Running payroll in Turkey – JK CONSULTING

Each month, lot of tasks need to be completed by a Payroll Company in Turkey known as an employer. There are tax months.

 

Payroll in Turkey overview

 

Our company can offer some Payroll Solutions software in order to make the pay easier. With our Payroll Solution Software :

  • Salary and wages can be recorded
  • From national insurance and tax deductions can be calculated
  • Employer’s turkish national insurance contribution are calculated
  • Payslips are produced
  • Pay and deductions are reported

Record and report of pay are sufficient if an employee is paid under a certain amount.

 

Turkish Payroll and Taxation

 

Whether the company in Turkey employs foreign nationals or local Turkish employees, there are rules for Payroll in Turkey.

Individual tax, social and health insurance costs, payroll tax, sales and business tax are considered as primary concerns for foreign companies in Turkey.

Your Payroll options in Turkey

Usually foreign companies in Turkey which don’t have any legal structure use the PEO Turkey (know as the professional employer organization).  This company employs and payroll the staff in Turkey.

Foreign companies prefer that a local Payroll Turkey company administer their payroll.

This Payroll Turkey company is responsible for the payment of taxes in the country.

If a foreign company wish not tu use the services of a PEO in Turkey. They need to register their business, hire by themself their human resources staff. With this approach, the cost are high, and the foreign companies need to have a solid knowledge of the employment/payroll laws.

Payroll Turkey companies can deal with all aspects of workers (as taxes…payslips…social security payments etc…)

PEO is paying taxes and wages of the employees each month, then invoices the client company in advance.

The calculation of Payroll Company invoice is :

TCE (Total cost for employer) + Payroll/Management fees.

Then, PEO provides payslips to both employees and clients companies.

 

Turkish corporate tax already westernized

You can look for a Payroll Turkey Company or, your need to know that Turkish corporate has been really westernized. The « modern » Corporate Tax was created by the law of June 3, 1949 and entered into force on January 1, 1950. The law was codified, and 1950 represents by therefore the year of the first Corporate Tax Code, the KVK (Kurumlar Vergisi Kanunu), largely influenced by German taxation. By way of comparison, the Corporate Tax was created in France in 1948 and, in Germany, in 1920. The Turkish government’s deliberate inspiration for the provisions German Corporate Tax Körperschaftssteuer is already a first step towards the westernization and Europeanization of the Turkish tax system.

Regarding tax coding, a dualism highlights the “calculation codes” and the « Status codes ». This tax coding « is global, but the structures of the codes tend to repeat and resemble each other by major region  » : America, Latin, Africa, Eastern Europe. As for Western Europe, it does not constitute alone, a geographically homogeneous codifying area insofar as three intersect large families of codes. Turkish tax codes, inspired by German law and therefore belonging to the family Ibero-Germanic, were initially of type « status code », the content thus being statutory with rights and obligations. With the developments that started in the 1980s and above all, since the adoption of the new Corporate Tax Code in 2006, the Turkish codification is today more of the « calculation code » type, the content of which allows more precise tax calculation.

Such a statement can be made to with regard to the main codes which are the Income Tax Code (GVK), the Code of Corporate Tax (KVK), the Value Added Tax Code (KDVK) and the Code of Turkish Tax Procedure (VUK). The current Turkish Corporate Tax Code establishes, in its article 1, the list of persons falling within the scope of the Corporate Tax:

 capital companies (Sermaye Şirketleri), which include

public limited companies, limited liability companies;

 limited partnerships;

 investment funds;

Étrangères foreign companies of all kinds;

 cooperatives;

 economic administrative establishments (Iktisadi kamu

müesseseleri);

 associations;

 unions;

 foundations

Under Article 25 of the former Corporate Tax Code (KVK) 554, the Corporate Tax rate in Turkey was 30%. It’s now 20%, in accordance with article 30-1 of the new Turkish Corporate Tax Code introduced by the law of June 21, 2006 555. The new 20% rate came into effect retroactively on 1 January 1, 2006 and therefore applies to profits made since that date.

Turkey, unlike France, applies a single rate of Tax on Companies. In fact, France, apart from the rate of 33.1 / 3%, also has a reduced rate of 15% 556, applicable to small and medium-sized enterprises.

The existence of a tax system governed by one or more tax rates does not attest not the degree of modernization of this system. The majority of European countries have only one only corporate tax rate. Therefore, the single tax rate will not be taken into account in this research as a criterion of modernism.

The corporate tax base of companies located in Turkish territory is represented by the « establishment profit » (kurum kazanç) made during a exercice. Turkish tax authorities use the term « establishment profit » to distinguish between profits of different establishments to facilitate the taxation of the business when it has several establishments. The tax concept of « establishment profit » is all the more appreciable when the company operates establishments in several countries.

Payroll Turkey Turkish Corporate Tax Declaration

Accounting result 300 000
++ Reintegration KKEG 40 000
+ + Financing fund

from the previous fiscal year

0
= Tax result 340 000
  80 000
  30 000
  50 000
– – Tax reduction 160 000
Result 180 000
Removed in 2016 60 000
Reduction for investment 40 000
Establishment profit 80 000
Corporate Tax 16 000

More informations about our company are available on our Accounting Turkey website.

 

 

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