Payroll Parameters in Turkey 2021

TURKISH PAYROLL GUIDE

The following fixed parameters of 2021 represent the basic payroll accounting in Turkey. There might be other benefits and allowances applicable to the employees. The below calculations exclude daily food, family and children allowances and other exemptions. Please consult your accountant for detailed information. The following information is for informational purposes only

PAYROLL PARAMETERS FOR 2021

I- GROSS SALARY:

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

  • Gross Salary = Net Salary + Total Deductions (Social Security Premium Employee’s Share (including Unemployment 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- EMPLOYER’S COST:

In addition to the gross salary, employer must pay the employee’s share of social security and unemployment insurance premiums.

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

IV-SOCIAL SECURITY PREMIUM AND UNEMPLOYMENT INSURANCE:

Total social security premium is the 37.5% (including unemployment insurance) of Earning Subjected to Premium Insurance. 15% of the total is deducted from the gross salary as employee’s allocation and 22.5% of the Earning Subjected to Premium Insurance is calculated additionally as the employer’s allocation. (Effective from 01/09/2013 Short term insurance branches premium rate is determined as 2% of the earnings subjected to premium insurance regardless of the gravity of danger of the work.)

Insurance Branches Employee’s Allocation (%) Employer’s Allocation (%) Total Allocation (%)
Short Term Insurance Branch Premium 2 2
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 22,5 37,5

 

SOCIAL SECURITY MINIMUM AND MAXIMUM RATES

MONTHLY (TL)

MINIMUM (01 Jan 2021 – 31 Dec 2021)

3.577,50

MAXIMUM (01 Jan 2021 – 31 Dec 2021) – MINIMUM (x) 7,5

26.831,40

V- INCOME TAX:

Employee’s Wage Income is subjected to income tax and employer is responsible to deduct and pay the tax office on behalf of the 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)(2021)

Rates

Up to 24 000 TL

%15

Between 24 000 and 53 000 TL (For the 24 000 TL of the total amount, income tax is 3600 TL) In excess

%20

Between 53 000 and 130 000 TL (For the 53 000 TL of the total amount, income tax is 9400 TL) In excess

%27

Between 130 000 and 650 000 TL (For the 650 000 TL of the total amount, income tax is 46.390 TL) In excess

%35

VI- STAMP TAX: (2021)

Stamp tax is based on gross salary. The rate of tax is 0,00759

  • Stamp Tax = Gross Salary * Stamp Tax Rate

VII- MINIMUM LIVING ALLOWANCE (MLA)

Effective from January 1st 2008, a tax-free minimum living allowance is available for wage earners. Income tax payment is calculated by deducting the MLA from the income tax.

The calculation is based on the minimum wage regardless the salary of the employee. In calculation of the minimum living allowance, the marital status and the family composition of the employee are taken into account.

Calculation: 50% for the taxpayer, 10% for the spouse provided that is unemployed, 7.5% for each of the first two dependent children, 10% for the third dependent child and 5% for each of the following dependent children.

Please see related post on Calculation of Minimum Living Allowance & MLA rates

  • Income Tax Payable = Income Tax – Minimum living Allowance

VIII – DISABILITY DEDUCTION

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. While calculating the income tax, the following monthly deductions are applicable to the taxable income of the employees (2021).

  • For the 1st degree disabled 1500 TL
  • For the 2nd degree disabled 860 TL
  • For the 3rd degree disabled 380 TL

MINIMUM WAGE CALCULATION – SINGLE EMPLOYEE WITH NO CHILDREN*

( PERIOD BETWEEN 01.01.2021 – 31.12.2021)

GROSS SALARY 3.577,50 TL
Social Security Premium Employee’s allocation (14%) 500,85 TL
Unemployment insurance Employee’s allocation (1%) 35,78  TL
Income tax base 3.040,88 TL
Income tax (15%) 187,82 TL
Minimum living allowance
(Single and no children)
268,31 TL
Stamp tax (0,00759) 27,15 TL
Total Deductions (Income tax payable +Stamp Tax + Social Security Premium Employee Allocation +Unemployment Insurance Employee Allocation) 751,60 TL
NET SALARY 2.825,90 TL


TOTAL COST OF EMPLOYEE TO EMPLOYER

 

TOTAL COST OF EMPLOYEE TO EMPLOYER  
Gross salary 3.577,50 TL
Social Security Premium Employer’s allocation (15.5%)**

554,51 TL

Unemployment Insurance (2%) 71,55 TL
TOTAL COST 4.203,56 TL

* Calculation is applicable to single employees with no children. Different Minimum Living Allowance amounts should be considered for other calculations.

**”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 )

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