaces such as offices, warehouses, or stores, withholding tax must be paid on the rental fee.
Professional Services: Withholding tax applies to payments made to freelancers, consultants, or external service providers.
Advertising and Marketing Expenses: Payments made to digital advertising platforms like Google, Facebook, and Instagram are subject to specific withholding rates.
Commissions and Service Charges: Commissions and service fees paid by businesses that sell on marketplaces may also be subject to withholding tax.
What Are the Withholding Tax Rates in E‑Commerce?
Withholding tax rates in e‑commerce vary depending on the type of payment. The current withholding rates are as follows:
1. Withholding Rate on Rent Payments
A 20% withholding tax is applied to rent payments made to individuals. No withholding tax is applied to rent payments made to corporations.
2. Withholding Rate on Professional Service Payments
A 20% withholding tax is deducted from payments made to professionals. This same rate applies to professions such as lawyers and certified public accountants.
3. Withholding Rate on Advertising and Marketing Expenses
For digital advertising payments made to domestic companies, a 15% withholding tax is applied. Payments to foreign advertising platforms are not subject to withholding tax, but VAT withholding is applied instead.
4. Withholding Rate Applied by Marketplaces
For revenues generated from sales made on behalf of sellers by intermediary service providers (i.e., marketplaces), those platforms are obliged to withhold tax. These deductions are credited against the sellers’ income tax or corporate tax.
According to the new regulation effective as of 2025 (in accordance with Articles 94 of the Income Tax Law and 15–30 of the Corporate Tax Law), payments made by marketplaces are evaluated as follows:
– The withholding rate will be determined by Presidential Decree. A 1% rate has been adopted as the basis.
– Withholding tax will be calculated on the gross amount excluding VAT and, if applicable, Accommodation Tax.
– Even if the marketplace deducts its own commission, shipping, or other fees from the sales amount, the withholding tax base is not affected by these deductions.
– In case of returns, if the withholding tax has not yet been declared and paid, no withholding may be made on the returned sales. However, if the payment was already made and the return occurs afterward, the withheld tax is not refunded; instead, the seller may credit this amount in their own annual or provisional tax declarations.
Example:
If a business sells products worth 30,000 TRY (including VAT) through a marketplace, and the VAT rate is 10%::
– Sales amount excluding VAT: 27,273 TRY
– Withholding tax base: 27,273 TRY
– If the withholding rate is 1%: 272.73 TRY
This amount is deducted by the marketplace to be declared to the government, and the remaining balance is transferred to the seller.
Cases Where Withholding Tax Is Not Applied
According to the new regulation, marketplaces are not required to withhold tax on payments made to the following individuals:
– Tax-exempt tradespeople (e.g., individuals producing handmade crafts at home),
– Taxpayers subject to the simple taxation method,
– Social content creators and mobile app developers earning income under Article 20/B (repeated) of Law No. 193.
These individuals may be excluded from withholding by submitting relevant documentation. However, the marketplace is obliged to report this information to the Revenue Administration system.
For sales made on behalf of sellers through marketplaces, a 1% withholding tax is applied to the sales income. This tax is deducted directly from the sales revenue and transferred to the relevant tax office.
How Is Withholding Tax Calculated?
You can use the following formula to calculate withholding::
Withholding Tax = Gross Payment Amount × Withholding Rate
For example, if an e-commerce business makes a sale of 15,000 TRY on a marketplace, and the withholding rate is 1%:
Withholding Tax = 15,000 TRY × 1% = 150 TRY
In this case, the marketplace deducts its commission, shipping costs, and the 150 TRY withholding tax before transferring the remaining amount to the e-commerce seller as the net proceeds from the sale. The marketplace then pays the 150 TRY withholding directly to the tax office.
Withholding tax in e-commerce is one of the financial obligations businesses must comply with. It is paid to the state by deducting certain amounts from specific types of payments. The withholding rates vary depending on the type of payment, and businesses must manage this process carefully. To avoid errors in withholding calculations and to prevent potential penalties, it is advisable to seek support from a professional certified public accountant.
