Some occupations subject to the simplified tax regime—such as barbers, tailors, workers employed alongside taxi drivers, chauffeurs working in private services, and laborers on private construction sites—are required to pay a lump-sum wage tax. As the end of the year approaches, people working in these trades should review their tax obligations.
What Is the Lump-Sum Wage Tax?
Under the simplified tax regime, a lump-sum wage tax applies to certain workers, including barbers, tailors, assistants to taxi drivers, chauffeurs employed in private services, and laborers on private construction projects. Regardless of the actual cash received, these workers are taxed based on 25% of the annual gross minimum wage. That calculated base is then subject to income tax. For 2020, the tax due under this method reached 1,324 TL. If taxes due during the year have not yet been paid, there is still an opportunity to settle them before the end of the year.
Under the Income Tax Law, wage income is generally taxed as either actual wages or other wages. The category called other wages corresponds to the lump-sum wage concept. Actual wage income is taxed by withholding at the time of payment by employers or by filing a return. For those earning other wages, tax authorities determine the payable tax. The taxable net wage for these workers is calculated as 25% of the annual gross minimum wage, and a 15% tax rate is applied to that net wage.
How Much Tax Will Be Paid?
The lump-sum wage tax paid by those earning other wages is calculated as 25% of the annual gross amount. Workers who begin employment during the year pay tax based on the net wage proportionate to the months they worked. In 2020, the monthly gross minimum wage was 2,943 TL, giving an annual gross total of 35,316 TL. The taxable net wage, equal to 25% of that annual figure, was therefore 8,829 TL. For workers taxed under the simplified regime—such as assistants to tailors, barbers, and drivers—the tax due at the 15% rate on that net wage amounted to 1,324 TL in 2020. Taxes were normally payable in February and August; however, for those who had not paid by year-end, recent restructuring measures allow payment including applicable statutory interest.
Determining the Tax Period
To determine the applicable tax period, consider an example of a worker who starts at a barber shop subject to the simplified regime on March 15, 2020. For that worker, the net wage for 2020 is calculated on the basis of nine months, from April through December. The annual gross minimum wage is multiplied by nine months, and then 25% of that amount is taken as the net wage. A 15% tax is applied to that net wage. Using this method, the total tax due for that example worker would be 993 TL. As this shows, employees who start work during the year can calculate their tax liability based on the remainder of the year. For instance, someone who began work in October 2020 would calculate tax for two months.
Similarly, employees who leave their job before year-end are taxed based on the period up to their departure date. For example, a person who starts in October and resigns at the beginning of December would only be liable for tax covering November. These calculations can be made on a daily basis when necessary.