In brief
Effective 2022, the net minimum wage has been increased to TRY 4,253.40. Along with this annual readjustment, the Turkish government has also announced that an income tax and stamp duty exemption will also apply to minimum wage, and going forward, there will be no income tax or stamp duty withholding on payroll. This exemption is also extended to higher-than-minimum wage earners, limited to the minimum wage amount.
In detail
Law No. 7349 has come into force following its publication in the Official Gazette on 25 December 2021 and it contains amendments to the income tax law and certain other laws.
By virtue of article 2 of Law No. 7349, minimum wage earners became exempt from income and stamp tax on their earnings through addition of the following paragraph to the article 23 of Income Tax Law No. 193.
“(...) In addition, this exemption will apply for the individuals with salaries over minimum wage up to certain limits. Below are the regulations made on this matter:
- The portion of the salary corresponding to the amount remaining after deducting the employee social security and unemployment insurance contribution from the monthly gross minimum wage will be exempted from income tax.
- However, in the taxation of the salary exceeding the exemption amount described above, the income tax brackets to be calculated are determined by considering the full salary amount (i.e. amounts within the scope of the exemption + gross minimum wage amount exempted from taxation.)
- The tax amount to be paid is calculated by deducting the part corresponding to the exemption amount from the tax calculated over full salary.
- The tax that will not be collected due to the exemption cannot exceed the tax that should be calculated over the monthly minimum salary in the relevant month.
- For those who receive wages from more than one employer, this exemption is applied only to the highest one.”
Stamp tax is also abolished on minimum wage, as per an additional phrase added to the paragraph 34 of the of the table numbered (2) of the Stamp Tax Law No. 488 through article 4 of Law No. 7349.
Therefore, in the taxation of the wage income exceeding minimum wage, part of the wage income corresponding to the minimum wage will not be subject to the stamp tax. Then again, stamp tax exemption will be applied to the wage income exceeding minimum wage.
The regulations entered into force on the date of publication; to be applied to wage payments made as of 01.01.2022.
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