Turkey: Radical changes to the Turkish tax system
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Radical changes have been made to the Turkish tax system with the Income Tax Law (Law No. 7349) published in the Official Gazette No. 31700 and dated 25.12.2021.
The details of these changes are as follows:
Income tax exemption for all salaries
With the new regulation, an income tax exemption would be applied to all salaries.
This income tax exemption will apply as follows:
- The minimum wage income tax exemption is applied on a monthly basis.
- The amount of the income tax exemption would be the amount of income tax calculated on the minimum wage.
- If an employee’s total gross salary is greater than the monthly gross minimum salary, income tax would be applicable on the amount of the total gross salary.
- In this case, the income tax brackets and rates would be determined on the basis of the cumulative amount of the income tax base, including the exempt part mentioned above.
- The amount of income tax payable should be calculated by deducting the amount of income tax calculated on the minimum wage for the month concerned from the total amount of income tax calculated on the total gross salary account given the cumulative tax base.
- This deduction / exemption amount cannot be greater than the monthly amount of income tax calculated on the monthly minimum wage.
- If employees receive salaries from more than one employer, the income tax exemption would only apply on the highest salary amount.
Example of calculation of the minimum wage 2022
| Gross Minimum Wage | 5,004.00 |
| SSI employee (% 14) | 700.56 |
| Unemployment Employee (% 1) | 50.04 |
| Total deduction | 750.60 |
| Minimum Net Wage | 4,253.40 |
Example of calculation of the cost of the employer 2022 on the minimum wage
| Gross Minimum Wage | 5,004.00 |
| SSI employer (% 20.5) | 1025.82 |
| Unemployment Employer (% 2) | 100.08 |
| Employer cost (without 5% discount) | 6,129.90 |
| Employer cost (with 5% discount) | 5,879.70 |
Calculation example 2022 – 2
| Monthly gross salary | 12,500.00 |
| SSI employee (% 14) | 1750.00 |
| Unemployment Employee (% 1) | 125.00 |
| SSI Total 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 |
| Basis of stamp duty (before exemption) | 12,500.00 |
| Exemption from the stamp duty base | 5,004.00 |
| Basis of stamp duty (after exemption) | 7,496.00 |
| Stamp tax payable | 56.89 |
| Total amount of the deduction | 2 887.63 |
| NET SALARY | 9,612.37 |
The minimum subsistence allowance is abolished
According to the new regulations, the minimum subsistence allowance, which is applied according to the marital status of employees, will be abolished from January 2022.
Exemption from stamp duty
With the new regulation, the amount of wages up to the gross monthly minimum wage would be exempt from stamp duty on the payroll.
You can access the related law through the link (in Turkish.)
Originally posted Dec 27, 2021
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.
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