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Income tax on individuals in Turkey

Income tax is unitary in nature. The source of income is defined in 7 categories: Business profits, agricultural profits, employment income, professional income, rental income, interest & dividends, and other income.

 There are two main types of tax statutes: resident taxpayers, and non-resident taxpayers. Residents are taxed on their worldwide income, whereas, nonresidents are taxed only on their Turkish source income.

 Turkish citizens, who work abroad, even if employed by companies with headquarters situated in Turkey or by the Turkish Government, are not subject to Turkish taxation in respect of income obtained and taxed outside Turkey.

 A foreigner who spends less than a continuous period of six months in Turkey during a calendar year and whose centre of vital interest is not concentrated in Turkey or who, although stays in Turkey for more than six months but has come to Turkey for a specific and temporary assignment (e.g. businessman, expert, pres or radio correspondent), is regarded as non-resident and is taxed accordingly.

 Taxable Gross Income

 Taxable gross income includes amounts received from the following sources:

  • Income from commercial activities
  • Income from agriculture
  • Income from professional services
  • Income from employment services (wages and salaries)
  • Income from capital investments (interest and dividends)
  • Income from immovable assets and rights (rental income)
  • Other income and earnings (capital gains, etc.)

 Exclusions and Exemptions

Certain amounts received by individuals need not to be reported for tax purposes. The followings are specifically exempt.

  • Annual rental income up to 3.000 TL
  • Employment income wholly consisting of salaries derived from one resident employer, provided that all payments are taxed by withholding mechanism on payroll
  • Interest income which has been subjected to withholding tax at source
  • Half of dividend income received by a resident taxpayer from a resident
  • corporation
  • Income derived by authors, sculptors, painters and composers, etc. and their heirs from copyrights and patent rights
  • Pensions and other social security compensations received up to certain levels,
  • Reimbursement (made by the employer) of travelling expenses incurred by employees for business purposes
  • Salaries paid in foreign currency by the representative/liaison offices of foreign companies
  • Retirement and termination indemnity payments ( maximum 2.805,04 TL for the first half of 2012)
  • Capital gains from the disposal of Turkish corporation shares held for more than two years
  • Capital gains from the disposal of real estates retained by individuals for more than five years.

 Deductions and Allowances

 Turkish income tax law provides various deductions and allowances for each category of income. Some important deductions and allowances are explained below:

  • Business expense deductions set out for companies are also applicable to individuals, to the extent that they relate to an individual’s business income
  • Compulsory pension contributions and social security premiums,

The following benefits are not taxable from the employee standpoint:

  • Insurance premiums paid for the taxpayer and his family for death, sickness, disability, birth and education are deductible from the taxable salary.
  • If meals are provided at the business premises, total payment made by the employer is tax exempted. Otherwise, only certain amount is exempted.
  • Transportation provided by the employer.
  • Accommodation provided by the employer, to the employees working inmining, factory and those whom the employee should provide accommodatio in accordance with the special legislation.
  • Children allowance up to the amount received by a government employee, for maximum two children.
  • Indemnity and assistance payments for reasons of death, disability, illness and unemployment.
  • Assistance paid to employees because of marriage and birth, limited to two months’ salary.

Income Tax Rates

Income tax rates applicable for year 2012 are as follows:

  • Up to 10.000 15%
  • 10.001-25.000 20%
  • 25.001-58.000 27%
  • 58.001 and upwards 35%

Tax Returns, Filing, Payments

Tax returns must be filed by 25th March in the following year. Income tax is payable in two equal installments in March and July.

Source: Turkish Revenue Administration

Income tax is unitary in nature. The source of income is defined in 7 categories: Business profits, agricultural profits, employment income, professional income, rental income, interest & dividends, and other income.

There are two main types of tax statutes: resident taxpayers, and non-resident taxpayers. Residents are taxed on their worldwide income, whereas, nonresidents are taxed only on their Turkish source income.

Turkish citizens, who work abroad, even if employed by companies with headquarters situated in Turkey or by the Turkish Government, are not subject to Turkish taxation in respect of income obtained and taxed outside Turkey.

A foreigner who spends less than a continuous period of six months in Turkey during a calendar year and whose centre of vital interest is not concentrated in Turkey or who, although stays in Turkey for more than six months but has come to Turkey for a specific and temporary assignment (e.g. businessman, expert, pres or radio correspondent), is regarded as non-resident and is taxed accordingly.

Taxable Income

Gross Income

Taxable gross income includes amounts received from the following sources:

  • Income from commercial activities
  • Income from agriculture
  • Income from professional services
  • Income from employment services (wages and salaries)
  • Income from capital investments (interest and dividends)
  • Income from immovable assets and rights (rental income)
  • Other income and earnings (capital gains, etc.)

Exclusions and Exemptions

Certain amounts received by individuals need not to be reported for tax purposes. The followings are specifically exempt.

  • Annual rental income up to 3.000 TL
  • Employment income wholly consisting of salaries derived from one resident employer, provided that all payments are taxed by withholding mechanism on payroll
  • Interest income which has been subjected to withholding tax at source
  • Half of dividend income received by a resident taxpayer from a resident
  • corporation
  • Income derived by authors, sculptors, painters and composers, etc. and their heirs from copyrights and patent rights
  • Pensions and other social security compensations received up to certain levels,
  • Reimbursement (made by the employer) of travelling expenses incurred by employees for business purposes
  • Salaries paid in foreign currency by the representative/liaison offices of foreign companies
  • Retirement and termination indemnity payments ( maximum 2.805,04 TL for the first half of 2012)
  • Capital gains from the disposal of Turkish corporation shares held for more than two years
  • Capital gains from the disposal of real estates retained by individuals for more than five years.

 Deductions and Allowances

Turkish income tax law provides various deductions and allowances for each category of income. Some important deductions and allowances are explained below:

  • Business expense deductions set out for companies are also applicable to individuals, to the extent that they relate to an individual’s business income
  • Compulsory pension contributions and social security premiums,

The following benefits are not taxable from the employee standpoint:

  • Insurance premiums paid for the taxpayer and his family for death, sickness, disability, birth and education are deductible from the taxable salary.
  • If meals are provided at the business premises, total payment made by the employer is tax exempted. Otherwise, only certain amount is exempted.
  • Transportation provided by the employer.
  • Accommodation provided by the employer, to the employees working inmining, factory and those whom the employee should provide accommodatio in accordance with the special legislation.
  • Children allowance up to the amount received by a government employee, for maximum two children.
  • Indemnity and assistance payments for reasons of death, disability, illness and unemployment.
  • Assistance paid to employees because of marriage and birth, limited to two months’ salary.

Income Tax Rates

Income tax rates applicable for year 2012 are as follows:

  • Up to 10.000 15%
  • 10.001-25.000 20%
  • 25.001-58.000 27%
  • 58.001 and upwards 35%

Tax Returns, Filing, Payments

Tax returns must be filed by 25th March in the following year. Income tax is payable in two equal installments in March and July.

Source: Turkish Revenue Administration

Income tax is unitary in nature. The source of income is defined in 7 categories: Business profits, agricultural profits, employment income, professional income, rental income, interest & dividends, and other income.

There are two main types of tax statutes: resident taxpayers, and non-resident taxpayers. Residents are taxed on their worldwide income, whereas, nonresidents are taxed only on their Turkish source income.

Turkish citizens, who work abroad, even if employed by companies with headquarters situated in Turkey or by the Turkish Government, are not subject to Turkish taxation in respect of income obtained and taxed outside Turkey.

A foreigner who spends less than a continuous period of six months in Turkey during a calendar year and whose centre of vital interest is not concentrated in Turkey or who, although stays in Turkey for more than six months but has come to Turkey for a specific and temporary assignment (e.g. businessman, expert, pres or radio correspondent), is regarded as non-resident and is taxed accordingly.

Taxable Gross Income

Taxable gross income includes amounts received from the following sources:

  • Income from commercial activities
  • Income from agriculture
  • Income from professional services
  • Income from employment services (wages and salaries)
  • Income from capital investments (interest and dividends)
  • Income from immovable assets and rights (rental income)
  • Other income and earnings (capital gains, etc.)

Exclusions and Exemptions

Certain amounts received by individuals need not to be reported for tax purposes. The followings are specifically exempt.

  • Annual rental income up to 3.000 TL
  • Employment income wholly consisting of salaries derived from one resident employer, provided that all payments are taxed by withholding mechanism on payroll
  • Interest income which has been subjected to withholding tax at source
  • Half of dividend income received by a resident taxpayer from a resident
  • corporation
  • Income derived by authors, sculptors, painters and composers, etc. and their heirs from copyrights and patent rights
  • Pensions and other social security compensations received up to certain levels,
  • Reimbursement (made by the employer) of travelling expenses incurred by employees for business purposes
  • Salaries paid in foreign currency by the representative/liaison offices of foreign companies
  • Retirement and termination indemnity payments ( maximum 2.805,04 TL for the first half of 2012)
  • Capital gains from the disposal of Turkish corporation shares held for more than two years
  • Capital gains from the disposal of real estates retained by individuals for more than five years.

 Deductions and Allowances

Turkish income tax law provides various deductions and allowances for each category of income. Some important deductions and allowances are explained below:

  • Business expense deductions set out for companies are also applicable to individuals, to the extent that they relate to an individual’s business income
  • Compulsory pension contributions and social security premiums,

The following benefits are not taxable from the employee standpoint:

  • Insurance premiums paid for the taxpayer and his family for death, sickness, disability, birth and education are deductible from the taxable salary.
  • If meals are provided at the business premises, total payment made by the employer is tax exempted. Otherwise, only certain amount is exempted.
  • Transportation provided by the employer.
  • Accommodation provided by the employer, to the employees working inmining, factory and those whom the employee should provide accommodatio in accordance with the special legislation.
  • Children allowance up to the amount received by a government employee, for maximum two children.
  • Indemnity and assistance payments for reasons of death, disability, illness and unemployment.
  • Assistance paid to employees because of marriage and birth, limited to two months’ salary.

Income Tax Rates

Income tax rates applicable for year 2012 are as follows:

  • Up to 10.000 15%
  • 10.001-25.000 20%
  • 25.001-58.000 27%
  • 58.001 and upwards 35%

Tax Returns, Filing, Payments

Tax returns must be filed by 25th March in the following year. Income tax is payable in two equal installments in March and July.

Source: Turkish Revenue Administration

Income tax is unitary in nature. The source of income is defined in 7 categories: Business profits, agricultural profits, employment income, professional income, rental income, interest & dividends, and other income.

 There are two main types of tax statutes: resident taxpayers, and non-resident taxpayers. Residents are taxed on their worldwide income, whereas, nonresidents are taxed only on their Turkish source income.

 Turkish citizens, who work abroad, even if employed by companies with headquarters situated in Turkey or by the Turkish Government, are not subject to Turkish taxation in respect of income obtained and taxed outside Turkey.

 A foreigner who spends less than a continuous period of six months in Turkey during a calendar year and whose centre of vital interest is not concentrated in Turkey or who, although stays in Turkey for more than six months but has come to Turkey for a specific and temporary assignment (e.g. businessman, expert, pres or radio correspondent), is regarded as non-resident and is taxed accordingly.

Taxable Gross Income

 Taxable gross income includes amounts received from the following sources:

  • Income from commercial activities
  • Income from agriculture
  • Income from professional services
  • Income from employment services (wages and salaries)
  • Income from capital investments (interest and dividends)
  • Income from immovable assets and rights (rental income)
  • Other income and earnings (capital gains, etc.)

 Exclusions and Exemptions

Certain amounts received by individuals need not to be reported for tax purposes. The followings are specifically exempt.

  • Annual rental income up to 3.000 TL
  • Employment income wholly consisting of salaries derived from one resident employer, provided that all payments are taxed by withholding mechanism on payroll
  • Interest income which has been subjected to withholding tax at source
  • Half of dividend income received by a resident taxpayer from a resident
  • corporation
  • Income derived by authors, sculptors, painters and composers, etc. and their heirs from copyrights and patent rights
  • Pensions and other social security compensations received up to certain levels,
  • Reimbursement (made by the employer) of travelling expenses incurred by employees for business purposes
  • Salaries paid in foreign currency by the representative/liaison offices of foreign companies
  • Retirement and termination indemnity payments ( maximum 2.805,04 TL for the first half of 2012)
  • Capital gains from the disposal of Turkish corporation shares held for more than two years
  • Capital gains from the disposal of real estates retained by individuals for more than five years.

 Deductions and Allowances

 Turkish income tax law provides various deductions and allowances for each category of income. Some important deductions and allowances are explained below:

  • Business expense deductions set out for companies are also applicable to individuals, to the extent that they relate to an individual’s business income
  • Compulsory pension contributions and social security premiums,

The following benefits are not taxable from the employee standpoint:

  • Insurance premiums paid for the taxpayer and his family for death, sickness, disability, birth and education are deductible from the taxable salary.
  • If meals are provided at the business premises, total payment made by the employer is tax exempted. Otherwise, only certain amount is exempted.
  • Transportation provided by the employer.
  • Accommodation provided by the employer, to the employees working inmining, factory and those whom the employee should provide accommodatio in accordance with the special legislation.
  • Children allowance up to the amount received by a government employee, for maximum two children.
  • Indemnity and assistance payments for reasons of death, disability, illness and unemployment.
  • Assistance paid to employees because of marriage and birth, limited to two months’ salary.

Income Tax Rates

Income tax rates applicable for year 2012 are as follows:

  • Up to 10.000 15%
  • 10.001-25.000 20%
  • 25.001-58.000 27%
  • 58.001 and upwards 35%

Tax Returns, Filing, Payments

Tax returns must be filed by 25th March in the following year. Income tax is payable in two equal installments in March and July.

Source: Turkish Revenue Administration

Income tax is unitary in nature. The source of income is defined in 7 categories: Business profits, agricultural profits, employment income, professional income, rental income, interest & dividends, and other income.

There are two main types of tax statutes: resident taxpayers, and non-resident taxpayers. Residents are taxed on their worldwide income, whereas, nonresidents are taxed only on their Turkish source income.

Turkish citizens, who work abroad, even if employed by companies with headquarters situated in Turkey or by the Turkish Government, are not subject to Turkish taxation in respect of income obtained and taxed outside Turkey.

A foreigner who spends less than a continuous period of six months in Turkey during a calendar year and whose centre of vital interest is not concentrated in Turkey or who, although stays in Turkey for more than six months but has come to Turkey for a specific and temporary assignment (e.g. businessman, expert, pres or radio correspondent), is regarded as non-resident and is taxed accordingly.

Taxable Income

Gross Income

Taxable gross income includes amounts received from the following sources:

  • Income from commercial activities
  • Income from agriculture
  • Income from professional services
  • Income from employment services (wages and salaries)
  • Income from capital investments (interest and dividends)
  • Income from immovable assets and rights (rental income)
  • Other income and earnings (capital gains, etc.)

Exclusions and Exemptions

Certain amounts received by individuals need not to be reported for tax purposes. The followings are specifically exempt.

  • Annual rental income up to 3.000 TL
  • Employment income wholly consisting of salaries derived from one resident employer, provided that all payments are taxed by withholding mechanism on payroll
  • Interest income which has been subjected to withholding tax at source
  • Half of dividend income received by a resident taxpayer from a resident
  • corporation
  • Income derived by authors, sculptors, painters and composers, etc. and their heirs from copyrights and patent rights
  • Pensions and other social security compensations received up to certain levels,
  • Reimbursement (made by the employer) of travelling expenses incurred by employees for business purposes
  • Salaries paid in foreign currency by the representative/liaison offices of foreign companies
  • Retirement and termination indemnity payments ( maximum 2.805,04 TL for the first half of 2012)
  • Capital gains from the disposal of Turkish corporation shares held for more than two years
  • Capital gains from the disposal of real estates retained by individuals for more than five years.

 Deductions and Allowances

Turkish income tax law provides various deductions and allowances for each category of income. Some important deductions and allowances are explained below:

  • Business expense deductions set out for companies are also applicable to individuals, to the extent that they relate to an individual’s business income
  • Compulsory pension contributions and social security premiums,

The following benefits are not taxable from the employee standpoint:

  • Insurance premiums paid for the taxpayer and his family for death, sickness, disability, birth and education are deductible from the taxable salary.
  • If meals are provided at the business premises, total payment made by the employer is tax exempted. Otherwise, only certain amount is exempted.
  • Transportation provided by the employer.
  • Accommodation provided by the employer, to the employees working inmining, factory and those whom the employee should provide accommodatio in accordance with the special legislation.
  • Children allowance up to the amount received by a government employee, for maximum two children.
  • Indemnity and assistance payments for reasons of death, disability, illness and unemployment.
  • Assistance paid to employees because of marriage and birth, limited to two months’ salary.

Income Tax Rates

Income tax rates applicable for year 2012 are as follows:

  • Up to 10.000 15%
  • 10.001-25.000 20%
  • 25.001-58.000 27%
  • 58.001 and upwards 35%

Tax Returns, Filing, Payments

Tax returns must be filed by 25th March in the following year. Income tax is payable in two equal installments in March and July.

Source: Turkish Revenue Administration

Income tax is unitary in nature. The source of income is defined in 7 categories: Business profits, agricultural profits, employment income, professional income, rental income, interest & dividends, and other income.

 There are two main types of tax statutes: resident taxpayers, and non-resident taxpayers. Residents are taxed on their worldwide income, whereas, nonresidents are taxed only on their Turkish source income.

 Turkish citizens, who work abroad, even if employed by companies with headquarters situated in Turkey or by the Turkish Government, are not subject to Turkish taxation in respect of income obtained and taxed outside Turkey.

 A foreigner who spends less than a continuous period of six months in Turkey during a calendar year and whose centre of vital interest is not concentrated in Turkey or who, although stays in Turkey for more than six months but has come to Turkey for a specific and temporary assignment (e.g. businessman, expert, pres or radio correspondent), is regarded as non-resident and is taxed accordingly.

 Taxable Income

Gross Income

 Taxable gross income includes amounts received from the following sources:

  • Income from commercial activities
  • Income from agriculture
  • Income from professional services
  • Income from employment services (wages and salaries)
  • Income from capital investments (interest and dividends)
  • Income from immovable assets and rights (rental income)
  • Other income and earnings (capital gains, etc.)

 Exclusions and Exemptions

Certain amounts received by individuals need not to be reported for tax purposes. The followings are specifically exempt.

  • Annual rental income up to 3.000 TL
  • Employment income wholly consisting of salaries derived from one resident employer, provided that all payments are taxed by withholding mechanism on payroll
  • Interest income which has been subjected to withholding tax at source
  • Half of dividend income received by a resident taxpayer from a resident
  • corporation
  • Income derived by authors, sculptors, painters and composers, etc. and their heirs from copyrights and patent rights
  • Pensions and other social security compensations received up to certain levels,
  • Reimbursement (made by the employer) of travelling expenses incurred by employees for business purposes
  • Salaries paid in foreign currency by the representative/liaison offices of foreign companies
  • Retirement and termination indemnity payments ( maximum 2.805,04 TL for the first half of 2012)
  • Capital gains from the disposal of Turkish corporation shares held for more than two years
  • Capital gains from the disposal of real estates retained by individuals for more than five years.

 Deductions and Allowances

 Turkish income tax law provides various deductions and allowances for each category of income. Some important deductions and allowances are explained below:

  • Business expense deductions set out for companies are also applicable to individuals, to the extent that they relate to an individual’s business income
  • Compulsory pension contributions and social security premiums,

The following benefits are not taxable from the employee standpoint:

  • Insurance premiums paid for the taxpayer and his family for death, sickness, disability, birth and education are deductible from the taxable salary.
  • If meals are provided at the business premises, total payment made by the employer is tax exempted. Otherwise, only certain amount is exempted.
  • Transportation provided by the employer.
  • Accommodation provided by the employer, to the employees working inmining, factory and those whom the employee should provide accommodatio in accordance with the special legislation.
  • Children allowance up to the amount received by a government employee, for maximum two children.
  • Indemnity and assistance payments for reasons of death, disability, illness and unemployment.
  • Assistance paid to employees because of marriage and birth, limited to two months’ salary.

Income Tax Rates

Income tax rates applicable for year 2012 are as follows:

  • Up to 10.000 15%
  • 10.001-25.000 20%
  • 25.001-58.000 27%
  • 58.001 and upwards 35%

Tax Returns, Filing, Payments

Tax returns must be filed by 25th March in the following year. Income tax is payable in two equal installments in March and July.

Source: Turkish Revenue Administration

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