Taxation of Individuals

Taxation of Individuals

Income tax is taken from the net total of income earned by any individual (real person) in a calendar year. According to Turkish Income Tax Law, the source of income defined in 7 categories:

1. Income from commercial activities,
2. Income from agricultural activities,
3. Income from employment services (wages & salaries),
4. Income from self employment,
5. Income from immovable properties (rent income),
6. Income from capital investments (interest, dividend and etc.),
7. Other income and earnings (capital gains and gains from appreciation).

A general residency criterion is employed in determining tax liability for individuals. This criterion requires that an individual whose place of residence is in Turkey must pay tax on their worldwide income (unlimited liability). On the other hand limited taxpayers are taxed on their Turkish source income.

Unlimited liability tax payers are the ones who are;

1. Resident in Turkey or,
2. Living in Turkey more than 183 days in one calender year or,
3. Living in foreign countries but assigned by government authorities or companies which their headquarter in Turkey.

However, foreigners who stay in Turkey for ≤6 months for a specific job or business, or for particular purposes specified in the Income Tax Law, are not treated as resident and are not subject to unlimited tax liability. Non-residents are only liable to pay tax on income derived from sources in Turkey (limited liability).

Table 12. Income tax rates applicable to yearly gross earnings from 2019.