Income tax, which is a tax on an individual's total income, is levied at the rate of income earned within 1 year. This is the tax you pay to the government on a portion of your income, calculated on your total income for the year. It is levied at a progressive rate, meaning that the tax rate increases as your income increases.
The amount of income tax that an individual or a company has to pay is usually dependent on the level of their income. The majority of tax systems have a progressive structure, which means that the rate of tax increases as the amount of taxable income increases. However, some countries also have flat tax systems (the same rate regardless of income) and regressive tax systems (lower rates at higher income levels).
The revenue from personal income tax is used by governments to finance, among other things, public services such as education, health care, and infrastructure.
Is There Income Tax in Turkey?
Yes, there is an income tax system in place in Turkey for both individuals and companies. If you are a business owner, you must pay this tax both for yourself and for your employees.
In Turkey, which has a progressive tax system, there are different tax brackets. The tax bracket you are in is determined by your annual income. The amount of tax you have to pay is calculated accordingly.
The types of income that are subject to income tax and must be declared are as follows;
- Income from self-employment,
- The basic wage, additional wages such as tips, gratuities, premiums and bonuses, and wages from percentage management,
- Rental income from properties in Turkey,
- Agricultural income from agricultural activities,
- Rents from movable property,
- Earnings of employees working in real estate capital income, workers in special construction formations, and drivers in special services.
What is the Income Tax Rate in Turkey 2023?
Tax brackets are taken into account when determining payment amounts and filing procedures. Income tax is calculated using the tax brackets determined on the basis of income. These brackets express the percentage to be paid according to the income earned. In other words, the income tax payable varies according to the income earned within a year. The current tax brackets for individual taxpayers in Turkey are as follows:
- 15% for incomes of ₺ 70,000.00 or less.
- 20% for incomes over ₺ 70,000.00 and up to ₺ 150,000.00.
- 27% for incomes over ₺ 150,000.00 and up to ₺ 550,000.00.
- 35% for incomes over ₺ 550,000.00 and up to ₺ 1,900,000.00.
- 40% for incomes over ₺ 1,900,000.00.
The top rate of tax in Turkey is 40%, which applies to those earning over ₺1,900,000.00. The average tax rate for all taxpayers is 21.9%.
Non-residents of Turkey are subject to tax only on their income which is of Turkish origin. The tax rates for non-residents are the same as for residents.
For example, a person who earns 10,000 TL with a monthly Turkish income has an annual income of 120,000 TL. The amount of income tax to be paid per year is 18,000 TL.
How to Pay the Income Tax in Turkey?
You can pay your income tax at tax offices. You can pay your income tax by going to the tax office in the province or district where you live. All you need to do is show your identity card. It is also possible to pay via the Interactive Tax Office.
Once you have registered with an E-Devlet account (for permanent and temporary identity card holders only), you can easily carry out the transaction online by selecting the income tax you are liable to pay.
It is also possible to pay taxes at banks authorized by the Tax Administration. Many banks, both public and private, are authorized. You can easily pay income tax from ATMs, the Internet, or mobile banking applications of these banks. This allows you to complete the tax payment process within minutes, without leaving home and without wasting time.
Who is Liable to Pay Income Tax?
Who is liable to pay income tax is clearly stated in Article 4 of the Income Tax Law. Firstly, it is necessary to reside in Turkey for at least 6 months in order to be a taxpayer. Furthermore, citizens of the Republic of Turkey or those working in public institutions are automatically considered taxpayers.
Anyone living in Turkey with income, as well as individuals and organizations living abroad with income in Turkey, are also liable to pay this tax.
Do Foreigners Pay Income Tax?
Yes, under the Turkish tax system, employee wage income is taxed through a withholding tax system. Under this system, commercial enterprises must withhold income tax from their employee's wages and pay income tax on their behalf.
Again, the income tax of all foreigners working legally in Turkey is generally paid by their employers. In addition, those who regularly engage in commercial or professional activities must declare their income by filing an annual income tax return if it exceeds the exemption and declaration limits set by law.