Is it Necessary to be a Taxpayer for E-Commerce?

The taxation issues and exemptions for e-commerce remain a big unknown for entrepreneurs who are considering selling online. There are many details that small, medium and large businesses need to master about e-commerce taxation. You can eliminate the unknowns in front of your digital enterprise by reading our guide article where we share every detail you need to know about being a taxpayer for e-commerce.

Tax Certificate for E-Commerce Sites

For e-commerce sites, a tax plate is a document showing that you are a taxpayer and that the revenues from online sales will be taxed within the limits set by the Ministry of Finance. Tax plates show the amounts of e-commerce earnings and the corresponding tax amounts. It can be inferred that the company will be taxed according to the amount of income obtained after obtaining this document, which enables the e-commerce site to be referred to as “E-Commerce Company“.

Tax Registration Process for Online Sales

The tax registration process for online sales starts with the application for“Tax Certificate“. You can complete the tax registration process by using 3 different points authorized for the application. With the transfer of public services to digital platforms, Revenue Administration (RA) applicationsfor tax registration can be made online. The tax registration process through the Internet Tax Office can be completed by following the following order:

1. Log in to the Revenue Administration (RA) website at https://gib.gov.tr/.
2. Log in directly to the Internet Tax Office under the e-Transactions menu.
3. Use the inquiry button to retrieve the tax certificate information.
4. Fill in the requested fields and complete your application.

The Process of Obtaining a Tax Certificate for E-Commerce

The process of obtaining a tax plate for the e-commerce site, you can complete the application process from 3 different points. In new company establishments, the tax plate can be obtained after the application made at the end of approximately 1 month. Considering the application phase of the process, which can be completed digitally, the 3 application points that can be used to obtain a tax plate can be listed as follows:

1. Revenue Administration(GİB) – Internet Tax Office
2. Certified public accountant
3. Affiliated Chamber of Tradesmen and Craftsmen

Is it Mandatory to Establish a Company to Sell Online?

In the delivery of sales made over the internet, you must also deliver an invoice to your customer together with the product. Your customer does not have the right of return and exchange in product deliveries made without an invoice. This choice, which puts the reliability of online shopping at risk, will lead to the failure of your attempt to make sales. Therefore, in order to do e-commerce, you need to issue invoices, and in order to issue invoices set up a company is required.

Setting up a company is not only necessary to receive payment from your e-commerce site for product delivery. Open virtual stores in marketplaces and PayTR virtual POS There is a prerequisite for establishing a company in order torealize the installations of the systems. For this reason, for every sale made online, you must establish a sole proprietorship or a capital company, that is, you must be a taxpayer.

What are the Advantages of Being a Taxpayer?

Being a taxpayer while selling online helps you to protect your economic interests with many advantages, as well as ensuring that you provide services within legal limits. In addition to gaining a corporate identity, the choice to become a taxpayer, which prevents you from receiving high penalties for financial crimes such as tax evasion, offers you the following advantages:

1. By adding a credit card payment option to your e-commerce site, you can receive payments with cards from many banks and expand your customer portfolio.
2. You can benefit from advantageous prices for your product delivery costs by making an agreement with cargo companies.
3. You can gain prestige in the eyes of your customers by gaining a corporate structure.
4. You can show that you are a business that protects consumers by registering with ETBIS(Electronic Commerce Information System), which was implemented by the Ministry of Trade.

What are the Taxes on E-Commerce?

During your online sales experience, which starts with the receipt of your tax certificate, taxes are accrued to your company in certain periods. After becoming a taxpayer, you must make your e-commerce tax payments monthly, quarterly or annually. You can follow below some of the tax types and payment frequencies to be paid for e-commerce when you become a taxpayer by establishing a private or capital company:

• Stamp Duty

Stamp tax is levied on documents documenting official and legal transactions between individuals or between an institution and an individual. Stamp tax, calculated at 8.25 per thousand, is paid monthly. You must declare your stamp tax by the 23rd of the following month and pay it by the 26th of the following month.

• Value Added Tax (VAT)

VAT is declared on a monthly basis and is calculated at 1%, 8% or 18% of the invoices issued for the sales made. VAT is declared by the 24th of the following month and must be paid by the 26th of the following month.

• Concise Declaration

The withholding tax return, which is not a type of e-commerce tax, is the document given for the declaration of the documents that individuals and organizations are obliged to pay. Salaries paid to employees, tax deductions and rental fees are declared with the withholding tax declaration. The withholding tax, which must be declared by the 23rd of the following month, must be paid by the 26th of the month.

• Provisional Tax

The advance tax, which is declared quarterly after the profit and loss situations of the e-commerce site are examined, is paid quarterly. You must pay the advance tax declared until the 14th of the following month until the 17th of the month. Taxes paid for provisional tax are deducted from income tax and corporate tax.

• Corporate Tax

Corporate tax is declared annually. You must complete the corporate tax declaration by the 25th of the 4th month following the closing period. Payments are made until the end of the 4th month.

• Annual Income Tax

For e-commerce site sole proprietorship entrepreneurs pay annual income tax, not corporate income tax. Annual income tax must be declared by March 25. The first installment is due in March and the second installment is due by the end of July.

• Annual Income Tax in Simple Method

Taxpayers subject to simple taxation are taxed according to the tax bracket ranging between 15% and 35% for each year they end with a profit. For this tax type, which is paid in two installments, the first installment is paid in February and the second installment is paid until the end of June.

Is It Possible to Do E-Commerce Without Establishing a Company?

According to the legislation in Turkey, those who make regular sales for commercial purposes must be taxpayers. Therefore, it is not possible to do e-commerce without opening a company. Although it is technically possible to make one-off sales without registering with the tax office, legal limits apply in cases where you aim to generate regular income.

If you are looking for an answer to the question of how to do e-commerce without starting a company, you should consider that this method is not sustainable in the long term, except for small volume transactions. The most common solution for those who want to do e-commerce without opening a company is to try to make a profit through individual sales. However, in this case, it is necessary to establish a sole proprietorship or a more comprehensive commercial structure in order to continue the business within the legal framework after starting to generate regular income. Selling without a sole proprietorship carries more risk, especially with the increase in earnings, and in cases where you exceed a certain sales volume, the tax office registration obligation comes into play.

How to Benefit from Tax Exemption in E-Commerce?

The e-commerce tax exemption is a great opportunity for small-scale entrepreneurs who want to do e-commerce from home. To benefit from the exemption, you must first be selling the products you produce without exceeding a certain income limit. In Turkey, the limit for the year 2024 is set at 1,300,000 TL. Provided that your income is below this limit, you will not have to pay internet sales tax. However, in order to benefit from this exemption, you must fulfill certain application processes.

If you want to benefit from the tax exemption, the first step is to apply to the tax office in your region of residence and obtain a “Tradesmen Tax Exemption Certificate”. This certificate allows you to benefit from tax advantages for selling your home-made products online. It is important that your sales revenues are officially recorded, so you should collect all transactions through bank accounts in Turkey.

There are some rules you need to follow in order to benefit from the tax exemption for e-commerce at home. For example, this exemption does not cover production with industrial or mass-produced machines, meaning that you must be producing your products with simple hand tools and your own labor. Also, if your annual earnings exceed the set limit, the tax exemption ends and you have to file a declaration like a normal taxpayer. In order to maintain your tax exemption and protect your legal obligations, you must continue your activities in accordance with the set conditions and regularly check your annual income.

You can get support from PayTR to ensure tax compliance in your e-commerce activities from home. With PayTR’s highly protected payment infrastructure, you can secure your online sales and offer your customers a professional shopping experience.

Can E-Commerce Sales Be Made Without Invoicing?

Although e-commerce can be done without invoicing, customer perspectives and governmental evaluations reveal that this approach is wrong. When starting e-commerce, it is the healthiest approach to establish a company and become a taxpayer, to pay taxes on time by issuing invoices for every sale made. While this approach increases your brand prestige in the eyes of the customer, it is also evaluated by the state as being a taxpayer and doing the trade in accordance with the rules. In the case of uninvoiced e-commerce sales, you are likely to face high tax penalties and problems that your customers do not trust your brand.

Tax Exemption for E-Commerce

Tax exemption is the exclusion of taxpayers or groups of taxpayers from tax up to a certain turnover according to the law. As of January 1, 2021, the tax exemption can be partial or total. In e-commerce, the exemption is for those who want to do e-commerce from home. While there is no obligation to establish a company to conduct e-commerce from home, the scope of the exemption has been expanded to include everyone who wants to conduct e-commerce at home as well as housewives. The conditions required to be exempt from income tax for e-commerce are determined as follows:

1. Production should be done at home and should not involve the use of machines or tools that enable mass production.
2. There must be no workplace and no outsourcing of labor.
3. Tax-exempt tradesmen certificate must be obtained.
4. The proceeds of online sales must be kept in a commercial account to be opened at the bank.
5. Annual turnover should not exceed 240 thousand TL.

FREQUENTLY ASKED QUESTIONS

• Is a Tax Certificate Required for E-Commerce?

Excluding the income tax exemption for online sales, it is mandatory to establish a company. A tax certificate is required to establish a company.

• Can E-Commerce Without Being a Sole Proprietorship?

In addition to establishing a sole proprietorship to do e-commerce, you can also establish a capital company. You can sell online by establishing a limited or joint stock company.

• Is E-Commerce in Simple Procedure?

E-Commerce is taxed according to the real method, not the simple method. Selling online is excluded from the scope of simple method taxation.

• Is Selling Online Taxable?

Selling on the internet is subject to tax. E-Commerce companies are liable to pay income/corporate tax, value added tax (VAT), withholding tax, stamp tax and provisional tax.

• Is There an E-Commerce Tax?

Not everyone engaged in e-commerce is liable to pay tax. Those who conduct e-commerce from home have no tax liability. The remaining e-commerce sites are obliged to pay tax.

• How much tax is paid when selling a product?

When selling products online, you must pay VAT at the rates of 1%, 8% and 18% depending on the product, stamp duty at the rate of 8.25% per thousand, income tax ranging from 15% to 35% depending on the annual profit amount, advance tax and withholding tax.

• Do People Who Sell on Instagram Pay Tax?

Sales made from Instagram are invoiced. Taxation is made for each invoice issued.

• Is There A Tax Exemption For Those Who Do E-Commerce At Home?

There is no obligation to establish a company for those doing e-commerce at home. Not establishing a company means being exempt from tax. E-commerce entrepreneurs whose annual turnover does not exceed 240 thousand TL, who do not own a company, do not employ workers and who obtain a tax-exempt tradesman certificate can benefit from tax exemption.

Disclosure: The amounts stated in the content are based on the date this content was published. Fee information may vary.