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Legal Alerts

Turkish Minister of Finance Announces New Withholding Liability for Foreign E-Commerce Websites

Legal Alerts

Recent Development

On June 12, 2017, the Turkish Minister of Finance, Naci Ağbal, announced the introduction of a new withholding tax liability for non-resident companies that engage in e-commerce.

In his statement to the press, the Minister of Finance highlighted the following points:

  • The government is currently working on a new Council of Ministers Decision that will introduce a withholding tax liability, which will be imposed on the sales payments made on foreign e-commerce websites through banks and similar intermediary institutions.
  • Banks or similar intermediary institutions will carry out the withholding tax deduction. The customers who shop online through these e-commerce websites will not be affected by the new withholding tax liability.
  • The withholding tax liability does not cover e-commerce companies already registered with the tax office in Turkey.
  • A sizable team of 200 people within the Revenue Administration will be tasked with tracking all kinds of transactions, including cargo and banking transactions, related to e-commerce.
  • This new regulation will cover all types of trade conducted through the Internet, including the sales of real estate and second-hand goods. The Minister further stated that the Revenue Administration would compare the sales prices for real estate shown in the e-commerce website and in the title deed records.


Withholding tax is imposed on income, and according to most of the Double Taxation Treaties to which Turkey is a party, the income derived by non-resident companies can only be taxed in Turkey if the income is generated through a permanent establishment in Turkey.

As such, there is uncertainty as to how the Minister’s statement regarding the withholding tax liability for e-commerce will apply to e-commerce companies that reside in countries where Turkey has concluded a Double Taxation Treaty. If adopted, the Council of Ministers will likely address these issues in the forthcoming decision.

Foreign e-commerce firms that engage in online sales activities in Turkey should be aware of the Ministry of Finance’s approach towards foreign e-commerce websites.