TAXING WAGES (Income Tax & Stamp Tax)

On December 16 2021, Turkey has raised minimum wage by 50,51 % to 5,004.00 TRY in gross as of Jan 1, 2022. Minimum wage commission further agreed to abolish income tax and stamp tax on minimum wage.

Subsequently, Law No. 7349 regarding amendments to the income tax law and certain other laws, has entered into force following its publication in the Official Gazette on 25 December 2021.

By the virtue of article 2 of law no 7349, minimum wage earners became exempt from Income tax on their earnings through addition of following sub-paragraph (18) to the first paragraph of Article 23 of Income Tax Law no.193.

The wages of the employees corresponding to the amount remaining after the worker’s social security institution premium and unemployment insurance premium are deducted from the monthly gross amount of the minimum wage valid in the month in which the payment is made; (However, in the taxation of the wage income exceeding the exemption, the income slice amounts and rates to be calculated are determined by taking into account the amounts within the scope of the exemption. The tax amount to be paid is calculated by deducting the portion corresponding to the exemption amount from the tax amount found in this way. The tax that will not be collected due to the exemption cannot exceed the tax that should be calculated over the monthly minimum wage in the relevant month. For those who receive wages from more than one employer, this exemption applies only to the highest wage.).

With Law No. 7349, with the regulation made in the sub-paragraph (18) of the first paragraph of Article 23 of the Law No. 193, wages corresponding to the remaining amount after deducting worker’s social security institution premium and unemployment insurance premium from the monthly gross amount of the minimum wage valid in the month in which the payment is made as of 1/1/2022 are exempted from income tax.

In the taxation of the wage income exceeding the exemption, the income segment amounts and rates at which the tax will be calculated regarding the income of the employee in the relevant month will be determined by taking into account the amounts within the scope of the exemption.

The tax that will not be collected due to the exemption will not exceed the tax that should be calculated over the monthly minimum wage of the relevant month.

In case the employee receives wages from more than one employer, the exemption will be applied only to the highest wage

Stamp tax is also abolished on Minimum wage, as per an additional phrase added to the paragraph 34 of the of the table numbered (2) of the Stamp Tax Law No. 488 through article 4 of Law no 7349.

Since income tax on minimum wage is abolished, due to repeal of article 32 of income tax law through article 3 of Law no 7349, the minimum living allowance, which has no application area, is also abolished.

New formula of gross to net salary calculation will be similar to example below for the wage income above Turkish Minimum wage.

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