The statutory deductions applicable in a standard Turkish payroll are social security premium, income tax, and stamp tax. Also, the salaries generated from liaison offices in Turkey are exempt from income tax per Article 23/14 of Income Tax Law, and these are only subject to social security.
Also, as of 2022, an income tax exemption amount up to the tax amount calculated over minimum wage would be applicable for all wages.
Social Security Premium
Social Security Premium is calculated over wages monthly and paid jointly by the employee and the employer. The contribution rates are as follows:
|SSI Unemployment Premium||%1||%2|
|Total Discount Included||%15||%17,5|
**Timely payment of social security premiums by the employer is a pre-condition for applying the employer discount (Incentive No. 5510.)
The rates above are applied to the social security base consisting of gross wages, bonuses, and other payments subject to social security premiums.
However, if the social security base is higher than the social security premium ceiling, which is renewed every year, the social security premium ceiling amount valid for that period is considered to calculate the premiums.
For the year 2022, the social security ceiling amount is 37,530.00 TRY. This ceiling amount is updated annually according to the changes in the minimum wage (7.5 times the minimum wage.)
SSI Base and Ceiling
|SSI||Monthly SSI Base||Monthly SSI Base Ceiling|
Transferred Social Security Base
One of the most important topics about the social security cap amount would be the transferred social security base.
That topic is regulated under Law No. 5510 Article 80/d.
According to these regulations, if the employee's earnings within any given month are over the social security ceiling, the exceeding amount related to additional payments will be transferred to the next month for consideration in the calculation. The transferred base can be carried forward for a total of two months before being excluded from calculations.
Salaries are subject to premium on the related month. Other payments are primarily included in the earnings of the month in which they are paid, together with these payments other than wages, the portion of the SSI base that cannot be subjected to premium if the upper limit is exceeded in the relevant month, starting from the month following the month of payment and not exceeding the upper limit for two months, is added.
Considering a salary of 35,000 TRY, the employee receives a bonus of 6,000 TRY in the current month. The SSI base that exceeds the ceiling will be transferred for the next two months;
Current month SSI Base: 37,530.00 TRY
35,000.00 + 6,000.00 = 41,000.00 - 37,530.00 = 3,470.00 Transferring SSI Base
Next month SSI Base: 37,530.00 TRY
35,000.00 + 3,470.00 = 38,470.00 / 38,470.00 - 37,530.00 = 940.00 Transferring Base
Next Month SSI Base (2nd month): 35,000.00 + 940,00 = 35,940.00 TRY
2022 Liability for Income Tax
Per the Income Tax Law, Article 1, the tax year is the calendar year in Turkey, and there is a cumulative income tax system that follows the calendar year. The applicable tax rate is determined based on the year-to-date cumulative income tax base of the employee. Therefore, the tax rate of the employees will increase throughout the year as their cumulative income tax base increases.
Below are the income tax brackets that are applicable for the salary income on 2022 tax year (Income Tax Communique No. 317):
|880,000.01 ve more||40%|
2022 Income Tax Exemption
An income tax exemption has come into force with Income Tax Law No. 7349 published in the Official Gazette numbered 31700 and dated 25.12.2021. The exemption amount is the income tax amount calculated over the applicable minimum wage.
Liability for Stamp Tax
The stamp tax is applied on employment income through the payroll. The applied rate is 0,759 percent as of 01.01.2015.
The stamp tax base equals the total gross earning on the payroll, and the stamp tax is calculated over that total gross earning.
Also, with Law No. 7349, a stamp tax exemption amount applicable as of 2022 has come into force. The stamp tax exemption amount would be the gross minimum wage of the current year.
2022 Minimum Wage Tax Exemptions
|Period||Income Tax Exemption||Stamp Tax Exemption|
2022 Minimum Wage Sample Calculation
|Gross Minimum Wage||5,004.00|
|SSI Employee (%14)||700.56|
|Unemployment Employee (%1)||50.04|
|Net Minimum Wage||4,253.40|
2022 Minimum Wage Employer Cost Calculation Sample
|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 a 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|
2022 Payroll Calculation Method Sample
You can find below a sample calculation process from gross salary to net salary;
- Total gross earning: gross base salary + all benefits and allowances (A)
- Gross base salary: monthly base salary / 30 * working days of the employee
- SSI base: total gross payment – exemptions (i.e., in-kind meal allowance)
- SSI employee contribution: Social security base * 0.14 (B)
- SSI employee unemployment contribution: social security base * 0.01 (C)
- SSI employer contribution: social security base * 0.205 (Y)
- SSI employer unemployment contribution: social security base * 0.02 (Z)
- Cumulative income tax base: Current income tax base + cumulative income tax base from the previous months
- Income tax base: total gross payment – SSI employee contribution – SSI employee unemployment contribution (D) = A - B - C
- Income tax: income tax base * tax rate (E) = D * Rate
- Income tax exemption: The tax amount calculated over the applicable minimum wage (F)
- Income tax payable: Income tax – income tax exemption (G) = E - F
- Stamp tax base (before exemption): total gross payment (H) = (A)
- Stamp tax base exemption: Monthly gross minimum wage amount. (I)
- Stamp tax base (after exemption): Stamp tax base – stamp taxe base exemption (J) = H - I
- Stamp tax: stamp tax base * 0.00759 (K) = (J) * 0.00759
- Total employee deduction: SSI total employee contribution + income tax + stamp tax (L) = B + C + G + K
- Net payment: total gross payment - total employee deduction (A) - (L)
- Total employer cost: Total gross earning + SSI employer contribution + SSI employer unemployment contribution A + Y + Z
The tax rate of the employees will increase throughout the year as their cumulative income tax base increases. As the cumulative income base of the employee change, the tax bracket of the employee changes as well. The income tax bracket for January can be 15%, and in February, the tax bracket would be increased and can be 20% due to an extra bonus payment.
Minimum Subsistence Allowance is abolished as of Jan, 2022.
You can click the link for Law No. 7349.
You can reach Income Tax Communiqué No 317 via the link (in Turkish.)
You can reach Stamp Tax Communiqué No. 66 via the link (in Turkish.)
You can reach Stamp Tax Table via the link (in Turkish.)
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.