Turkish Labor Law
Related Articles
Turkish Labor Minister promised in a press conference that the net 1.300,00 TL monthly minimum wage, which was determined at the beginning of 2016 will not be slashed due to increasing income tax, and they will take the necessary steps to prevent any decrease, which otherwise would occur because of the shift in the taxable income brackets.
In the application of income tax rates, the cumulative income is taken as a base. Until September 2016 the cumulative amount of minimum wage was in the first bracket, which is 12.600,00 and the rate was 15%. But as of October some part of cumulative minimum wage will be shifted to second bracket and 20% income tax will be applied to that part of the wage, and will lower it up to 1.230,00 TL, meaning about 70,00 TL losses on the monthly minimum wage.
WHAT IS TAXABLE INCOME BRACKET?
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 determined for every year.
Taxable income brackets and the tax rates in 2016 issued in Official Gazette Nr. 29573, dated 25 December 2015 are shown below:
|
GROSS INCOME BRACKETS |
RATES |
|
Up to 12.600 TL |
15% |
|
For the 12.600 TL of 30.000 TL the tax is 1.890 TL, in excess |
20% |
|
For the 30.000 TL of 110,000 TL 5,370 TL, in excess |
27% |
|
For the 110,000 TL of income over 110,000 TL the tax is 26,970 TL, in excess |
35% |
HOW CAN IT BE APPLIED
The simplest way of keeping the minimum wage stable is to increase the upper limit of first income tax bracket, however all other wages will be affected positively in this case, which may mean considerable lost of tax for the Government.
Although it is not clear yet, the loss on the minimum wage will be covered by Government itself according to news in the media. Most probably, an additional “Minimum Living Allowance” will be provided for minimum wage earners to compensate the decrease caused by the increase in income tax. It is also suggested that employees with wages 1.700-1.750 TL will benefit from the same arrangement and will not suffer any lose due to shift in tax bracket.
