Does the Worker Have to Carry the Cumulative Income Tax Basis?

Let’s first define the Cumulative Income Tax Basis and how it works in Turkey.

Cumulative Income Tax Basis, or abbreviated as KGVM, refers to the total of income tax bases in a calendar year, used to determine the income tax rate. In order to decide from which rate the income tax will be collected, brackets of the cumulative income tax basis are included in the income tax tariff. As it concerns the calendar year, it is reset in January.

Should KGVM Be Carried?

With the Income Tax General Communiqué numbered 311, published in the Official Gazette on May 27, 2020, a change in regulation was introduced regarding the resetting of income tax basis, for those changing jobs to work for new employers during the year.

Until this communiqué, there was no cumulative income tax transfer, except for workplace changes, transfers and assignments. With the new arrangement, the employee has the right to choose for moving his KGVM to his new workplace.

In case the employee requests for the KGVM to be carried to the new employer and wants to be taxed accordingly, the employer is required to make an income tax calculation over the new income tax basis, taking into account the relevant tax bracket.

How To Calculate Income Tax For Different Workplaces?

The income tax basis for the wages earned from different employers and the income taxes calculated from the relevant tax brackets are taken into account separately.

In the Income Tax General Communiqué No. 160, which regulates income tax related to employees working for multiple employers, it is stated: “accordingly, if a service employee receives wages from more than one employer, the wages paid by each employer are taxed separately. Therefore, the tax tariff is applied separately for the wages paid by each employer, regardless of the amount of the wages. However, if the total gross amount of the wages in question exceeds the limit stated in Article 86 of the Income Tax Law, these wages must be declared with an annual tax return declaration. ”

As clearly stated in the communiqué, employers are NOT responsible for the income tax basis and deducted income tax on wages of their employees receiving pay from other employers. 

The only exception here is: if the employee is transferred or assigned to another workplace related to the same employer, it is the employer’s responsibility to calculate the income tax on the relevant tax bracket by combining KGVM and the new income tax basis.

Is There an Obligation to Submit Income Tax Return?

Another result of KGVM is the obligation to submit an income tax return.

Employees who earn wage income from more than one employer or change employers are taxed by considering the KGVM formed at the end of a calendar year, and in case of certain conditions, they are obliged to submit an Annual Income Tax Declaration. Thus, it will be ensured that income taxes paid through withholding from the income tax calculated over the declared basis will be deducted.

The fact that the employer is in a position to change and wants to continue KGVM in the new workplace does not eliminate the obligation of the employees to submit declarations.

It is the responsibility of the employees to submit a declaration. By March of the following year, if they fail to make a declaration, they will have to pay the tax itself plus the corresponding tax loss penalty.