Payroll in Turkey is a complex process that requires compliance with several regulations and involves several steps.
In this article, we will provide a detailed overview of payroll in Turkey, including the registration process, salary calculation, social security contributions, income tax, reporting requirements, and compliance regulations.
Employer Registration
Before an employer can start hiring employees in Turkey, they must register with the Turkish social security institution (SGK). This registration is mandatory, and failure to do so may result in penalties and legal issues. During the registration process, the employer will be issued an SGK number, which they will use for all future social security contributions.
Employee Registration
Once an employee is hired, the employer must register them with the SGK and obtain a tax number. This tax number will be used to deduct income tax from the employee’s salary. The employer is also responsible for providing the employee with a copy of their employment contract, which should include information about their salary, working hours, and other terms and conditions of employment.
Salary Calculation
The employer must calculate the employee’s salary based on the gross salary, which includes social security contributions and income tax. The gross salary is the total amount of money paid to the employee before any deductions are made. The employer must deduct social security contributions and income tax from the gross salary to arrive at the employee’s net salary.
Social Security Contributions
Employers in Turkey are required to contribute to social security for their employees. The contributions are based on a percentage of the employee’s gross salary. The employer must deduct the social security contribution from the employee’s gross salary and pay it to the SGK. The social security contribution is calculated based on the employee’s gross salary and is split between the employer and the employee. The employer’s share is higher than the employee’s share.
Income Tax
Employees in Turkey are subject to income tax, which is calculated based on a progressive tax system. The employer must deduct the income tax from the employee’s salary and pay it to the tax authority. The income tax rate varies depending on the employee’s income level. The tax rate starts at 15% for incomes up to 18,000 TL, and it increases up to 35% for incomes above 180,000 TL.
Payroll Reporting
Employers are required to submit monthly payroll reports to the SGK. The report should include information about employee salaries, social security contributions, and income tax deductions. The report must be submitted by the 23rd day of the following month. Failure to submit the report may result in penalties and legal issues.
Payroll Compliance
Employers must ensure they are compliant with all Turkish labor laws and regulations related to payroll, including minimum wage requirements, working hours, overtime, and paid leave. The minimum wage is set by the government and is revised every year. The working hours are limited to 45 hours per week, and any work done beyond that is considered overtime, which should be compensated at a higher rate. Employees are entitled to paid leave, including annual leave, sick leave, and maternity leave.
Conclusion
In conclusion, payroll in Turkey is a complex process that requires compliance with several regulations and involves several steps. Employers must register with the SGK before they can start hiring employees. They must also register their employees with the SGK and obtain a tax number. Employers must calculate the employee’s salary based on the gross salary, which includes social security contributions and income tax. Employers must deduct social security contributions and income tax from the gross salary to arrive at the employee’s net salary. Employers must submit monthly payroll reports to the SGK and ensure they are compliant with all Turkish labor laws and regulations related to payroll. Employers may choose to outsource their payroll to a professional payroll provider to ensure compliance with Turkish regulations.
