Payroll in Turkey

Managing payroll in Turkey, ensuring timely payments of wages, salaries, and other compensation to employees, is a crucial aspect of business operations. As the leader in payroll technology, Mercans specializes in simplifying and streamlining payroll processes in Turkey, offering businesses a reliable and compliant solution to efficiently pay employees. Our comprehensive payroll services cover payroll processing, administration, and compliance, providing businesses with the expertise and technology needed to effortlessly handle payroll in Turkey.

Transforming Payroll with Advanced Technology, Seamless Integrations, and Recognized Excellence

At Mercans, we pride ourselves on being at the forefront of payroll technology and service delivery in Turkey. Our comprehensive suite of payroll capabilities covers every aspect of payroll management, ensuring a seamless experience for businesses of all sizes and complexities.

• Technology-Driven Solutions Mercans leverages cutting-edge technology to streamline payroll processes in Turkey. Our advanced payroll system simplifies intricate tasks, from payroll setup to processing, ensuring timely and accurate payments. Whether it’s managing payroll taxes, administration, or compliance with local laws, our technology-driven approach enhances efficiency and accuracy. Learn more
• Integrations for Effortless Payroll At Mercans, we prioritize seamless integrations to enhance your payroll and HR experience. We have successfully integrated with industry-leading HCM platforms, including UKG, Workday, Oracle HCM, SAP Success Factors, DarwinBox, and Dayforce. Our unified HCM and payroll solution not only consolidates and reduces payroll processing costs but also eliminates data redundancy by enabling real-time data flow. This integration enhances workforce management, streamlines payroll administration, and ensures efficient synchronization of data between systems. Learn more about our integrations and how they can benefit your business by visiting us at Integrate HCM with Mercans.
• Recognitions in Excellence Mercans’ commitment to excellence hasn’t gone unnoticed. We’ve earned recognition for our expertise in payroll services in Turkey and beyond. Our dedication to compliance, accuracy, and innovation has positioned us as a trusted partner for businesses seeking payroll solutions. Learn more at Awards and Recognition.

From managing small business payroll to providing global payroll services, Mercans’ capabilities cover a wide spectrum. Our expertise extends to payroll reporting, HR and payroll integration, payroll automation, and precise payroll calculations. We offer flexible payroll frequencies, catering to diverse business needs.

Mercans’ Comprehensive Suite of Payroll Solutions

At Mercans, our commitment to providing comprehensive payroll solutions extends across various domains, catering to diverse business needs. Here, we’ll delve into two key facets of our payroll offerings: Global Payroll Outsourcing and Global Payroll SaaS (Software as a Service).

Global Payroll Outsourcing:

Discover Mercans’ comprehensive payroll solutions designed to streamline and enhance your payroll operations in Turkey and beyond:

SaaS (Software as a Service)

Mercans’ innovative SaaS solution empowers businesses to manage payroll seamlessly. With our advanced technology, you can effortlessly process payroll, ensure compliance, and handle tax management in Turkey. Say goodbye to manual payroll administration and embrace automation for accurate and efficient payroll processing.

Managed Services

Mercans’ Managed Services offer a hassle-free payroll experience. We take care of every aspect, from setup to processing and compliance in Turkey. Our expert team ensures your employees’ wages, salaries, and compensation are handled meticulously, allowing you to focus on your core business activities. Trust us to manage payroll laws and compliance in Turkey effectively.

HRMS (Human Resources Management System)

Mercans’ Global Payroll Outsourcing service simplifies payroll management. As leaders in payroll technology, we optimize payroll setup, processing, compliance, and tax management in Turkey. By outsourcing to Mercans, you gain confidence in the accurate and efficient handling of your payroll, enabling you to dedicate more time to your core business operations.

Choose Mercans for a seamless and efficient payroll solution tailored to your unique needs. Learn more about the above solutions at: Mercans – Global Payroll Outsourcing

Global Payroll SaaS (Software as a Service):

Mercans’ Global Payroll SaaS empowers businesses with a sophisticated yet user-friendly payroll software solution. Whether you’re a small business or a multinational corporation, our SaaS platform is tailored to meet your specific payroll needs. From payroll calculation to reporting, our software streamlines payroll processes, ensuring error-free payments. The system integrates seamlessly with your existing HR infrastructure, providing a unified platform for HR and payroll management. With Mercans’ Global Payroll SaaS, businesses in Turkey can effortlessly handle payroll setup, processing, taxes, and compliance. Our solution is designed to enhance efficiency and accuracy while reducing the complexities of managing payroll in Turkey.

In conclusion, Mercans offers a wide range of payroll solutions, including Global Payroll Outsourcing and Global Payroll SaaS, to meet the unique requirements of businesses in Turkey and globally.

Establishing an Entity in Turkey

Establishing a company in Turkey is a swift one-day process through submission of required documents to the relevant trade registry office. Official establishment occurs when founders express their intent to form a joint-stock company in the articles of association, complying with legal requisites and notarized signatures. Following registration with the trade registry, the company gains its “legal entity” status.

In Turkey, various company types are available:

Joint Stock Company (A.Ş.)

Capital divided into shares with limited shareholder liability. Requires at least one shareholder (individual or legal entity) and a minimum capital of TRY 50,000, with mandatory general assembly and board of directors.

Limited Liability Company (Ltd. Şti.)

Minimum of one shareholder with limited liability up to the capital, requiring a minimum capital of TRY 10,000.

Commandite Company

Combines limited and unlimited liability shareholders, with legal entities solely as commanditers. No minimum capital, and terms outlined in the articles of association.

Collective Company

All shareholders have unlimited liability, no minimum capital, and all shareholders must be individuals. Rights and obligations detailed in articles of association.

Establishing a company involves preparing three notarized article of association copies and submitting them, alongside other necessary documents, to the trade registry office within 15 days of notarization. These include a company establishment petition, founders’ statement, bank letter confirming capital deposit, bank receipt for the Turkish Competition Authority, and more.

Corporate entities should register their office address with the tax office and obtain a tax registration number. Legal books require Public Notary certification, with related registrations at the Tax and Social Security Institute during legal entity establishment.

For payroll processing without establishing a legal entity in Turkey, some providers offer an “umbrella service” solution, eliminating the need for a dedicated legal entity.

Requirement for Payroll in Turkey

When it comes to managing payroll in Turkey, compliance and efficiency are paramount. At Mercans, we recognize the significance of aligning with the essential requirements for seamless payroll processing in this dynamic business landscape. Here’s how we can assist you in navigating these prerequisites:

Legal Entity Formation and Compliance with New Turkish Commercial Code (TCC):

The foundation for processing payroll in Turkey is establishing a legal business entity. Whether you’re an individual or an organization, Mercans guides you through the process of creating a legal presence in Turkey. We ensure that your corporate governance practices adhere to international standards, a primary objective of the New Turkish Commercial Code (TCC). We guide you in achieving this alignment seamlessly, ensuring that your business operations align with Turkish regulations.

Access to Private Equity, Public Offerings, and Alignment with EU Legislation:

If your business aspirations involve private equity or public offerings, Mercans provides guidance on navigating these aspects in harmony with the TCC’s objectives. For businesses seeking EU accession or aiming to harmonize with EU standards, Mercans ensures that your operations align with relevant EU legislation, as outlined in the TCC.

Nationality and Place of Residence:

Setting up a business entity in Turkey enjoys the unique advantage of being accessible to individuals of any nationality and place of residence, thanks to Turkey’s inclusive regulatory environment.

Company Establishment Procedures in Turkey:

Labor Law No. 4857:

In compliance with Labor Law No. 4857, Mercans assists you in meeting the following payroll requirements:

• Worker’s name and surname
• The day and the period of payment
• The amount of any additions to the original wage, such as overtime, weekends, holidays, and general holiday fees.
• All kinds of deductions such as tax, insurance premium, advance deduction, alimony, and execution
• Payment day
• Employer’s signature

Social Insurance and General Health Insurance Law No. 5510:

In alignment with Social Insurance and General Health Insurance Law No. 5510, Mercans ensures compliance with the following payroll essentials:

• Registration number of the workplace
• The payroll’s month and period
• Name and surname of the insured
• Social security (TC Number) registration number of the insured
• Total number of days paid
• Insured’s fee

Tax Procedure Law No. 213:

Under the purview of Tax Procedure Law No. 213, Mercans assists with the following tax-related payroll requirements:

• Name, surname, signature or seal of receipt of fee
• Date and number of the tax card, if any
• Unit fee (monthly, weekly, daily, hourly, or piece rate)

In addition to these statutory requirements, Mercans provides comprehensive support for every aspect of your payroll needs, ensuring seamless operations in Turkey’s ever-evolving business landscape. With our expertise and dedication to compliance, you can confidently navigate Turkish payroll requirements while focusing on your core business operations.

Registration of Employees to Statutory Bodies

Registration of New Hires / Leavers: In Turkey, the process of registering new hires and reporting employee departures to statutory bodies is a fundamental aspect of ensuring compliance with labor regulations. This essential procedure involves the submission of critical employee information to government agencies, establishing a solid foundation for legal and financial transparency within organizations. Key aspects of employee registration include enrolling individuals for income tax purposes and social security, alongside other mandated benefits, all of which are crucial for adhering to the Turkish labor code.

Income Tax: The registration of individual starters, leavers, or changes in registration status is not required at the time of occurrence. However, it is imperative that employers include the names of their employees in the year-end declaration, indicating the number of months each employee has worked during the tax year.

Social Security: Initiating and concluding employment relationships are pivotal events, and they must be reported to the Social Security Institution (SGK) promptly. Specifically, starter and leaver events must be declared to SGK before the 15th of the following month.

In addition to the flexi-form provided by the client, certain documents are essential for the registration of new hires with social security. These documents include a copy of the employee’s identification card.

This meticulous registration process is not only a legal requirement but also a testament to an employer’s commitment to ethical labor practices. It underscores an organization’s dedication to maintaining a transparent and accountable employment environment while mitigating the risk of penalties. Moreover, it contributes to the well-being of the workforce and supports government initiatives related to healthcare, retirement, and social security programs.

Ensuring that employees are properly registered with the relevant statutory bodies such as SSI is not just a legal obligation but also a responsible practice that fosters compliance, transparency, and the welfare of the workforce in Turkey.

Declarations to Statutory Bodies

Mercans recognizes the significance of social security and tax compliance, and we streamline the declaration process to perfection. Here’s how we ensure seamless execution:

Social Security Declarations:

Mercans recognizes the significance of social security compliance and streamlines the declaration process. Here’s how we ensure seamless execution:

Tax Declarations:

Mercans understands the importance of tax compliance and ensures a seamless declaration process. Here’s how we handle tax-related declarations:

Both social security and tax declarations are meticulously managed by Mercans to ensure adherence to statutory requirements and mitigate the risk of penalties.

Payroll Cycle Process

Payroll processing in Turkey is a meticulous operation guided by labor laws, tax regulations, and social security mandates. Maintaining accuracy throughout the process is essential, involving the calculation of employee salaries, benefits, and deductions within the framework of Turkish payroll parameters and tax codes. Mercans, a leading global payroll solutions provider, brings extensive expertise to this complex terrain. With an impressive 99% accuracy rate, Mercans empowers businesses to navigate payroll processing seamlessly, ensuring punctual and precise payments while mitigating compliance risks. Let’s delve into the key stages of the payroll cycle:

Mercans’ expertise ensures that these critical payroll processing timelines are adhered to with precision, allowing businesses to maintain compliance and uphold payroll accuracy in Turkey’s intricate regulatory landscape.

Payroll Administration in Turkey

Payroll administration in Turkey involves a range of critical responsibilities, each contributing to the efficient management of employee records, adherence to labor and tax regulations, and the seamless calculation of benefits and taxes. Mercans, a renowned provider of specialized payroll administration services, boasts a remarkable 95% customer satisfaction rate. This highlights Mercans’ commitment to simplifying the complexities of payroll administration in Turkey, maintaining impeccable records, upholding Turkish labor laws, and ensuring precise tax calculations. An important key aspect is:

Employee Fixed and Variable Transactions:

In Turkey, employee fixed and variable transactions refer to the financial components of an employee’s compensation that may include both consistent, fixed elements (such as base salary) and dynamic, variable elements (such as bonuses, overtime, or deductions) within their payroll. These transactions encompass the regular payments and changes in pay that employees receive, making them an essential aspect of payroll management.

For payroll transactions involving changes to employee variable data, Mercans simplifies the process. We offer a single standard input template for amount-based changes, while separate forms are available for unit-based changes (e.g., hours, days). Pay elements representing variable data, such as overtime and bonuses, are pre-defined during setup. Clients can also add one-time pay elements later. Changes in variable employee data include the pay element code, values, and the effective date.

Common variable data changes encompass overtime, bonuses, premium pay (for shifts, weekends, and holidays), reimbursements, deductions (e.g., garnishment, alimony, pension), pay element adjustments, and one-time or periodic payments/deductions for with-balance elements (e.g., loans). Overtime and premium pay are available to all employees, with specific entitlement rules.

Our Responsibility Matrix for Variable Data Changes (Existing Employees):

• Identify additional payments and deductions.
• Internally approve transactions.
• Complete the variable data changes input template.
• Dispatch the template to Mercans by the specified deadline.
• Mercans validates the request and processes it in the system.
• Conduct internal controls (finance, accounting, HR, etc.).
• Archive records for reference.

Here’s a closer look at the key sub-sections of payroll administration:

• Maintenance of Client Master Data: Employee fixed transactions cover activities like new hires, departures, and employment changes, while variable data includes elements like overtime, incentives, unpaid work, and deductions. Accurate client master data maintenance is vital for seamless payroll administration, encompassing employee details, organizational structures, and compliance requirements.
• Changes in Fixed Employee Transactions: It refers to modifications in employee statuses, roles, or conditions, encompassing activities like new hires, departures, and adjustments in employment terms. This process ensures accurate records and organizational compliance.
• Variable Transactions: Variable Transactions in Turkey encompass dynamic elements like overtime, bonuses, premium pay, reimbursements, deductions, and one-time or periodic payments, ensuring financial accuracy and regulatory compliance.
• Emergency Cases/Exceptions: Managing unforeseen situations and exceptional circumstances in payroll, like handling salary advances or one-time payments, demands agile and accurate adjustments to maintain financial integrity.
• Starters/New Employees: Bringing aboard new employees in Turkey involves meticulous documentation and strict adherence to labor and tax regulations, ensuring a seamless integration into the payroll system while staying compliant with local laws.
• Leavers: Properly addressing employee departures in Turkey entails thorough management of final settlements and strict adherence to exit procedures, safeguarding the precision of payroll administration and compliance with Turkish employment regulations.
• Absence Recording for Paid Absences: Comprehensive recording of paid absences, such as sick leave and vacation days, is essential in Turkey to ensure employees receive fair and accurate compensation, aligning with labor laws and company policies.

Payroll Parameters in Turkey

Payroll processing in Turkey involves juggling a complex set of payroll parameters that can make or break compliance and accuracy. Keeping a keen eye on these parameters is paramount for businesses to ensure precise payroll calculations and remain compliant with local regulations. Mercans, your trusted partner in global payroll solutions, equips you with an in-depth understanding of these Turkish payroll parameters, ensuring your payroll operations are always on point and in line with the law. Here are the eight crucial payroll parameters in Turkey:

• Gross Salary Gross salary in Turkey refers to an employee’s total earnings before any deductions, including taxes and social security contributions. It includes the base salary, overtime pay, bonuses, and any other forms of compensation. The gross salary serves as the starting point for all payroll calculations.
• Net Salary Net salary represents the amount an employee receives after all deductions have been subtracted from the gross salary. Deductions typically include income tax, social security contributions, and other mandatory withholdings. It’s the actual amount that employees take home.
• Employer’s Cost The employer’s cost includes not only the employee’s gross salary but also the additional expenses incurred by the employer, such as social security premiums and other contributions. These costs can vary based on the employee’s salary and the nature of their employment.
• Income Tax Income tax in Turkey is progressive, with rates ranging from 15% to 35%. The tax rate is determined based on the employee’s income level. There are also various deductions and exemptions available, such as those for dependents or specific types of income.
• Stamp Tax Stamp tax in Turkey is typically applied to various documents, including employment contracts. The rate can vary depending on the type of document and its value. For employment contracts, the stamp tax rate is generally 0.948% of the annual gross salary.
• Disablement Deduction Turkey offers a disablement deduction for employees with disabilities. The amount of the deduction depends on the degree of disability and other factors. It is subtracted from the taxable income, reducing the employee’s income tax liability.
• Social Security Premium and Insurance In Turkey, both employees and employers are required to contribute to the social security system. The employee’s share is typically around 14% of their gross salary, while the employer’s share is approximately 20.5%. These percentages can vary slightly depending on the type of insurance and the employee’s specific situation.
• Exempt Allowances Some allowances, such as meal and transportation allowances, may not be subject to social security or income tax in Turkey. The exact treatment of these allowances can vary, so it’s essential to understand the specific rules governing each type of allowance.

Payroll Taxes in Turkey

In Turkey, payroll taxes are a multifaceted landscape comprising four distinct tax types, each with its own set of percentages and regulations. Accurate compliance with these tax regulations is not just essential; it’s a legal mandate to prevent potential legal consequences and financial penalties.

Here are the four prominent tax types you need to navigate in Turkey:

• Corporate Income Tax Turkish corporations are subject to corporate income tax, which is calculated based on their annual profits. The standard corporate income tax rate is 20%, although certain conditions may apply that result in different rates for various business activities.
• Sales Tax Sales tax, often referred to as “Katma Değer Vergisi” (KDV) in Turkish, is a value-added tax applied to the sale of goods and services. The standard rate for sales tax is 18%, with reduced rates of 1% and 8% applicable to specific items.
• Value Added Tax (VAT) VAT is a broad-based consumption tax imposed on goods and services at various rates. The standard VAT rate is 18%, but reduced rates of 1%, 8%, and 5% are applied to specific goods and services, depending on their nature.
• Personal Income Tax Employees in Turkey are subject to personal income tax, which is deducted at source from their monthly salaries. The tax rates are progressive, with various brackets ranging from 15% to 35%, depending on the individual’s income.

Payroll Calculation

Calculating payroll in Turkey involves a meticulous ten-step process, encompassing employee salaries, benefits, deductions, taxes, and compliance checks. Mercans leverages advanced payroll calculation systems and a team of experts to ensure precision and accuracy throughout this complex process. With an impressive 96% accuracy rate, Mercans minimizes compliance risks, promotes employee trust, and enables businesses to focus on their core operations.

Payslip Generation

In Turkey, it’s a legal mandate to provide employees with payslips. Mercans streamlines this requirement by offering digital payslips upon receiving written consent from employees. This digital solution enhances transparency and accessibility, simplifying the payroll process for employers and employees alike. Additionally, Turkish law requires employers to retain payroll data for a period of 10 years, a regulation that Mercans diligently follows

Payroll Reporting

In Turkey, income tax is applied annually, with employers required to deduct it from employee salaries and wages. These withholding taxes must be reported by the 23rd and paid by the 26th of the following month. The annual income tax return is due by March 25th of the subsequent year.

Employers also contribute the full declared amount to the Social Security Corporation every month. For employees under Article 4 (4) of Law No. 5510, premiums are deducted monthly, including the employer’s share, and must be submitted by the end of the month. If the payment date falls on a public holiday, it is extended to the next business day.

For instance, premiums for June 2020 must be paid by July 31st, 2020. The insured and premium service declaration, containing details of the employee’s income and service, is issued by the authorized tax office no later than 23:59 on the 23rd day of the following month.

In addition, the following notification must be made to SSI in time;

• Full wage of employee,
• Starting or leaving of an employee,
• Missing days of employee should be declared by monthly premium and service document,
• Employee who receive temporary disability allowance from SSI should be notified in certain periods determined by law,
• Social Security premiums should be paid on time.

Payroll Compliance in Turkey

Payroll compliance in Turkey involves intricate tasks driven by evolving labor laws and tax regulations. Mercans excels in helping businesses meet these compliance requirements through:

• Tax Calculations Accurately calculating taxes and social security contributions to ensure timely payments and prevent legal issues. (Due Date: Monthly)
• Social Security Reporting Staying updated on legal changes and fulfilling reporting obligations related to social security contributions. (Due Date: Monthly)
• Statutory Filings Meeting various filing deadlines for compliance with labor and tax authorities, ensuring businesses stay on the right side of the law. (Due Date: Varied)

With a remarkable 97% compliance rate, Mercans offers comprehensive support for navigating the complexities of payroll compliance in Turkey.

Payroll Outsourcing in Turkey

Outsourcing payroll in Turkey offers numerous benefits, including cost savings, accuracy, and compliance. Mercans specializes in payroll outsourcing, handling the complexities of Turkish payroll processing with a 98% satisfaction rate. Mercans ensures timely payments and provides expert guidance on labor and tax regulations.

Employee Benefits Administration

Mercans excels in employee benefits administration, assisting businesses in managing health insurance, retirement plans, and statutory benefits compliant with Turkish labor laws. This ensures that employees receive their entitled benefits while simplifying benefits administration for employers.