Articles Tagged ‘Tax, - Turkish Labor Law’

Minimum Wage Support Ends


Government support for minimum wage, which is being applied since 2016, will end after September 2018.

As is known minim wage support started in January 2016 by the government to reduce the burden of employers due to 30% wage hikes at the time. The support continued throughout 2017, and between January 2018 and September.

As per the Omniums bill (colloquially known bag law) No. 7103, issued in Official Gazette No. 30373, dated 27th March 2018, and the Cabinet Decree,2018/11668, issued in the Official Gazette on 20th June 2018; minimum wage support is applied between January and September 2018. However, no support will be provided for minimum wage after September 2018.

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Set-off process from the due debts of employer, regarding the retrospective benefiting from the incentives, will start as of July 2018 without waiting until 1st of 2019.

As we informed you before, the Bag Law No. 7103, issued in Official Gazette No. 30373, dated 27 March 2018, gives the opportunity to benefit from missed incentives retrospectively. We also informed you that calculated amount will be refunded within 3 years starting from 1st January 2019 (for the applications completed until 1st June 2018). Legal interest will be calculated for the refund amount as of above dates.

Now as per the new announcement from SSI, refunding process (by setting off from their current term SSI premium debts) will be started as of July 2017 term for the employers who completed their application until 1st June 2018), and prepared the additional-cancellation declaration.

Tax and SSI Premium Debts to be Restructured

Many of the public receivables, accrued before 31 March 2018, related to taxes and social security premiums, and subsidiary receivables associated with them will be restructured.

After Turkish PM Yıldırım has announced his government's economic package that contains social reforms and restructuring of some public receivables including SSI premiums and tax debts on Monday this week, the “Draft Law on Restructuring Some Receivables,” has been accepted in Plan and Budget commission and expected to get through Parliament well before the elections that will held on June 24, 2018.


The law will be applicable to following receivables provided that they accrued before 31 March 2018;

* All types of taxes and tax penalties,

* Administrative monetary fines

* Insurance premium, group insurance premium, pension deduction and institution's contribution, unemployment insurance premium, social security support premiums and subsidiary receivables associated with principles receivables (penalties, default interests and late,)

* Customs duties,

* Estate tax,

* The motor vehicle tax and their tax penalties, default interests and late fees.


Only the "Domestic PPI" applied amount of principle receivable will be collected, and delay penalty and default interests will be waived.

In the collection of receivables; Monthly Change Ratio of Domestic Producer Price Index (Domestic PPI / Yİ-ÜFE) will be applied to principal amount of;

"Insurance premium, pension deduction, unemployment insurance premium, social security support premium, irredeemable voluntary insurance premium and group insurance premium, general health insurance premium, and SSI related stamp tax, special transaction tax, and contribution to education" receivables accrued before 31 March 2018

However, the delay penalty and default interests (subsidiary receivables) applied to these principle amounts will not be collected, provided that PPI applied amount of principle receivable is paid.

In short, the amount to be collected = principle amount of receivable*PPI.

The same will be applied to social security support premium receivables, accrued on or before 31 March 2018, related to retired persons who continue to work independently.

Debts may be paid bimonthly in 6-9-12-18 equal installments. First installment and advanced payments should be paid until 31 August 2018.


Half of the principle amount of receivables related to unpaid administrative fines imposed for the acts conducted before 31 March 2018 will be deleted. In other words, "Domestic PPI" will be applied only to half of the principal amount of administrative fine.


Similar principles, such as Domestic PPI will be applied to tax receivables. We will inform you in details when the application circulars are issued.



Cash compensation or cash indemnity is a kind of additional payment made to employees dealing with or responsible for cash flow in pay-desk, cashier's office and so on. This payment is intended to compensate the cash deficit that may occur during such employees' transactions.

Paying cash compensation is not obligatory for the employers; however it is very common in practice, as a kind of insurance for above said employees.


It Is a controversial issue whether cash deposits can be deducted from employee's salary or not. In the light of Labor Law and ruling of Supreme Court's rulings this kind of deduction doesn't' seem possible.

Article 62 of Labor Law 4857 reads as follows "no deductions of any kind may be made from an employee’s wages on the grounds that the daily or weekly working hours applicable to any type of work have been reduced by law, or by reason of the fulfillment by the employer of any legal obligation or because of any mandatory obligation imposed on the employer by the provisions of this Act.


As per article 80 of Social Security and General Health Insurance Law No 5510, cash compensation is not subjected to SSI premium contribution.


Cash compensation is considered as wage and subject to income tax.

As per article 61 of Income Tax Law No. 193; “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.


As a rule qualified employee shall be paid a severance pay equal to last 30 days’ gross wages for each full year of employment.

In calculation of the last 30 days’ wage, the wage paid and the some contractual and statutory benefits in kind provided by employer shall be taken into account. Also periodical (annually, quarterly etc.) payments such as bonuses, cash compensation etc. will be added in monthly basis.

Withholding Tax And Monthly Premium Service Document Application Postponed To 1 October 2018

We informed you that “Withholding Tax and Monthly Premium Service Document” application will start as of 1st of July 2018; however the start date is determined as 1st October 2018 by the Finance Ministry’s General Communique issued in Official Journal number 30435, dated 29 May 2018.

As is known, it is stipulated by the Law No. 6728 that “withholding tax returns and SSI e-declarations will be combined in a single form under the name of Withholding Tax and Monthly Premium Service Document and submitted only to the tax offices until the 23rd of the following month.

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