Turkey: New legislative proposal to impact income taxpayers

Insights from Global Mobility

Turkey: New legislative proposal to impact income taxpayers

December 5, 2019

In brief

The Turkish parliament on November 22, 2019 approved a new legislative proposal that will come into force once signed by the President and announced through the official gazette. The new law includes several revenue-generating measures and significant changes affecting income taxpayers.

In detail Income tax rates

Under the current law, the highest marginal tax rate is 35%, but with the new legislation a new tax rate will be applied. For individuals who earn more than TRY 500.000 a year, the income tax rate will be 40%. The new scheme will start to apply as of January 1, 2020 for employment income. For other types of income, it will be effective retrospectively from January 1, 2019.

Filing obligations

Under the current law, no tax return filing is required for the employment income received from a single Turkish employer. With the new legislation, individuals who receive more than TRY 500.000 salary income during a year will be required to file an annual income tax return. This requirement would start to apply on income earned in 2020.

Professional athletes

While tax rates currently vary between 15% and 35% in Turkey, Turkey levies only a 15% flat tax rate on salaries of footballers playing in the Super League and collects one of the lowest taxes from sportsmen among the European countries. Starting from 2020, the new legislation proposes a 20% withholding tax rate on salaries paid to football players in the top league instead of 15%. While withholding tax rates of the Clubs are set to increase from 15% to 20%, personal tax burdens of athletes who earn more than TRY 500.000 a year also will increase significantly as they will be required to file an annual income tax return and pay 40% income tax under the new legislation. The above changes will be effective for contracts signed later than November 1, 2019, meaning that those footballers who have ongoing contracts with their Clubs still will be subject to the 15% withholding tax rate and no tax return will be required for the income above TRY 500.000.



Insights

Other regulations

An additional property tax has been introduced for high-value residential property as of the beginning of 2020. The tax would apply at 0.3% for residence property worth between TRY 5 million and TRY 7.5 million and at 0.6% for residence property worth between TRY 7.5 million and TRY 10 million. Residence property worth over TRY 10 million would be taxed at 1%. In addition, the time limit for taxpayers to provide an explanation, and for filing a corrected return when the tax office has invited an explanation, has been extended to 30 days from 15 days.

The takeaway

Mobile executives, individuals, and their employers should consider how these changes could impact their filing obligations, withholding responsibilities, as well as mobility costs.

Let's talk

For a deeper discussion of how this issue might affect your business, please contact your Global Mobility Services engagement team or one of the following professionals:

Global Mobility Services ? Turkey

Bilgutay Yasar +90 (212) 326 6094 bilgutay.yasar@

Global Mobility Services ? United States

Peter Clarke, Global Leader +1 (646) 471-4743 peter.clarke@

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