What is Electricity Consumption Tax (ECT)?, Which taxes are collected from electricity bills?, or Where are the taxes collected from electricity bills transferred?

you may contact Aykut Law & Consultancy, which operates throughout Türkiye, particularly in Izmir.

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LEGAL BASIS OF THE ELECTRICITY CONSUMPTION TAX
The principle of legality in taxation is a fundamental principle. Article 1 of the Tax Procedure Law No. 213 stipulates that the provisions of this Law shall also apply to taxes belonging to municipalities. Article 8 of the said Law defines the concepts of taxpayer and tax responsible person, stating that the taxpayer is the natural or legal person upon whom a tax liability is imposed under tax laws, whereas the tax responsible person is the individual who is accountable to the creditor tax office for the payment of the tax.
Pursuant to Article 35, paragraph 1 of the Municipal Revenues Law, electricity consumers are obliged to pay the Electricity Consumption Tax. Paragraph 2 of the same article provides that institutions supplying electrical energy under the Electricity Market Law are responsible for collecting this tax together with the sales price and remitting it to the relevant municipality. Accordingly, the taxpayer of the Electricity Consumption Tax is the electricity consumer, while the tax responsible person is the electricity supplier.
According to Article 38 of the Municipal Revenues Law, the Electricity Consumption Tax is calculated at the rate of 1% over the sales price for the cases listed under subparagraph (a), and at the rate of 5% over the sales price for the cases listed under subparagraph (b). Consumers are obliged to pay the Electricity Consumption Tax to the electricity suppliers at the aforementioned rates, calculated over the sales price determined based on the amount of energy consumed. Suppliers, in turn, are required to remit the taxes they collect to the municipality.
In this context, electricity supply companies function as an intermediary mechanism in transferring the tax from the consumer to the municipality.

TAX BASE AND RATES IN THE ELECTRICITY CONSUMPTION TAX
ECT Tax Base
The term tax base refers to the value or amount on which a tax is calculated. Pursuant to Article 37 of Law No. 2464, the tax base of the Electricity Consumption Tax (ECT) is the sales price of electrical energy, excluding charges related to transmission, distribution, and retail sales services. Taxes, funds, and shares are not included in the tax base. Accordingly, it is understood that the tax base of the ECT is determined on an ad valorem (value-based) basis.
Since the provision refers specifically to the sales price of “electrical energy,” the sale of “electric capacity” does not fall within the scope of the ECT. The term electrical energy used in determining the sales price refers to active energy. Reactive energy is considered an extension of transmission and distribution activities. As charges related to transmission and distribution activities are excluded from the tax base, reactive energy charges are not included in the ECT tax base.
In this context, it may be stated that, pursuant to the Law, the tax base of the ECT essentially consists of the active electrical energy price. The active electrical energy price generally consists of the costs of acquiring electrical energy supplied to the consumer (production or purchase from third parties) plus the supplier’s profit margin.
For residential use — including detached houses, apartment buildings, independent units within apartments, housing cooperatives, and residential complexes — the table below illustrates the formation of the price under the “single-term single-time low-voltage residential tariff.”
Residential Subscribers Electricity Tariff (1 January 2022)
Consumption Amount
1 kWh
240 kWh
Electricity Charge (a)
0.794622 TRY
190.71 TRY
Distribution Charge (b)
0.329483 TRY
79.08 TRY
ECT (c) (a × 5%)
0.039731 TRY
9.54 TRY
VAT Base (d) (a + b + c)
1.163836 TRY
279.32 TRY
VAT (e) (d × 8%)
0.093107 TRY
22.35 TRY
Total Electricity Price (d + e)
1.256943 TRY
301.67 TRY

Progressive Electricity Tariff for Residential Consumers
During periods when electricity consumption exceeds the minimum daily average of 8 kWh (240 kWh for 30 days), the first 240 kWh of energy consumption is charged at 1.26 TRY per unit, and the remaining amount is calculated at a 50% increased unit price of 1.89 TRY.
Accordingly, for a residence consuming 300 kWh per month, the electricity bill is calculated as follows:
(1.26 × 240) + (1.89 × 60) = 415 TRY
Another conclusion to be drawn from the above table is that, for a residential subscriber billed under TEDAŞ tariffs, approximately 63% of the invoice amount consists of the electricity energy charge, while the remaining portion corresponds to other charges.
THE STATUS OF ECT IN MUNICIPAL BUDGETS
According to the “2020 Final Budget Revenue Account” of Municipality X, which has a population of approximately 170,000 and is the actual creditor of the ECT amounts paid by users to supplier companies, the total municipal revenue accrual for the period amounted to 140 million TRY, of which 46.5 million TRY constituted tax accruals. However, only approximately 70% of these tax accruals could be collected within the period. In some other municipalities, the overall tax collection rate can fall as low as 65%.
According to the “2020 Audit Commission Report” of Municipality X, a total of 4.6 million TRY in Electricity Consumption Tax (ECT) was collected during the 12-month period of 2020. This ECT revenue corresponds to approximately 4% of the municipality’s total revenues of approximately 120 million TRY.
Considering that electricity constitutes one of the most intensive areas of consumption expenditure in Türkiye, it is striking that the share of taxes collected at a rate of 5% from all consumer groups — primarily residential and commercial subscribers — except for the industrial group subject to 1%, and paid by citizens on each invoice by electricity supply companies acting as tax responsible persons, remains so low.
Based on January 2020 figures, the monthly minimum electricity consumption of 230 kWh for a family of four corresponded to a bill amount of 180 TRY. For residential subscribers exceeding this consumption amount, the excess consumption is calculated at a higher unit price.
The approximate electricity consumption figures of District X for 2020 are as follows:
District total consumption: 350 million kWh.
It is understood that approximately 8% of the total 4.3 billion kWh electricity consumption across the province — which has a population of approximately 1.5 million — was consumed in District X. Annual consumption figures by subscriber type are as follows:
Subscriber Group
kWh (Approx.)
ECT Rate
Industrial
2 billion
1%
Residential
1 billion
5%
Commercial
0.9 billion
5%
Other
0.4 billion
5%
Total
4.3 billion

Accordingly, it is possible to calculate the approximate ECT amount payable based on the 2.3 billion kWh consumed by user groups subject to the 5% ECT rate and the 2 billion kWh consumed by industrial subscribers subject to the 1% ECT rate throughout the province.
It is the responsibility of municipal financial services units and administrators to monitor whether the ECT amounts collected by supplier companies as tax responsible persons are fully and accurately transferred to the municipalities, which are the creditor public administrations. For this purpose, it is evident that not only energy experts knowledgeable in electricity pricing mechanisms but also tax experts and tax law specialists proficient in financial analysis and taxation techniques are required.
Taxes constitute a significant share in financing municipal services. Increasing industrialization and recent rises in energy prices have further enhanced the importance of the Electricity Consumption Tax. From the perspective of municipalities, the key issue is to ensure that the tax is transferred at the highest possible level to the municipality by taking the necessary legal measures in the monitoring and collection process.
For professional support in Energy Law and in the monitoring and collection of the Electricity Consumption Tax (ECT) by municipalities, you may contact Aykut Law & Consultancy, operating primarily in Izmir and throughout Türkiye.

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As a method used in public procurement, the concept of tender (procurement) encompasses the entire process regulated under the laws governing public procurements and other relevant regulations and practices. It includes determining, among those who meet the necessary conditions for the tender, the bidder submitting the most suitable offer according to the nature of the work, and completing the process through the signing of an administrative contract following approval by the competent authority regarding the tender decision.

Procurement procedures to be applied are regulated under Articles 18 to 23 of the Public Procurement Law No. 4734 (KİK), in the First Chapter titled “Procurement Procedures and Their Implementation” of the Second Part titled “Procurement Process.”

Initially, four main procurement methods were adopted for public tenders (Art. 18):

Open tender procedure

Restricted tender procedure (among pre-qualified bidders)

Negotiated procedure

Direct procurement method

Subsequently, in order to ensure the sound conduct of public procurements and in response to administrative demands and observed practical needs—also taking international examples into account—amendments were made to the Law. The most significant change concerned the direct procurement method. Although it was originally introduced to enable administrations to meet small-scale needs more easily without being subject to other tender procedures, requirements such as concluding contracts even for very small procurements and seeking qualification criteria under Article 10 of the Law prevented the intended flexibility. Therefore, direct procurement was removed from being classified as a tender procedure and redefined as a procurement method, with its principles and procedures regulated under Article 22 of the Law.

The procedures and principles to be applied in tenders conducted by public institutions and organizations subject to public law, such as municipalities, are set out in detail in Law No. 4734. The procurement procedures stipulated in the Law are mandatory not only for construction works and goods procurement but also for service procurements.

In order to ensure the legality of processes related to public service procurements and to promote efficient and effective public service delivery, various principles have been developed worldwide—particularly in the European Union—based on established practices and positive legal norms. In this context, principles such as transparency, competition, equal treatment, reliability, confidentiality, public scrutiny, efficiency, prevention of corruption, timely fulfillment of needs under appropriate conditions, and efficient use of resources (Art. 5 of the Law) are adopted and implemented in Türkiye in line with the EU public procurement acquis.

Moreover, as provided in Article 26 of Directive 2014/24/EU, where it is understood that a new type of work, service acquisition, or development—different from what is available on the market—cannot be carried out through the procedures specified in the directive, an alternative procurement method may be permitted for such public contracts.

Likewise, even if a contract falls within the definition of a public procurement contract, certain contracts may be excluded from the scope of the classical procurement procedures provided in EU directives and in the Public Procurement Law due to their special nature. One reason for such exclusion is that the nature of the work under the contract may not allow compliance with the competitive conditions envisaged in the directives. Another category of exceptions applies to procurements concerning the performance of a specific work or service of a specialized character. In particular, in the acquisition of financial and legal services requiring special expertise and specialization, the application of special procurement methods may become inevitable. Exceptions are therefore recognized in such cases.

Furthermore, Directive 2014/24/EU provides that the “Negotiated Procedure Without Prior Publication” may also be applied in certain specific service contracts subject to public procurement, and this method is regulated as a procurement procedure (Art. 26/6).

The public procurement system in Türkiye has been fundamentally restructured by the Public Procurement Law. The key characteristics of the procurement system to be applied by administrations subject to public law principles are as follows:

All procurements of goods and services, as well as construction works, fall within the scope of the Law, while exceptions are limited.

Transparency, competition, reliability, public oversight, and efficiency in the use of resources are established as the main procurement principles.

Procurement procedures are regulated in alignment with the legislation and practices of the EU and other international institutions.

A publication obligation has been introduced for finalized procurement processes and decisions to enable public scrutiny.

New provisions specific to consultancy service procurements have been introduced.

Through the Public Procurement Authority, an effective administrative remedy mechanism has been established for complaints and other administrative objections concerning procurement processes.

For professional support in Public Procurement Law matters, you may contact Aykut Hukuk & Danışmanlık, which operates throughout Türkiye, particularly in İzmir.

The post Public Procurement Methods Applied in Service Procurements in Türkiye and the Principles Observed in the Procurement System first appeared on Aykut Hukuk Danışmanlık.