According to the Turkish Income Tax Code No. 193, the income of real persons is subject to income tax. Income elements subject to income tax consists of (i) commercial income, (ii) agricultural income, (iii) wages, (iv) self-employment income, (v) real estate capital income, (vi) movable capital income and (vii) other earnings and incomes.
Wages are defined as benefits provided in cash and allowances (given in return for services in the form of goods) in exchange for services to employees who are subject to an employer and affiliated with a specific workplace, as to these benefits can be represented by money (providing housing, vehicles, etc.).
According to the Turkish Tax Law, wages are subjected to income tax in two ways: First, as deduction at its source (while the payment is being made), and secondly, for wages exceeding certain amount as by being declared with an annual tax return to the Ministry of Treasury and Finance.
Of these earnings and revenues subjected to income tax, certain types of wages are exempt from income tax. Accordingly, the following payments are some wages which are exempt from income tax:
- Wages of workers who are exempt from income tax or who work for farmers who are not actually taxed,
- Benefits provided to employees by providing meals at the workplace or outbuildings by employers (In cases where employers do not provide meals at the workplace or outbuildings, the part of the one-day meal cost for the days worked that does not exceed TRL 170 per day for the 2024 calendar year is within the scope of the exception. If the payment exceeds this amount, the excess part and the amount for this purpose and other benefits provided are taxed as wages.),
- Transportation expenses incurred by employers in order to enable service personnel to travel to and from their workplaces collectively (Benefits provided by providing service personnel with public transportation cards, tickets or payment instruments used for this purpose also include the determined daily amount for each day worked (TRL 88 per day for the 2024 calendar year),
- The portion of the retirement, disability, widow and orphan pensions paid by the retirement funds established by law and the funds specified in the provisional the Article 20 of the Social Security Law No. 506 and the Social Insurance and General Healthcare Insurance Act No. 5510, not exceeding the amount paid to the highest civil servant, depending on the period worked,
- Wages of apprentices subject to the Vocational Education Code No. 3308 that do not exceed the minimum wage (Wages above the minimum wage are taxed as a whole),
- Retirement, disability, widow and orphan pensions paid by social security institutions in foreign countries (These pensions, which are not within the scope of the social security institution but paid by private companies, are not within the scope of this exception).
- Wages paid in foreign currency to service personnel working for employers subject to limited liability, whose legal and business headquarters are not in Turkey, based on the earnings earned outside Turkey by the employer.
