In Turkey, employers are responsible for withholding income tax from employees’ salaries and remitting it to the tax authorities.
Individuals are considered tax residents if they have a legal residence there or stay in the country for more than six continuous months within a calendar year. Residents are taxed on their worldwide income, while non-residents (limited taxpayers) are taxed only on income sourced in Turkey.
However, those staying longer than six months solely for temporary or specific assignments are still treated as non-residents for tax purposes.
Personal income tax: The individual income tax rates are structured progressively, ranging from 15% to 40%. The tax brackets differ slightly between employment and non-employment income.
Employment income tax brackets:
- Up to TRY 158,000: 15%
- TRY 158,001 – 330,000: 20%
- TRY 330,001 – 1,200,000: 27%
- TRY 1,200,001 – 4,300,000: 35%
- Above TRY 4,300,000: 40%
Non-employment income tax brackets:
- Up to TRY 158,000: 15%
- TRY 158,001 – 330,000: 20%
- TRY 330,001 – 800,000: 27%
- TRY 800,001 – 4,300,000: 35%
- Above TRY 4,300,000: 40%
Withholding and contributions: Here are the standard withholding rates in Turkey:
- Dividends: For domestic dividends: 15%. For foreign dividends: Reportable above a threshold, with potential 50% exemption (if conditions are met) and foreign tax credits available; tax treaties may further reduce or eliminate withholding.
- Interest:
- Domestic interest income: WHT varies by type. Typically, 10% on Turkish bonds, tiered rates for bank deposits (5%–25%), and 15% on repo income for non-residents; exemptions may apply in certain cases.
- Foreign & cross-border interest: Foreign interest must be reported above a threshold, with foreign tax credits available, while tax treaties can reduce or override standard WHT rates.
- Capital gains: 15%
Tax allowances and non-taxable benefits: There are no personal allowances in Turkey.
Deductions and tax reliefs:
- Salaries and wages (legally required deductions, pension payments, insurance premiums, and labour union membership fees);
- Income from independent professional services (rent for office space, utilities and office overhead costs, membership fees for professional associations, travel and lodging expenses related to work, depreciation of fixed assets used for business purposes, and retirement payments and legally mandated indemnities);
- Charitable deductions;
- Education and health expenses;
- Insurance premiums.
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