Definition of wage and its taxation under Turkish law-l

 Following information is for informational purposes only. Please consult to your accountant for detailed information.


Definition of wage exists in a variety of relevant Turkish laws and regulations. Article 32 of Turkish labor law defines wage as;

“Wage is, in general terms, the amount of money to be paid in cash by an employer or by a third party to a person in return for work performed by him.”

More detailed definition of wage is given under the article 61 of the law no: 193 on Income Tax Law. Accordingly wage is defined as;

“Wage is a benefit provided by cash in kind and cash, represented by cash, in return of services performed by employees registered and subject to an employer. It does not change the true nature of wage by paying it under the names of indemnity, allowance, cash compensation (Financial Liability Indemnity), allocation, increment, advance, remuneration, attendance fee, premium, bonus, in return of an expense or determined by a particular percent of revenue provided not to have the attribute of a partnership. ”


In accordance with article 32 of Turkish Labor Law, there are three components of wage; (1) Wage should be paid in return for performed work, (2) wage should be paid by an employer or by a third party, (3) wage should be paid in cash.

For the purpose of law no: 193 on Income Tax, on article 61, components of wage are defined as; (1) being subject to an employer, (2) work in association with a specific place of business (3) being paid in return of services performed


All payments, which are treated as wage under Income tax law, are subject to the income tax. As per article 61 of Turkish income tax law (law no. 193) in addition to wage, all other associated income such as allowances, bonuses, anniversary gifts, gratuities, commissions, premiums, compensations and other wage and salary related remunerations including benefits in kind at market value are also subject to the income tax.

Taxable income is determined after the deduction of some allowed expenditures from the gross amount. These deductions explained under article 63 and 89(1) of Law no: 193 on Income Tax as;

(1) Legal deduction made according to various laws or regulations,

(2) Premiums and contributions made to the social security institution.

(3) 50 % of life insurance premiums made by employees on their own behalf or on behalf of their spouse and/or children to private insurance and retirement companies which are resident in Turkey and whose headquarters, registered head offices or business centers are in Turkey, Insurance premiums made by the employees on their own behalf or on behalf of their spouse and/or children for death, accident, disease, disability, unemployment, maternity, birth and education polices provided that total amount premiums deducted shall not exceed %15 of monthly income and yearly amount of minimum wage.

(4) Payments made for labor union membership.

Additionally following benefits are (fully or partially) exempted from income tax;

  • Benefits, provided by the employer in the form of free meal within business place or its annexes are excluded from the scope taxable income. In the case of not providing free meal within business place or its annexes , obtaining meal service from the outside providers such as by using meal tickets, income tax exemption will be applicable only up to daily settled limit by law (In accordance with Income Tax General Communiqué with Serial no: 285, – 12 TL – in 2014) . In the latter case, employer required to pay the price for the meals directly to the meal service provider, or intermediary. Any payment made directly to the employees under the name of meal or food allowance is subject to income tax. (Article 23 (8) of Income tax law)
  • Benefits, paid to employees due to birth and marriage, are exempt from income tax. This exemption is limited up to two months’ salary of the employee. In the excess of this limit, remaining amount is subject to income tax. (Article 25(5) of income tax law)
  • Payments made to the employees in the name of ‘child benefits’ are exempt from income tax. This exemption is applicable for maximum two children and limited to the settled amount received by the government employees. (Article 25(4) of income tax law)

“Child benefit” amounts for 2014 are as follows; for the children between 0-6 years old, 38, 50 TL – for the children who are 6 years old and older, 19, 25 TL.

*The list provided above is not exhaustive. There might be other expenses, benefits or payments that are exempt from income tax. Please consult to your accountant for more information.


Effective from January 1, 2008, a tax-free minimum living allowance is available for wage earners. Income tax payable (taxable income) is calculated after deducting MLA from the income tax.

Calculation is made on the basis of minimum wage regardless of the wage 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 dependent children.

For 2014 rates, you may visit 2014 Payroll Parameters page


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

For 2014 rates, you may visit 2014 Payroll Parameters page


  • In accordance with article 3(2) of Corporate Income Tax law numbered 5520[2], Corporations[3] have a limited tax liability for income deriving from Turkey if neither their registered office nor their business center is within Turkey. Full liability taxpayer corporations are subject to corporation tax on their worldwide income.
  • As per article 23(14) of Income tax law, employees working for limited liability corporations whose registered offices and business centers are not located in Turkey are exempt from income tax if; (this usually applies to the liaison offices)
  1. The wage is paid out from the earnings and revenues generated abroad.
  2. The wage is paid out in the form of foreign currency.
  3. Wage is not evaluated in Turkey.[4]

[1] Income tax law (Law no. 193) distinguishes limited tax liability and full tax liability. As a general rule, resident taxpayers are subject to full tax liability for their worldwide income. (art.3) Nonresident taxpayers are taxable on their income generated in Turkey. For the purpose of Income tax law, resident taxpayer refers to those who have legal residence in Turkey and who stay in Turkey more than six consecutive months within a calendar year. (art.4)

[2] Law No. 5520, Official Gazette of 21.06.2006, No. 26205.

[3] Refers to all subjects of Corporate Income Tax law.

[4] The term evaluated refers to the situations which salary payments are used as expenses against profits taxable in Turkey.

Ata Kurumsal

Ata Institutional Consulting is a leading consultancy company in its field, with expert personnel, with 12 years of experience, providing residence permit, work permit, Turkish citizenship consultancy and corporate consultancy services to foreigners. Ata Instiutional Consultancy

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