Personal Income Tax in Turkey

Personal income tax (PIT) is governed by the Personal Income Tax Law (Law No. 193). Personal income tax is levied on the annual net income of individuals derived from different sources which are exhaustively listed in the Law.

The sources of income are;

a)     Business profits

b)     Agricultural income

c)     Wages and salaries (employment income)

d)     Income from independent professional services

e)     Income from immovable property (rental income)

f)      Income from capital investment

g)     Other income and earnings

Individuals who are deemed to be tax resident in Turkey shall be taxed in Turkey on their worldwide income (unlimited tax liability). An individual is deemed to be tax resident in Turkey if one of the following conditions is met.

i-                If an individual’s domicile is in Turkey according to the Civil Code of Turkey or,

ii-              If an individual resides more than six months in Turkey within a calendar year.

However, foreigners who stay in Turkey for six months or more by the reason of a specific job or business or particular purposes which are specified in the PIT Law are not treated as tax resident. Therefore, unlimited tax liability is not applicable for them.

Non-resident individuals are subject to tax only on their income derived in Turkey (limited tax liability).

For the purposes of PIT, partnerships are fiscally transparent entities, meaning that business profits of partnerships are subject to PIT at the partner level.

Personal income tax is a progressive tax whose rates vary between 15% and 35%. Income from all sources mentioned above are aggregated and subject to tax on a total basis. However, it should be noted that as can be seen below, tax brackets for employment income and other sources of income are different.

Personal income tax rates applicable for 2017 income are as follows:

PIT return has to be filed until 25^th of March of the following year and the tax must be paid in March and July in two equal instalments.