What is Withholding Tax in e-Commerce? Applications and Legal Regulations

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What is Withholding Tax (Stopaj)?

Withholding tax, known as stopaj in Turkish, is a tax deduction made from income or earnings at the source. In this system, the tax is not collected from the person who earns the income, but from the entity that pays it meaning it is deducted at the source and directly transferred to the state. This ensures that taxes are collected more easily and securely. For example, an employer deducts a portion of an employee’s salary as income tax and pays it to the government. This deduction is called withholding tax. The same principle is also applied to the taxation of digital income, such as e-commerce.

What is Withholding Tax in e-commerce?

In e-commerce, withholding tax refers to the obligation for intermediary service providers (such as e-commerce platforms and marketplaces) to deduct 1% tax from the payments they make to sellers.

Legal Basis:

• Income Tax Law

• Corporate Tax Law

• Law on the Regulation of Electronic Commerce

Purpose of the Regulation:

• Prevent tax loss by collecting tax at the source

• Reduce unregistered income

• Strengthen tax auditing

• Clarify the tax obligations of actors in the digital economy

Calculating Withholding Tax in Digital Environments

This section covers the withholding tax rates and calculation methods applied to payments made to sellers as a result of sales of goods and services through digital platforms. It also outlines which payments are subject to withholding and which are excluded.

Included Payments: Payments made directly to the seller for the sale of goods or services fall within the scope. For example, income earned by a seller through an e-commerce platform is subject to withholding tax.

Excluded Payments: Revenue not directly tied to sales—such as advertising income, platform usage fees, and commissions—is excluded from withholding calculations. These types of payments may be subject to different tax regulations.

How Can e-Commerce Businesses Comply with Withholding Regulations?

The withholding tax regulation, which came into effect as of 2025, imposes significant tax obligations on businesses operating in the e-commerce sector. Introduced by the Revenue Administration (GİB) and the Ministry of Trade, this regulation is critical for avoiding financial penalties and ensuring lawful operations.

Comprehensive Analysis of Tax Obligations

Businesses must thoroughly assess the scope of the new withholding regulation. They should evaluate the impact on income and expense items, cash flow, tax base, and cost structure. Professional support from tax advisors can prevent misapplications.

Transition to Digital Accounting and Automation Systems

To ensure accurate and timely withholding tax calculations, the use of digital accounting systems has become essential. Software integrated with e-invoice and e-archive systems, featuring automatic tax calculation and reporting capabilities, not only reduces manual errors but also increases operational efficiency.

Effective Communication with Marketplaces

Businesses selling through large marketplaces must closely monitor these platforms' withholding tax practices. Regular information exchange regarding deduction rates, payment schedules, and reporting systems is necessary. Deductions should be verified against platform reports.

Training and Awareness Activities

It is crucial that accounting and finance departments stay updated on withholding regulations. Businesses should regularly train their teams and organize internal training programs to minimize errors during declaration processes.

Utilizing Support for Small Businesses

Businesses and individual sellers can alleviate the burden of withholding tax by applying for support and incentive programs offered by state institutions or marketplaces. Tax benefits, payment facilities, and guidance services can help these businesses adapt to the legal process more quickly.

Ensuring Tax Compliance in International Sales

Businesses selling abroad must comply with international taxation standards and double taxation avoidance agreements. Especially in transactions involving foreign currency and cross-border sales, the impact of withholding tax should be carefully evaluated, requiring separate planning for exporting firms.

Who is Affected by Withholding Tax?

Intermediary Service Providers: e-Commerce platforms and marketplaces

Electronic Commerce Intermediary Service Providers: Entities that mediate sales in digital environments

Service Providers: Sellers offering products or services digitally

Electronic Commerce Service Providers: Firms selling directly through their own e-commerce infrastructure

Why Was the Withholding Tax Regulation Introduced?

The rapid growth of the e-commerce sector has made tax auditing more difficult and led to an increase in unregistered income. The new regulation aims to bring this area under control and secure government tax collection. It also strengthens trust in and the fairness of the tax system.

What Are the Withholding Responsibilities of Companies?

e-Commerce businesses must:

• Deduct 1% withholding tax from payments made to sellers

• Declare these deductions quarterly via provisional tax returns

• Offset deductions in annual tax declarations

• Archive documents and reports related to deductions

• Submitting accurate and complete declarations is crucial to avoiding penalties.

Conclusion

The implementation of withholding tax in e-commerce is an important step toward making the digital economy more transparent and integrating it into the tax system. This regulation imposes new responsibilities on intermediary service providers, sellers, and digital platforms, encouraging legal compliance and securing public revenue. For small businesses and individual sellers in particular, strengthening digital infrastructure, seeking financial advisory services, and tracking support programs are vital for successful adaptation. With proper planning, effective communication, and well-informed teams, the withholding tax system can become a factor that contributes to the sustainability of digital commerce.