Payroll Basics in Turkey

I- Gross Salary:

Gross Salary refers to amount of salary which is earned by employees according to Turkish Labor Law

Gross Salary = Net Salary + Total Deductions (Social Security Premium Employee's Share (including Unemployemnt Insurance) + Income Tax + Stamp Tax)

 

II- Net Salary:

It is the amount of salary actually received by the employees.

Net Salary = Gross Salary – Total Deductions

 

III- Total Cost of Employee to Employer:

In addition to the gross salary, employer must pay the employer's share of social security premium.

• Total Cost of Employee to Employer = Gross Salary + Social Security Premium Employer's Allocation (including Unemployemnt Insurance)

 

IV-Social Security Premium:

Currently total social security premium is between 36.5% to %42 of gross salary. 15% of total is deducted from the gross salary as employee's allocation and between 21.5% and 27% of gross salary is calculated additionally as the employer's allocation. 

 

Insurance Branches	Employee's Allocation (%)	Employer's Allocation (%)	Total Allocation (%)
Short Term Insurance Branch Premium	-	1 to 6,5	1 to 6,5
Invalidity, Old Age and Death Insurance Premium	9	11	20
General Health Insurance	5	7,5	12,5
Unemployment Insurance	1	2	3
Total	15	21,5 to 27	36,5 to 42

 

SOCIAL SECURITY BASE AND CEILING	MONTHLY (TL)	DAILY (TL)
BASE (BETWEEN 01.01.2013 - 30.06.2013)	978,60	32,62
BASE (BETWEEN 01.01.2013 - 30.06.2013)	6360,90	212,03
CEILING (BETWEEN 01.07.2013 – 31.12.2013)	1021,50	34,05
CEILING (BETWEEN 01.07.2013 – 31.12.2013)	6.639,90	221,33

 

V- Income Tax:

Employee's Wage Income is subject to income tax and employer is responsible to deduct, and pay to tax office on behalf of employee.

• Income Tax Base (Taxable Income) = Gross Salary - Social Security Premium (Employee's Share)

• Income Tax = Taxable income * Income Tax Rate (%)

 

Income Tax (Cumulative) (Wage Income)	Rates
Up to 10.700 TL	%15
Between 10.700 and 26.000 TL (For the 10.700 TL of the total amount, income tax is 1.605 TL) In excess	%20
Between 26.000 and 94.000 TL (For the 26,000 TL of the total amount, income tax is 4,665 TL) In excess	%27
Over 94.000 TL (For the 94,000 TL of the total amount, income tax is 23,025 TL) In excess	%35

         

 

 

 

 

 

 

 

VI- Stamp Tax:

Stamp tax is based on the gross salary. The rate of tax is 0.00759

• Stamp Tax = Gross Salary * Stamp Tax Rate

 

VII- Minimum Living Allowance (MLA)

Effective from January 1, 2008, a tax-free minimum living allowance is available for wage earners. Income tax payable is calculated by deducting MLA from the income tax. Calculation is made on the basis of minimum wage regardless of the salary of employee. In calculation of the minimum living allowance, the marital status and the family composition of the employee is taken into account. Calculation: 50% for the taxpayer, 10% for the spouse provided who is unemployed, 7.5% each for the first two dependent children, and 5% each for the following dependant children.

  Calculation on the basis of Minimum Wage

Minimum Living Allowance	2013
* For the tax payer	73,40 TL
* For the spouse who is unemployed	14,67 TL
* For each first two dependent children	11,01 TL
* For the Third and the following dependant children	7,34 TL

 

•  Income Tax Payable = Income Tax - Minimum living Allowance

 

VIII – Disablement Deduction

The employee who lost working capacity at minimum 80 % is regarded as 1^st degree disabled, minimum 60 % is 2^nd degree disabled, minimum 40 % is 3^rd degree disabled worker. In calculating income tax, the following monthly deductions are applicable to the taxable income of the employees (2013).

• For the 1^st degree 800 TL
• For the 2^nd degree 410 TL
• For the 3^rd degree 190 TL
 

 

MINIMUM WAGE CALCULATION - EMPLOYEES OVER 16 YEARS OLD ( PERIOD BETWEEN 01.01.2013 – 30.06.2013)
 

Gross salary	978,60 TL
Social Security Premium Employee’s allocation (14%)	137 TL
Unemployment insuranceEmployee’s allocation (1%)	9,79 TL
Income tax base	831,81 TL
Income tax (15%)	124,77 TL
Minimum living allowance (Single and no children)	73,40 TL
Income tax payable	51,37 TL
Stamp tax (0,00759)	6,46 TL
Total Deductions (Income tax payable +Stamp Tax + Social Security Premium Employee Allocation +Unemployment Insurance Employee Allocation)	204,62 TL
NET SALARY	773,98 TL

                           



















TOTAL COST OF EMPLOYEE TO EMPLOYER

Gross salary	978,60 TL
Social Security Premium Employer’s allocation (14.5%)*	141,90 TL
Unemployment Insurance (2%)	19,57 TL
TOTAL COST	1.140,07 TL

*"For the private sector employers who employ insurance holders under item (a) of paragraph one of Article 4 of this Law, the amount corresponding to five points of employer share in the premiums of invalidity, old - age and survivors insurances pursuant to item (a) of paragraph one of this Article shall be covered by the Treasury." SOCIAL INSURANCE AND UNIVERSAL HEALTH INSURANCE LAW (law no:5510 - Article 8-ı )