What is the base for income tax withholding?
What is the base for income tax withholding? Is it calculated as (gross salary - social contributions - unemployment insurance) * tax rate?
What is the base for income tax withholding? Is it calculated as (gross salary - social contributions - unemployment insurance) * tax rate?
In Turkey, the taxable base for income tax (the amount on which the withholding tax rate is applied) is generally calculated by subtracting the employee’s statutory social security contributions and unemployment insurance contributions from the gross salary. In a simplified form:
Tax Base = Gross Salary – (Employee’s Social Security Contributions) – (Employee’s Unemployment Insurance Contributions)
Once you have determined this tax base, you apply the progressive income tax rates (not a single rate) to calculate the actual tax withholding. The portion of income up to the annual minimum wage limit is exempt from both income tax and stamp tax, and any amount above that threshold will be taxed according to the progressive brackets in effect.
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About the author
- Evren Özmen is an Istanbul-based CPA / SMMM specializing in tax and accounting for remote workers, freelancers and professionals earning income from foreign clients. His practice has supported more than 1,000 remote-working taxpayers. Core topics include employee versus contractor classification, foreign-client invoicing, VAT exemption for exported services, service export deductions, sole proprietorship and limited company compliance. General information only; case-specific review is required before applying any tax position.
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