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Radical Amendments in the Turkish Tax System

Radical Amendments in the Turkish Tax System

Radical amendments have been made in the Turkish tax system with Income Tax Law (Law no: 7349) published in the Official Gazette numbered 31700 and dated 25.12.2021.

The details of these amendments are as below:

Income Tax Exemption for All Wages

With the new regulation, an income tax exemption would be applied for all wages.

This income tax exemption will be applied as below:

  1. Minimum wage income tax exemption is applied on monthly basis.
  2. The income tax exemption amount would be the income tax amount calculated over the minimum wage.
  3. If the total gross wage of an employee is higher than the monthly gross minimum wage, income tax would be applicable on the total gross wage amount.
  4. In that case, the income tax brackets and rates would be determined based on the cumulative income tax base amount, including the exempt part mentioned above.
  5. The payable income tax amount would need to be calculated by deducting the income tax amount calculated over the minimum wage in the related month from the total income tax amount calculated over the total gross wage considering the cumulative income tax base.
  6. That deduction/exemption amount cannot be higher than the monthly income tax amount calculated over the monthly minimum wage.
  7. If employees receives wages from more than one employer, the income tax exemption would only be applicable on the higher wage amount.

2022 Minimum Wage Sample Calculation

Gross Minimum Wage 5,004.00
SSI Employee (%14) 700.56
Unemployment Employee (%1) 50.04
Total Deduction 750.60
Net Minimum Wage 4,253.40

2022 Employer Cost Sample Calculation on Minimum Wage

Gross Minimum Wage 5,004.00
SSI Employer (%20.5) 1,025.82
Unemployment Employer (%2) 100.08
Employer Cost (without discount of 5%) 6,129.90
Employer Cost (with discount of 5%) 5,879.70

2022 Sample Calculation - 2

Monthly Gross Salary 12,500.00
SSI Employee (%14) 1,750.00
Unemployment Employee (%1) 125.00
Total SSI Deduction 1,875.00
Income Tax Base 10,625.00
Income Tax Amount (%15) 1,593.75
Income Tax Exemption 638.01
Income Tax Payable 955.74
Stamp Tax Base (Before Exemption) 12,500.00
Stamp Tax Base Exemption 5,004.00
Stamp Tax Base (After Exemption) 7,496.00
Stamp Tax Payable 56,89
Total Deduction Amount 2,887.63
NET WAGE 9,612.37

Minimum Subsistence Allowance is Abolished

Per the new regulation, the minimum subsistence allowance, which is applied depending on the employees' marital status, will be abolished as of January 2022.

Stamp Tax Exemption

With the new regulation, the wage amount up to the gross monthly minimum wage would be exempt from stamp tax on payroll.

You can reach the related Law via the link (In Turkish.)

Should you have any queries or need further details, please contact your customer representative.

Author Erdoğdu Onur Erol, Category Taxation Law

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