IdeaSoft/Özkara: We Anticipate E-commerce Volume to Reach Approximately 5.5-6 Trillion TL by 2025 Due to Inflation Effects

Forex - Starting from January 1, 2025, intermediaries facilitating electronic commerce transactions will apply a 1% withholding tax when paying the amount excluding VAT obtained from these transactions to the product owner, and will offset this amount from their income declaration.

Evaluating the new regulation, Seyhun Özkara, CEO of IdeaSoft and a member of the TOBB E-commerce Council, stated, "The rates of 25% for businesses paying income tax and 15% for other corporations have kept the agenda quite busy. There have been numerous discussions about these rates being excessively high, and many news articles have appeared in the media regarding this issue. Article 94 of the Income Tax Law No. 193 already standardizes these rates."

Özkara continued: "This withholding, deduction, or cut will take effect at a rate of 1% starting from January 1, 2025. This means that for every sale conducted by businesses selling through marketplaces or platforms, this deduction will be made, and the income administration will be notified. It was expected that there would be no deduction in the highly competitive e-commerce market where profit margins are not very high; however, the rate was set at 1%. As the e-commerce volume is projected to close at 3.2-3.4 trillion TL in 2024, we anticipate that the e-commerce volume will reach approximately 5.5-6 trillion TL in 2025, influenced by inflation.

There are businesses operating with a 10-15% profit margin. We had assessed that this new regulation might have an inflationary effect and the risk of businesses passing this figure onto product prices. However, at this point, we are discussing a rate of 1%. I don't think businesses will reflect this rate in their product prices. Even if they do, it will not lead to a significant price increase in the e-commerce sector. The government's main objective is not to generate tax revenue, as a tax scope of one billion TL would not represent a substantial figure. The aim is to be able to see more clearly the actual tax base, total volume, real e-commerce volume, and the potentially unregistered e-commerce volume for businesses selling on marketplaces and other platforms."