Evren Özmen
Serbest Muhasebeci Mali Müşavir
Bilirkişi
evrenozmen@ozmconsultancy.com
www.ozmconsultancy.com

Personal Income Tax Returns in Turkey: Your Guide to Frequently Asked Questions

Personal Income Tax Returns in Turkey: Your Guide to Frequently Asked Questions

If you are a foreigner residing in Turkey, it is important to understand the laws and regulations governing personal income tax. While the rules may vary depending on factors such as nationality, domicile, and length of stay, it is crucial to ensure that you file your income tax returns accurately and on time. 

This article will provide a summary and guidance of frequently asked questions and answers regarding personal income tax returns in Turkey.

What is Personal Income Tax in Turkey?

Personal income tax is a tax levied on the income of individuals in Turkey. This includes income from employment, self-employment, and business activities. The tax rate varies depending on the income bracket and ranges from 15% to 40%.

Who is Required to File Personal Income Tax Returns?

All individuals who have income in Turkey are required to file personal income tax returns. This includes foreigners who reside in Turkey for more than 183 days in a calendar year or who have a permanent residence permit in Turkey.

What is the Filing Deadline for Personal Income Tax Returns?

The filing deadline for personal income tax returns in Turkey is March 31st of the following year. For example, if you earned income in Turkey in 2022, you must file your tax return by March 31, 2023.

What are the Consequences of Failing to File Personal Income Tax Returns?

Failing to file personal income tax returns in Turkey can result in penalties and fines. The penalty for late filing is 1% of the tax due per month, up to a maximum of 12% of the tax due. In addition, interest may be charged on the late payment of taxes.

What are the Double Tax Treaty Benefits for Foreigners?

Turkey has double tax treaties with more than 90 countries to prevent double taxation of income earned in both countries. These treaties provide benefits such as reduced tax rates, exemptions, and credits for foreign taxpayers. It is important to consult a tax advisor to determine the benefits available under the relevant treaty.

How Can I Ensure Compliance with Personal Income Tax Regulations in Turkey?

To ensure compliance with personal income tax regulations in Turkey, it is advisable to consult a tax advisor who can provide guidance on tax planning, tax returns, and tax payments. The tax advisor can also assist with interpreting the relevant tax legislation, double tax treaties, and other regulations.

Here are some frequently asked questions on taxation for foreigners in Turkey.

1-Does Turkey have a particular tax system for people who are not Turkish citizens?

There is no special tax regime for expatriates or foreign individuals residing in Turkey. Therefore, foreign nationals living and working in Turkey are subject to the same taxation laws and regulations as Turkish citizens.

2-If I become a tax resident of Turkey, what are the rules that will apply to me in terms of taxation?

If you are seconded from a country that Turkey has a Double Tax Treaty agreement with, your taxation status is determined based on the provisions of this agreement. 

The country where your financial and individual interests are closer to is generally considered the country where you are a tax resident.

3-How long is the period during which taxes are levied in Turkey?

The taxation period in Turkey is from January 1 to December 31. Therefore, all taxes and reports should be submitted to the tax authorities between these dates.

4-If I am considered a tax resident of Turkey, what types of income do I need to declare for tax purposes?

If you are treated as a tax resident of Turkey, you are required to report your worldwide income in Turkey, regardless of where the income is delivered. 

This includes salary, interest, dividends, rental income, and any other type of income earned from a foreign or domestic source.

5-If I am not considered a tax resident of Turkey, what types of income do I need to declare for tax purposes?

In case you are treated as a non-tax resident of Turkey, you only need to report your Turkish source of income in Turkey. 

This includes income earned from Turkish companies, rental income from properties located in Turkey, and any other income earned within the country.

6-Do I need to report only cash benefits in Turkey or also benefit in kind (like rent paid by employer directly to landlord)?

Turkey is a country that has a complex taxation system, which can be confusing for both locals and foreigners alike. One question that is often asked is whether only cash benefits need to be reported, or whether benefit in kind (such as rent paid by an employer directly to a landlord) also needs to be reported. In this article, we will explore this question in detail.

7-What is a benefit in kind?

Before we dive into the specifics of reporting benefits in kind in Turkey, it’s important to understand what exactly a benefit in kind is. 

A benefit in kind is any non-monetary benefit that an employee receives from their employer in addition to their regular salary. Examples of benefits in kind include housing allowances, company cars, and health insurance.

8-Are benefits in kind treated as part of salary in Turkey?

According to Turkish Income Tax Law, benefits in kind are treated as part of an employee’s salary. This means that they are subject to the same taxation rules as regular salary payments. If an employee receives benefits in kind in addition to their regular salary, the total amount is considered to be their taxable income.

9-What if benefits in kind are not processed on Turkish payroll?

If an employee receives benefits in kind that are not processed on Turkish payroll, and therefore no salary withholding taxes are withheld for those components, then the employee is still obliged to report them through their personal income tax return. This means that even if the employer does not withhold taxes on benefits in kind, the employee is still responsible for paying the appropriate taxes.

10-Do I need to report benefits in kind even if I don’t have a work permit in Turkey?

Yes. The filing requirement for personal income tax returns is independent from holding a valid work permit or residence permit. If you receive any income in Turkey, including benefits in kind, you are required to report it through your personal income tax return.

11-How do I report benefits in kind on my personal income tax return?

When filing your personal income tax return, you will need to report all income that you received during the tax year, including any benefits in kind. The specific forms and procedures for filing your personal income tax return will depend on your individual circumstances, so it’s important to seek advice from a qualified tax professional.

12-To which tax office should I be registered?

If you are living in Turkey, you are supposed to be registered with the tax office in the jurisdiction in which you are officially residing. If you do not have an official residence address in Turkey, then you are supposed to be registered with the tax office in the jurisdiction in which your employer is located.

13-When is the Due Date for Filing the Annual Income Tax Return in Turkey?

The due date for filing the annual income tax return in Turkey is the 31st of March of the following year. This means that if you earned income in Turkey during 2022, your tax return is due by March 31, 2023.

14-Is There an Extension System in Turkey?

Unfortunately, there is no extension system available in Turkey. This means that it’s important to file your tax return by the due date to avoid any penalties or late fees.

15-Can the Personal Income Tax Return be Filed Electronically in Turkey?

Yes. As of 2014, electronic personal income tax return can be filed for employment and nonemployment income types. This can make the filing process more efficient and convenient for taxpayers.

16-What is the Procedure to File the Personal Income Tax Return Electronically in Turkey?

To file your personal income tax return electronically in Turkey, you’ll need to obtain a user ID and password from your local tax office. Once you have access to the online tax return system through the internet site of Revenue Administration, you can use your password and user ID for more than one time.

17-Is There a Joint Filing Mechanism in Turkey?

No, taxpayers must file their own personal income tax returns and cannot file jointly with a spouse or partner.

Conclusion:

Navigating the personal income tax regulations in Turkey as a foreigner can be complex and confusing. However, it is important to understand the rules and comply with the regulations to avoid penalties and fines. 

By consulting a tax advisor and ensuring timely and accurate filing of personal income tax returns, you can ensure compliance with the regulations and enjoy the benefits of doing business or residing in Turkey.

01.03.2023

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