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Vergide Gündem
English Translation

The cumulative base burden both on the
employee and employer!

At the end of 2019, while new taxes such as "digital services tax" were added to
the in fiscal legislation in Turkey, the amendments in the Income Tax Law have been
introduced in order to increase the number of "taxpayers”. Therefore, annual tax
declaration will be mandatory for those who submit their annual tax returns" for
the income owners of both self-employed whose income being exempt from income
taxes and workers whose wage earnings exceeding a threshold in a calendar year.
Explanations regarding the implementation of the amendments were disclosed
through the Income Tax General Communique numbered 311.

The withholding (“WHT”) liability of an employer

Since the wages are subject to a taxation at source (WHT tax), employers are liable
for deducting and paying income tax from the wages of their employees as “tax
responsible”. Due to this responsibility, employers are the respondents of the tax
office in terms of the payment of the tax withheld at source and hence they are
responsible for these taxes' payment and overdue.

Cumulative tax base

Until the publication of the Communique numbered 311 on the implementation
of the amendments brought by the Law, other than their own wage payments
in a calendar year as tax responsible, employers were not required to follow the
"cumulative income tax base" that includes the wage payments of their employees
from other employers or the wages of the employees who started working during
the year at the previous employer in any circumstance. Each employer applied
WHT to the wages paid without making a connection with the wage paid by other
employer or employers (called “cumulative tax base”).

However, new explanations were made with the headline "the situation of those
working with more than one employer in private sector workplaces" through
Article 21 of the Communique numbered 311. With the announcement of the
Communique, the taxation of the wages deemed to be obtained from a single
employer in the same calendar year predicated upon "cumulative tax base" was
taken as basis. However, in addition to this, a statement was also made with regard
to the employees changing their jobs within the same calendar year, indicating that
the new employer ought to withhold the taxes by taking into the cumulative base of
an employee in case of an employee requests to do so. However, carrying forward
the cumulative base from previous employer to the current one does not eliminate
the employee's duty to submit an annual income tax return.

Who benefits from carry forward of “cumulative tax base”?

Let’s look at who will be benefitting from carrying forward the base? Firstly, number
one beneficiary will be the Ministry of Treasury and second one is going to be
the employee requesting from the employer. Because of this application, the tax
administration will collect more withholding taxes throughout the year, while the
employees requested the practice will not pay additional income tax upon annual
income tax submission since their wage income calculated and paid by the employer
with the cumulative tax base practice.

Ekim 2020 October 2020 7