Almost all of the payroll parameters are derived from minimum wage which is determined by "Minimum Wage Fixing Board" (Labor Law 4857, article 39) every two years. Traditionally, wage rise is applied differently for the first and second half of the year, however 2016 is an exception and net minimum wage has increased %30, covering all year long.
For the time being it is not clear whether the 2017 minimum wage will be determined differently for the first and second half of the year, but we can make an average estimation covering all the year, and that will give us quite a good idea about what will be the net minimum wage.
Our average estimation of monthly net minimum wage is 1.398,14 TL (Gross 1.770,00 TL), and the calculation of net minimum wage is shown in the table below.
CALCULATION OF NET MINIMUM WAGE/GROSS TO NET TL
MONTHLY MINIMUM GROSS WAGE 1.770,00
DAILY MINIMUM WAGE 59,00
SSI EMPLOYEE CONTRIBUTION (%14) 247,80
UNEMPLOYMENT PREMIUM - EMPLOYEE ( % 1 ) 17,70
INCOME TAX BASE 1.504,50
AMOUNT OF INCOME TAX (%15) 225,68
STAMP TAX (%07,59) 13,43
TOTAL EMPLOYEE DEDUCTION 504,61
NET MINIMUM WAGE (Without Minimum Living Allowance) 1.265,39
MINIMUM LIVING ALLOWANCE (SINGLE) 132,75
NET MINIMUM WAGE (Minimum Living Allowance Included) 1.398,14
MINIMUM LIVING ALLOWANCE ESTIMATION
Part of the wage that constitutes the amount of minimum subsistence level is not subject to income tax for real persons in Turkey. Minimum Living Allowance (MLA) is calculated on the basis of minimum wage regardless of the total earning, and in accordance with the marital status and the number of the children of the employee.
Marital Status Monthly MLA Amount
Single + 0 kid 132,75
Single/Spouse working + 0 kid 132,75
Single/Spouse working+ 1 kid 152,66
Single/Spouse working+ 2 kids 172,58
Single/Spouse working + 3 kids 199,13
Single/Spouse working + 4 kids 212,40
Single/Spouse working + 5 kids 225,68
Married + Non working Spouse + 0 kid 159,30
Married + Non working Spouse + 1 kid 177,19
Married + Non working Spouse + 2 kids 199,13
Married + Non working Spouse + 3 kids * 225,68
* MLA cannot be over the income tax amount to be paid which is 225,68 TL for monthly gross minimum wage of 1.770,00 TL.
MAXIMUM WAGE SUBJECT TO PREMIUM
The wage hike will also affect the earning of maximum wage subject to premium.
Monthly cap of earning subjected to premium are used to calculated as 6,5 times of monthly minimum wage, but the rate has been increased to 7,5 for 2017.
In line with our estimation, cap of earnings subject to premium will be 1.770.00 *7,5 = 13.275,00 TL in 2017.
2016 cap of earnings subject to premium was 10.705,50 TL. Total premium to be paid by employee was 1.605,83 TL for the wages 10.705,50 TL and over (even for the 13.275,00 TL and over).
But in 2017, employee will be paying 1.991,25 TL premiums for the wages 13.275,00 TL and over.
So there will be a rise of 385,42 TL in employee's contribution for the wages 13.275,00 TL and over, i.e. employee will be earning 385,42 TL less for the stated wages.