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If you are looking for Payroll in Turkey, it means that you don’t want to set up a legal structure in this country. Whatever your situation may be, you will need information regarding Turkish taxation.

Corporate tax in Payroll Turkey

1.1 Plate

Legal entities are subject to corporate income tax, calculated on their profits. The Payroll Turkey company is also subject to this tax.

1.2 Residents and non-residents

Companies whose head office or business are located in Turkey, or whose operations are concentrated or managed in Turkey, are subject to tax which is applicable to their international revenues. In Turkish tax law, these companies are described as fully liable tax payers.

1.3 Frequency and declaration

The fiscal year in Turkey corresponds to the calendar year. However, a company can complete a tax return based on its own fiscal year.

Generally, the tax return and IRC payment are due on April 25th every year. The amount of the IRC payable is the amount due after the deduction of interim payments made in the previous February, May, August and November (the provisional tax is applicable quarterly), and the tax withheld at source. The balance due must be paid on April 30th.

1.4 Taxable income

Taxable profit is based on accounting profit, subject to a few adjustments. Additionally, there are limited deductions for certain donations. Profits include capital gains, and expenses inherent to the business are generally deductible, although the deduction of certain expenses (which may be of a mixed nature) may be limited.

1.5 Group income and group agreements

A Turkish resident company may combine with its subsidiaries for tax purposes e.g. a holding structure.

1.6 Capital gains

Gains and losses are included in the tax base of the IRC.

1.7 Losses

Losses can be carried forward for 5 years.

1.8 Exclusions

There is a participation exemption for dividends received from a society.

1.9 Rate

The corporate income tax rate for 2020 is 22%, this also concerns companies specialised in Payroll Turkey.

1.10 Reduction of double taxation

Credit is given on withholding taxes on dividends, interest and royalties.

Personal income tax in Payroll Turkey

2.1 Income taxes

The most important taxes are income tax and salary tax, the latter being deducted at source. There are also social security contributions, paid by the employer and the employee.

2.2 Residents and non-residents

Any person who in the year to which the income relates, has remained in Turkish territory for more than 183 days, with or without interruption:

  • has stayed in Turkish territory for less than 183 days, has a place of residence on December 31st of this year under such conditions that he can be inferred that this person intends to keep it and occupy it as a usual residence
  • is a member of the crew of a boat or an aircraft, as of December 31st, that this person is employed by entities having their domicile, their registered office or their effective administration in this territory
  • exercises a public service or a mission in the service of the state abroad

Turkish non-residents are subject to the IRS only on income derived from within Turkish territory, regardless of their family or personal situation.

2.3 Frequency and declaration

The fiscal year corresponds to the calendar year.

In general, the tax declaration must be completed from March 25th. The income earned in Turkish territory by non-resident tax payers is not subject to source deduction. After completing the return, the tax payer receives a tax notice.

2.4 Taxable income

Income is classified into seven different categories:

  • Category A: Commercial income
  • Category B: Farm income
  • Category C: Salaries
  • Category D: Income from sole proprietorship

and commercial or industrial activities;

  • Category E: Rental income
  • Category F: Income from capital gains
  • Category H: Other income

2.5 Capital gains

Capital gains are specifically taxed by adding the taxable capital gain to taxable income subject to income tax.

2.6 Losses

Category B losses: Income from sole proprietorship and commercial or industrial activities is treated as follows:

Income from sole proprietorship and commercial or industrial activities is deferred for 5 years.

2.7 Exemption

There is no exemption from personal income tax.

2.8 Reductions and rates

Income other than capital gains is taxed at rates up to 35% for amounts exceeding TRY 110,000 for labour income and TRY 69,000 for other income.

2.9 Social security

Social security also concerns the employee working under Payroll Turkey company. Public sector workers with private law employment contracts, and workers in the private sector who are employed by one or more employers, are covered by the social security system. Employees and employers both have to pay social security premiums. The contribution rates are 15% for employees and 21.5% for employers respectively.

Contributions calculated from a percentage of gross salary are paid in an upper and lower limit.

The social security system covers illness, maternity, disability, pensions for the elderly and death. Dependents of workers may also be entitled to certain benefits in certain circumstances.

2.10 Expatriates

There is no exemption for expatriates.

2.11 Options

The capital gain is subject to personal income tax.

2.12 Associations – Partnerships

The capital gain is subject to personal income tax.

2.13 Pensions

When a pension is paid, more favourable IRS bands are taxed.

3. Inheritance and gift taxes

Donations and successions are subject to taxation except for housing.

3.1 Residents and non-residents

Transfers that are free of charge by inheritance or by donation constitute the object of this tax.

3.2 Basis & Rates

The tax rate ranges from 1% to 30% depending on the amount and the nature of the transfer (free or not).

4. Wealth tax

There is no wealth tax.

5. Value added tax

5.1 Rate

  • Standard rate: 18%
  • Second rate: 1%

– distribution of newspapers and magazines

– second-hand cars

– processing and delivery of certain agricultural commodities

– dwellings less than 150m² net area

  • Third rate: 8%

– basic food products

– deliveries of books and other similar publications

– entrance fees, cinema, theatre, opera, etc.

The Council of Ministers has the power to raise VAT rates to a base rate of 40% or reduce them to 0%. VAT is applied as soon as a goods are delivered or a service is executed. In cases where invoices are issued before delivery, VAT is only payable on the amounts shown on the invoices. When the goods are dispatched, the VAT is subject to departure from expedition.

6. Other taxes

6.1 Taxation of banking and insurance operations

Income received by banks such as commissions, interest and premiums collected by insurance companies is subject to taxation of 5% on banking and insurance operations. This tax is generally borne by customers. A declaration must be completed, and the tax must be paid by the 15th of the month following the statement. The tax rate for interbank deposit operations, capital gains from pensions and capital gains from sales of government bonds and treasury bills before maturity is 1%.

6.2 Property tax

Property and wealth taxes can be calculated on the price of property and therefore be impersonal, or they can be calculated on the park cumulative real estate of a person, net worth therefore falling under the tax of physical persons.

The property tax levied on real estate is a special form of wealth tax. An annual property tax on the estimated market value applies to residences at a rate of 0.1%, on buildings other than residences at a rate of 0.2%, on cultivated land at a rate of 0.3% and on uncultivated land at a rate of 0.1%. Property tax is double these rates for properties located within the territorial limits of large cities.

The tax base reported for the actual calculation of the property tax cannot be lower than that determined by government authorities. The tax is paid in two equal instalments, the first instalment is made in March, in April or May, and the second in November.

6.3 Tax stamp

The tax stamp is applied to a large number of legal documents such as contracts, agreements, bills to pay, financial statements and tax returns. The tax base differs depending on the nature of the document. Stamp duty can be either fixed or proportional. In other words, either the tax payable is a fixed amount, or it represents a percentage of the value of the transaction recorded.

7. Definition of Payroll Turkey

Take advantage of Payroll in Turkey services offered by Gartner Inc. to work on your own account while being an employee.

We are at the service of individuals and professionals in Istanbul, Izmir, Ankara and other cities in Turkey.

7.1 The benefits of Payroll Turkey

Payroll is today one of the most flexible forms of employment for the company. It offers a high level of security for the individual who benefits from the advantages of being an employee.

With this solution, we give you the opportunity to integrate a network of national consultants with areas of expertise, grouped according to their functions. You exercise your activity freely, and we take care of all the administrative details. This will give you more time to focus on your job. Take advantage of the security of employee status and the freedom of the self-employed.

7.2 Fully at your service

We have 10 years of experience at your disposal to support you in the realisation of your projects.

We are the partner of business creators who want to validate their projects without risk. We advise you to gradually increase and obtain a turnover allowing you to cover the costs of managing your own legal structure.

For the duration of your benefits, you will be covered by social security.

7.3 Advantages for the customer:

Our Payroll Turkey solutions offer you several benefits:

  • Billing
  • No relationship of subordination
  • No increase in payroll
  • No restriction in number of hours
  • Flexibility and flexibility

Gartner Inc. is a company that has specialised in Payroll Turkey solutions for more than 10 years. The purpose of this article was to give you a complete description of taxes in Turkey. Please contact us for further information.



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