Tax Declaration Preparation and Notification of Foreign Employees, Income tax concerns almost everyone living in our country, and it occupies an important place for companies and individuals in business life, both as workers and employers.
In accordance with Article 1 of the Income Tax Law, the income of real persons is subject to income tax. Earnings and revenues subject to income tax are defined in seven different groups listed below; Different taxation principles have been determined for each income group.
- Commercial Earnings,
- Agricultural Earnings,
- Self-Employment Earnings,
- Real Estate Capital Revenues,
- Security Capital Revenues,
- Other earnings and
In which cases the income tax return should be submitted, has been set out separately according to each income type and taxpayer. The taxes collected through withholding constitute the weight of the income tax, and the most important part of the income subject to withholding is wage income.
Taxation of Wage Income
Pursuant to Article 61 of the Income Tax Law; It is defined as the benefits that can be represented by money, provided by money and types given to employees in return for service, subject to the employer and linked to a specific workplace. In Article 94 of the same Law, employers are obliged to withhold tax as a deduction from the income taxes of the beneficiaries over the wages paid to the service personnel and the payments accepted as wages.
In the Turkish tax system, it is envisaged that wage incomes are mainly taxed through withholding. Commercial companies are obliged to pay income tax, which is calculated by deducting income tax from the wages paid to the servants on behalf of the servants. While all kinds of benefits represented by the money provided by the employer are added to the gross amount, very few payments such as private pension/health insurance can be deducted in determining the income tax base. Since the calculated income tax is paid to the tax office, a list by name is not required, so there is no information in the tax office about which employee received and how much.
If taxable wage income is obtained from a single employer through withholding, it is not possible to file an annual income tax return for this income. On the other hand, those who regularly engage in commercial and professional activities, who exceed the limits of exception and declaration in the Law; Those who earn income such as rent, dividend and wage income from more than one employer are also required to declare their income by filing an annual income tax return. Since most of the employees receive wage income from a single employer and income tax is withheld by the employers on these incomes, the cases where the wage income declaration is filed are very limited. For example; Pursuant to Article 95 of the Income Tax Law, it is not possible to deduct taxes from the wages of service professionals who receive their wages directly from an employer in a foreign country and these incomes must be declared with the annual income tax return.
Tax Declaration Preparation and Notification of Foreign Employees
It is frequently seen that employees assigned from abroad to work in Turkey, especially multinational companies operating in our country, enter the Turkish sovereignty in terms of taxation in personnel assignments. multinational companies; It can perform the regional leadership task of the regions it is organized such as the Middle East, the Balkans, Central Asia and the Arabian Peninsula with a company residing in Turkey and foreign employees assigned to this company.
Persons assigned to work in Turkey with a service contract from abroad can also declare their worldwide income and/or parts of their wages paid directly from abroad. While evaluating the situation against income tax of employees assigned to work in Turkey from abroad, it is necessary to take into account the provisions of our local legislation as well as the provisions of the Double Taxation Agreements to which the Republic of Turkey is a party. In cases where the provisions of Double Taxation Agreements are taken into account, the obligation to declare wage income directly from abroad frequently arises in Turkey.
In principle, the personnel assigned to work in Turkey from abroad can work in Turkey; It is possible thanks to the work permit obtained as a result of the application made to the Ministry of Labor and Social Security. Employment of persons without a work permit; It is an illegal practice that causes employees and employers to face some criminal sanctions. For this reason, foreign nationals must obtain a residence and work permit before starting to work in Turkey.
The provisions of the Turkish Income Tax Law are also valid in the taxation of the wage income of foreign personnel working in Turkey. For example, if the salary payments of a person who is appointed to a company of a multinational group of companies in Turkey from abroad are made by the company in Turkey and the person has no other income, the company will pay the taxes with income tax withholding. Annual income tax for the entire salary of this employee. It will not be possible to file a declaration.
On the other hand, income tax withholding will not be possible if the wage payment of the foreign worker is made in the country of residence or citizenship before his duty in Turkey. In such a case, wage payments made by a company residing abroad may be subject to income tax in Turkey, taking into account both our local legislation and the provisions of the Double Taxation Agreement, and this may need to be declared with an annual income tax return.
There is not yet a central tracking system in our country for the tracking of tax returns of foreign employees. However, the fact that the Social Security Institution has started to use more central control mechanisms in the follow-up of social security premium receivables shows that similar practices can be applied in the field of income tax in the future.