Starting from 2018, income tax rate that applied to 3rd taxable income bracket will be increased from 27% to 30%.
In a press conference held for introducing Turkey’s “Medium Term Program,” Finance Minister Naci Ağbal announced some tax hikes and revision in income tax tariff to be applied within the next years.
Most significant proposed change from the point of wages and payroll calculation is the extra 3% change on the income tax rate applied to 3rd income section (bracket). In practice, it seems that the amendment will affect the medium and comparatively high wages most.
WHAR ARE TAXABLE INCOME BRACKETS AND TAX RATES?
One of the most important parameter in the calculation of wages is the income brackets and the tax rates applied to them. Withholding tax amount on the wages is calculated by taking into consideration the cumulative income tax base during the year.
2017 income tax tariff is as follows;
Income /TRY Tax Rate
0 – 13.000,00 15%
13.000 – 30.000,00 20%
30.000 – 110.000,00 27%
110.000 + 35%
If the draft passes through the parliament, the tax rate applied to 3rd bracket will be increased to %30 from %27 in 2018; and most probably minimum and maximum limits of income brackets as well will be increased in line with the next years minimum wage hike.
We will soon provide you with our estimation of 2018 payroll parameters.
RAISE IN CORPORATION INCOME TAX
It is also announced by the Minister that “Corporation Income Tax” rate will be increased from 20% to 22% in the finance sector.