Turkish Labor Law
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Providing employees with gold as a social aid is a controversial issue in practice as regard to accounting treatment of it (i.e. tax and social security liability).
Many companies treat it as a cost item and directly record into expenses. In fact the gold aid should be treated as a direct benefit provided for employees and be included in payroll. By reason of the fact that the gold has the quality of being directly convertible to cash it is questionable to regard it as benefits-in-kind.
In-kind-benefits, by definition, are the aids and allowances employees benefit directly. They may have a value in cash, but are not directly convertible to cash. For this reason we cannot asses the gold aid, which is directly convertible to money/cash/many currencies, in the same context with the above said in-kind-benefits.
How to Be Calculated In Payroll
Total amount of gold aid must be converted into money in payroll calculation by taking the Central Bank’s current rate as a basis and be entered into a separate column in the payroll.
Tax Liability of Gold Aid
Total amount must be deemed as salary and be included in the relevant months’ income tax base.
And also it is liable to stamp duty in the total earnings, like all other pay items are.
SSI (SGK) Premium Liability
In practice, it is witnessed that some companies consider the gold aid as an in-kind-benefit and do not include it in the earnings subject to premium. Our opinion on that issue, in consideration of the Law No. 5510 Social Security and General Health Insurance, Article 80/b-c, it should be assessed within the scope of earning subject to premium.
Although no explicit SSI letter of opinion or a Supreme Court Decision covering this matter is exist, officers of SSI authorized with audit may well be imposing administrative fines in case of gold aid is not included in the earnings subject to premium.
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As you see below, benefits in kind items that are deemed as exceptions in concern with premium liability, specified in Article 80/b, and gold aid is not included in this sub clause.
And sub clause (c) of above mentioned article clearly stipulates that “excluding the exceptions in sub clause (b), under whatsoever name, all payments and cash payments made to substitute aids in kind shall be included in the earning subject to premium.”
Social Security and General Health Insurance Law No. 5510;
“Article 80/b; benefits in kind and funeral, birth and marriage benefits, duty travel allowances, mobile duty compensation, severance pay, dismissal pay or collective payment in the form of severance pay, estimated cost, pay in lieu of notice or cash compensation, and food, child and family increments of which amount will be determined the Institution in years, private health insurance premiums and personal retirement contribution fees, not exceeding 30% of the monthly total minimum wage, paid by the employers to private health insurances and personal retirement system for insurance holders shall not be included in the earnings subject to premium”.
“Article 80/c; excluding the exceptions in item (b), under whatsoever name, all payments and cash payments made to substitute aids in kind shall be included in the earning subject to premium. Exemptions and exceptions regarding not being subject to premium in other laws shall not be taken into consideration in the execution of this Law.”
Summary
As the gold is so directly convertible to money/cash (even to many currencies in today’s practice) it should not be considered as a value in kind. In Datassist opinion the gold aid provided for employees is not an in-kin-benefit and must be included in payrolls as part of the main salary and the total amount of it (calculated on the basis of Central Bank’s current rate) is liable to income tax, stamp tax and social security premium.
