Income Tax and Stamp Duty Exemptions Applied to Wage Incomes

January 5, 2023by Bünyamin Esen0

With the Decision No. 2022/02 taken by the Minimum Wage Determination Commission on the date of 22nd of December 2022, the minimum national wage to be applied in the calendar year of 2023 has been determined as TRL 333.60 gross per day and TRL 10,008.00 gross per month. The decision has entered into force as of 1st of January 2023, as the Minimum Wage Determination Commission Decision No. 2022/2 is published in the Turkish Official Gazette dated 29th of December 2022 and numbered 32058.

As it is known, as of January 2022, it was being announced that “income and stamp taxes have been removed from the wage income of all workers up to the minimum wage”.

With the following Income Tax General Communiqué No. 319 which is published in the Turkish Official Gazette dated 27th of January 2022 and numbered 31732, the procedures and principles on how to apply the Income Tax and Stamp Tax exemptions are being clarified.

According to the Income Tax General Communiqué No. 319, Income Tax Deduction is applied through deduction from the calculated income tax. While income tax deduction is applied with this method, the calculated tax deduction cannot exceed the income tax calculated for the minimum wage.

In the stamp duty, the application was implemented through deduction from the tax base.

If the employee works with the minimum wage throughout the year, the income tax deduction will be TRL 1,276.02 until the month August, TRL 1,604.08 in the month September, and TRL 1,701.36 from October to the end of December. From January to the end of December, a discount of TRL 10,008.00 from the Stamp Duty Base will be made and the duty tax deduction will be calculated in this regard. If the employees have a Stamp Duty Base of TRL 10,088.00 or more, the stamp tax reduction to be applied will be TRL 75.96.

Wages are defined as the benefits that can be represented by money, provided in cash or in kind, benefits provided in return for the service, for the employee works under the employer and as attached to a certain workplace. It does not matter whether the wage is paid under the name of allowance, compensation, cash compensation (financial liability compensation), allocation, raise, advance, contribution, attendance fee, premium, bonus, expense provision or with other names.

At the same time, the fact that it is determined as a certain percentage of the earnings, provided that it is not a partnership relationship, will not change the nature of the wage. Therefore, monthly wages, overtime wages, premiums, bonuses, expenses, and all other payments and benefits paid to service professionals are also considered within the scope of wages, and taxation is made on the basis of the cumulative base. Discounts and exceptions applied in the relevant periods are applied once to the total of these payments. Therefore, the aforementioned exception must be applied once to the sum of the wages and payments considered as wages made in the relevant month.

The Article 63 of Income Tax Code No. 193 stipulates that the real net value of the wage is the amount remaining after deductions and payments such as insurance premium, personal insurance premium and union dues are deducted from the sum of money and benefits provided by the employer.

Salary payments exempted from income tax are included in the 23rd and subsequent articles of the Income Tax Code No. 193, and the disability allowance is included in the 31st Article of the same law. Exceptions and deductions are the monetary amounts shown on the payroll but are not included in the income tax base.

In the taxation of the wage income exceeding the exemption, the income segment amounts and rates for which the tax will be calculated regarding the income of the service person 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 exception will not exceed the tax that should be calculated over the monthly minimum wage in the relevant month. If the service person receives wages from more than one employer, the exception will only be applied to the highest wage. Below are some examples for implementation of exemptions from income tax and stamp duty.

Bünyamin Esen

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