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This article presents you with all the modalities concerning taxation Turkey.
Payroll Turkey: Taxation of the country
The four main tax laws in Turkey are:
- Tax Procedures Law No. 213 of 4.1.1961
- Income Tax Law No. 193 of December 31st, 1960
- Company Tax Law No. 5422 of 3.6.1949
- VAT Law No. 3065 of October 25th, 1984
If you are looking for a Payroll in Turkey solution, you need to know some important points regarding taxation.
The Tax Law defines income as “the net amount of all kinds of income, source of savings and expenses in a year”.
Income therefore includes:
- commercial profits
- agricultural profits
- wages and salaries
- non-commercial profits
- profits of the self-employed
- interest and dividends as well as property and securities income.
Residents in Turkey are taxable on all of their income, regardless of origin. Non-residents are only taxable on their Turkish source income, however, according to the same criteria and the same rates as residents.
Different rates apply. It depends on whether it is the tax on wages or the tax on their other income. Tax law combines a fixed rate with a progressive rate.
An individual is not required to make a declaration, unlike independent professionals who must fulfil tax obligations.
The income tax rate is progressive, depending on the amount earned during a fiscal year.
Rates applicable for 2020 revenues:
Ceilings Fixed rate Progressive rate
- Up to TRL 10,700 – 15%
- Up to 26,000 TRL 1605 TRL + 20% for the difference between the amount declared and the top limit
- Up to 60,000 TRL 4,465 TRL + 27% for the difference between the amount declared and the top limit
- Above 60,000 TRL 13,845 TRL + 35% for the difference between the amount declared and the top limit
Payroll in Turkey: Tax payment method
Employee tax is levied directly at source by the employer. For a self-employed, commercial or service activity, a declaration is made in March, and the tax is then paid in March and July.
For more information on taxation in Turkey, you can contact the Turkish Ministry of Finance:
T.C. Maliye Bakanligi Gelir Idaresi Baskanligi Ilkadim Cad.
06450 Dikmen Ankara / TURKEY
Telephone: +90 (312) – 415 29 00 or +90 (312) – 415 30 00
Fax: +90 (312) – 415 28 21 or 22
Corporate tax
Non-resident companies are only subject to the IS for Turkish source income, while resident companies are only subject to IS for all their income.
The tax rate is 20%. A 15% withholding tax (stopaj) is applicable for dividends distributed.
The VAT system applicable in Turkey is similar to the system applicable in the countries of the European Union.
Any natural or legal person carrying out a commercial, industrial, agricultural or independent activity within Turkish territory, or when importing goods or services into Turkey, is liable to VAT. All imports are subject to payment of VAT and exports are excluded from the scope of VAT. Here is more information on this topic.
Persons liable for VAT
Regarding business procedures in this country such as Payroll in Turkey, VAT is an important point to mention. The VAT law defines liable persons as any person engaged in taxable transactions, regardless of their legal status, or their nature/situation with regards to other taxes.
The following are therefore subject to VAT:
- Suppliers of goods and services
- Importers of goods and services
- The following activities: post office, telephone, fax, television, organisation of concerts and sporting events, oil and gas transfers by pipeline.
- Any natural or legal person, resident or not, private or public, engaged in this type of transaction is subject to VAT.
In terms of imports, the person liable for VAT is the person in possession of the import document (bill of lading, document representing the goods).
VAT rates
The rate applicable for transaction operations was set at 18% on May 15th, 2001. Two other reduced rates remain: 1% and 8%. They are applicable to different types of goods and services.
List I lists those subject to the 1% rate. These include dry foods, cotton, wheat, newspapers and magazines.
List II lists the goods and services taxed at the rate of 8%. In particular, basic foods (milk, pasta, oil), medicines, books, textiles and shoes.
Vehicles are subject to 18% VAT.
The special consumption tax (ÖTV)
Law No. 4760 of June 6th, 2002 instituting a special consumption tax (ÖTV) brought the following modifications:
of the five categories of VAT rates, only three remain:
those made up of rates at 1%, 8% and 18%.
The 26% and 40% rates have been removed and products subject to these rates are now taxed at 18%.
It is therefore in no case to cancel the VAT for products taxable at the rates of 26% and 40%. But only to reduce the applicable rate to 18%.
A distinction is made between four groups of products, which are subject to different tax rates:
- Group 1: petroleum products, natural gas (specific rates);
- Group 2: automobiles and other motor vehicles, motorcycles, helicopters, yachts (rate from 1% to 130%);
- Group 3: tobacco, alcoholic and carbonated drinks (rate from 25% to 65.25% and lump sums);
- Group 4: luxury products (rate from 6.7% to 20%)
This tax is applicable in the same way to imported products and certain domestic products.
Local taxes
Property taxes vary between 0.1% and 0.4% of the tax value for buildings and between 0.1% and 0.6% for land.
Duties and taxes on international trade
Within the framework of the customs union between the European Union and Turkey, products from European countries are exempt from customs duties (except for unprocessed agricultural products).
The scale of customs duties for products from other countries varies by product. Various lists prepared in accordance with the harmonised system of description and coding of goods are available on the website of the Turkish Ministry of the Economy.
However, it is essential to pay import VAT and special consumption tax (especially for certain categories of luxury goods).
Payroll in Turkey: Fiscal year
The fiscal year corresponds to the calendar year. The declaration of income of natural persons (associates of so-called collective societies, sponsorships as well as ordinary associations) is made at the latest at the end of March. It is done at the tax office. The forms are available online and at tax offices. The competent tax office is located in residence’s region of applicant or according to work location.
If the income consists solely of property income, the declaration is made at the latest at the end of January.
Corporate income tax returns must be made by the end of April at the tax office in the region where the company is headquartered or online. Forms are available at the same office or online. This declaration is different from that of the income declaration.
Tax clearance
A tax discharge will only be required in the case of a company manager.
Account balance at end of the stay
An UK expatriate in the private sector can settle his account at the end of their stay.
Contact information for tax information centres:
MALIYE BAKANLIGI
Gelir Idaresi Baskanligi
Ilkadim Caddesi 06450 Dikmen – ANKARA / TURKEY
Tel: +90 (312) 415 29 00
Fax: +90 (312) 415 28 21
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