How are bonuses, incentives and expenses taxed in Turkey?

Here’s how bonuses & incentives, and expenses are taxed in Turkey.

Bonuses and Incentives

incentives and bonuses in Turkey are subject to taxation. These additional forms of income are typically considered part of an individual's total income and are subject to income tax.

In Turkey, income tax is calculated based on a progressive tax rate system, where the tax rate increases as the income level increases. Bonuses and incentives are added to the employee's regular salary, and the total income is used to determine the applicable tax rate.

The tax treatment of bonuses and incentives may vary based on factors such as the purpose of the payment, the timing of payment, and the specific regulations in place at a given time.

Expenses

Expenses in Turkey can be subject to various tax rules depending on the nature of the expenses and the specific circumstances.

• Reimbursed Business Expenses: If an employee incurs legitimate business-related expenses and is reimbursed by the Customer, these reimbursements are generally not considered part of the employee's taxable income. Reimbursements for actual business expenses are typically treated as non-taxable benefits.
• Unreimbursed Business Expenses: If an employee incurs business-related expenses that are not reimbursed by the Customer, the treatment can vary. In some cases, employees might be eligible to claim deductions for unreimbursed business expenses when filing their annual income tax return. Specific conditions and limitations apply, and proper documentation is usually required.
• Allowances and Benefits: Certain allowances, such as meal allowances or travel allowances, might be provided to employees. The tax treatment of these allowances can vary based on the purpose of the allowance and the amount. Some allowances may be treated as non-taxable benefits, while others may be subject to specific tax rules.
• Per Diems: Per diems or daily allowances provided by employers for business travel or work-related purposes may have specific tax rules. These payments might be subject to tax withholding or reported as part of the employee's taxable income, depending on the nature and purpose of the per diem.
• Specific Tax Rules: Tax laws and regulations related to employee expenses in Turkey can be complex and can vary based on factors such as the type of expenses, the industry, and the individual's employment status.

Please visit the Turkish Investment Office website to read the full details.