Payroll is the process by which an employer pays his/her employees. It consists of the list of workers, calculation of the employee’s pay and work hours, distributing the salary on time, and recording the payroll expense.
This procedure is usually the same in all companies and countries, with some slight differences.
Payroll parameters for 2023 in Turkey are:
- Gross salary. It is the amount of money earned by employees under the Labour Law of the Turkish Republic. Gross salary includes net salary, total deductions (Social Security Premium of Employee’s share and Unemployment Insurance), income tax, and stamp tax.
- Net salary. It is the money received by the employees as salary. Net salary consists of gross salary and total deductions.
- Employer’s cost. Employers must pay their employees a share of social security and Unemployment Insurance Premiums, which are called employer’s costs. The total cost of the employee to the employer includes Gross Salary, Social Security Premium Employer’s Allocation, and unemployment insurance
- Social Security Premium and Unemployment Insurance- It is 37.5%, including unemployment insurance of earnings subject to premium insurance. 15% is deducted from the gross salary as the employee’s allocation and 22.5% of the earnings as the employer’s allocation.
- Income Tax – It is wage income and the employer is responsible to deduct and pay the tax office on behalf of the employee. Income Tax Base or Taxable Income is Gross Salary – Social Security Premium (Employer’s Share).
Income Tax Rates (2022):
Up to 71.337 TL %15
Between 71.337 and 156.061 TL In excess % of 20
Between 156.061 and 378.981 TL In excess %27
Between 378.981 and 1.961.784 TL In excess %35
- Stamp Tax is based on gross salary and its rate is %122.93
- Minimum Living Allowance (MLA) – It is tax-free and income tax payment is calculated by deducting the MLA from the income tax. The calculation is based on the minimum wage regardless of the salary, but taking into account the marital status, and, the family composition of the employee. 50% for the Taxpayer, 10% for the unemployed spouse, 7.5% for the first two dependent children, and 5% for each of the following dependent children.
Income Tax Payable is Income Tax – Minimum Living Allowance
- Disability Deduction. It is the deduction when the employee loses working capacity at a minimum of 80% and is considered 1st-degree disabled (1500TL), minimum 60% 2nd-degree disabled 860TL), and minimum 40% 3rd-degree disabled worker (380TL).
The minimum wage calculation for the period between January 1, 2023 –December 31, 2023, is as follows for a single employee with no children is:
GROSS SALARY 10.008 TL
Social Security Premium Employee’s allocation (14%) 1.401,12 TL
Unemployment insurance Employee’s allocation (1%) 100,08 TL
Income tax base 10.008 TL
Income tax (15%) 1.501,2 TL
Total Deductions (Social Security Premium Employee Allocation +Unemployment Insurance Employee Allocation) 3.753 TL
NET SALARY 8.506,80 TL
TOTAL COST OF EMPLOYEE TO EMPLOYER
TOTAL COST OF EMPLOYEE TO EMPLOYER Gross salary 10.008 TL Social Security Premium Employer’s allocation (15%)** 1.501,2 TL TL Unemployment Insurance (2%) 200,16 TL TOTAL COST 11.709,36 TL
This is applicable to single employees, but for other employees, the calculations differ.
https://expatguideturkey.com/payroll-parameters-in-turkey/
