Insights

Annual income tax returns for FY 2020 must be submitted between the period of March 1-31, and the first installment payments must be made by the end of working hours on Wednesday, March 31.

Wage income received in 2020 must also be declared within the specified period. However, through the Law No. 7194, significant amendments have been introduced regarding the declaration of wage incomes. In accordance with the recent amendments, essential issues about the declaration of wage income may be summarized as follows:

Payments Included in the Scope of Wage 

According to Article 61 of the Income Tax Law No. 193 (“ITL”), wage is defined as the benefits represented by money and provided as in kind and money in return of services performed by employees who are subject to the employer and dependent to a certain workplace. Paying the wage under names of allowance, compensation, attendance fee, premium, bonus does not change the nature of the income.

Determination of Tax Base

Tax regarding to wage is levied on the real and net amount of income. The net amount of the wage is the amount that remains after certain deductions are made of the sum of the benefits provided by the employer as in kind and cash (i.e. the gross amount of the wage).

These deductions are generally as follows: Pension contributions and social security premium, social security support premium, unemployment insurance, life/personal insurance premium, legal deduction made by OYAK and other public institutions, union dues (unions of employees and civil servants), disability deduction.

Wage Incomes to be Declared Through Annual Declaration

In the following cases, the taxpayers are required to declare their wage income through an annual income tax return:

• The total wage income of taxpayers, who receive the wage income from only one employer, exceeding TRY 600,000
• The total wage income of taxpayers, who receive the wage income from more than one employer, exceeding TRY 600,000 including the wage income from the first employer
• The total wage income of the taxpayer received from the employer/employers after the first employer of exceeding TRY 49,000
• Regardless of the amount, receiving wage income which does not subject to withholding

In the event of receiving wages from more than one employer, the wage received from the first employer can be freely determined by the person who receives the wage income.

Due Date to Submit the Declaration and Tax Payment

The wage income received in 2020 subject to annual declaration is required to be declared with the annual income tax return between the dates of 1-31 March, 2021. Furthermore, the calculated income tax must be paid in two equal installments in March and July 2021.

The annual income tax declaration must be submitted to the authorized tax offices according to the residence addresses of the persons.