As a Payroll in Turkey company we are proud that Turkey has one of the most competitive tax rates among the OECD member countries. Turkish corporate tax legislation is regulated by provisions that are understandable, objective and in accordance with international standards.
Taxes in Turkey
Turkish tax legislation can be grouped under three main headings:
Income taxes, personal income tax and corporate tax are all included in the Turkish tax legislation. Although personal income tax and corporate tax are defined by different laws, most of the rules and provisions that apply to individuals, especially in terms of income elements and the determination of net income, also apply to corporations.
Personal Income Tax
Revenues of natural persons are subject to personal income tax. Revenue is the net amount of earnings, and earnings of a natural person during a calendar year. According to the Income Tax Law, the items considered to be income are as follows:
- Business earnings
- Agricultural earnings
- Salaries and fees
- Self-employment earnings
- Real estate capital income (rental income)
- Income from securities (income from capital investments)
- Other earnings and revenues
Turkish tax legislation regulates the full or narrow liability obligation on the basis of residence. Full tax payers (resident in Turkey continuously for more than six months in Turkey within a calendar year) of Turkey are taxed on all of the revenues, except for limited tax payers (residents not living in Turkey and within a calendar year from those living permanently more than six months) are taxed only on profits and revenues earned in PEO (Professional Employer Organisation).
Personal income tax rates vary from 15% to 35%.
In case the elements of income defined in the Income Tax Law are obtained by a corporation, the taxation is made through the legal personality of a corporation. The corporate tax payers defined by the law are as follows:
- Capital companies
- Public economic institutions
- Economic enterprises of associations and foundations
- Business partnerships
Legal centres, business centres or institutions in Turkey, are considered fully responsible and should be taxed on the profits they obtain in Turkey and foreign countries. If legal centres or both of the business centres are located in Turkey, it is considered that tax payers and are taxed only on income earned in Turkey. While the legal centre is the centre specified in the articles of association or the laws of the taxable institutions, the business centre is the place where the business activity is actually conducted and managed.
The corporate tax rate levied on business profits is 20% in Turkey. Corporate tax rate has been increased to 22% for 2018, 2019 and 2020. However, the Council of Ministers has the authority to reduce the mentioned rate of 22% down to 20%.
Full tax payers are generally subject to withholding tax at the rate of 15% when dividends are paid to shareholders. However, the dividends paid by tax payers to tax payers are not subject to withholding tax. Since the addition of profit to capital is not considered as profit distribution, such situations are not subject to withholding. Similarly, after deducting the corporate tax of tax payers, a 15% tax deduction is made on the amounts transferred to the head office. The withholding tax is applied to the remaining amount after deducting the corporate tax from the profit of the taxable branches.
Taxes on Expenses
The generally applied rates of VAT are 1%, 8% and 18% for commercial, industrial, agricultural and independent professional goods and services. All deliveries of goods and services derived from the importation of goods and services into the country and other activities are subject to VAT.
Some of the VAT exemptions and exclusions are:
- Exports of goods and services
- International roaming in accordance with the agreement and provided that the implementation of the reciprocity in Turkey for customers outside Turkey roaming services
- Subcontract services for customers in free zones
- Oil exploration activities
- Services provided for ships and aircraft at ports and airports
- Deliveries of machinery and equipment within the scope of investment incentive certificate
- Transit transportation
- Provided that the reciprocity requirement is applied, diplomatic representatives and consulates, international organisations in the status of tax exemption and their delivery and services
- Banking and insurance transactions subject to Banking and Insurance Transactions Tax
Special Consumption Tax (SCT)
There are four main product groups subject to SCT at various tax rates:
Petroleum products, natural gas, machine oils, solvents and solvent derivatives
Cars and other vehicles, motorcycles, planes, helicopters and yachts
Tobacco, tobacco products and alcoholic beverages
Luxury consumer goods
Applied on every delivery
Find yourself a suitable Payroll in Turkey solution
PEO Turkey (Professional Employer Organisation), Payroll in Turkey management or a combination of both. Choose from our range of solutions to support your employees throughout their employee life cycle and improve your bottom line.
Discover our HR solutions to automate and drive your HR processes, including time management, training, and performance reviews.
Whether your workforce is local or international, we can optimise the payment process by freeing you from time-consuming, low value tasks.
Time and activities
Management of working time and planning of the organisation.
Payroll in Turkey Management: Externalising salary payment with Sthatam
For any company, the payment of wages is a delicate and critical task. With Sthatam, you have complete outsourcing to PEO Turkey (Professional Employer Organisation) solution that allows you to reduce your fixed costs.
Our mission is to make payroll management easier. The solution we offer allows you to organise, secure and optimise your payroll process through an analysis of indicators related to regulation, quality, performance, HR, information system and the organisational dimension of your payroll.
Why externalise pay management at Sthatam ?
Social legislation is constantly evolving and the calculation of wages is largely impacted by these incessant changes. In order to conform with the social legislation, a socio-legal watch is essential, but can be expensive if it is carried out internally.
By entrusting your payroll and your social statements to Sthatam, you benefit in 3 key areas:
- Regulatory compliance and timeliness: Sthatam is committed to ensuring that wages are paid monthly and on time. One less hassle on your list!
- Save time: Thanks to our technical experience and legal expertise, salaries are processed faster each month and your HR department can focus on other priority tasks.
- Greater cost flexibility: Significant positions such as IT maintenance can be saved, increasing productivity for your business.
Information you need to know if you are looking for a PEO Turkey company (Professional Employer Organisation)
- January 1st – New Year
- April 23rd – National Sovereignty and Children’s Day
- May 1st – Labour and Solidarity Day
- May 19th – Commemoration of Atatürk, Youth and Sports Day
- Feast of Ramadan
- Eid al-Adha
- August 30th – Victory Day
- October 29th – Republic Day