Calculate the withholding tax on a progress payment

Good to know

Only on multi-year works

Tax is withheld from payments on construction and repair works that spread over more than one calendar year (Income Tax Law art. 42 and 94/1-3; Corporate Tax Law art. 15/1-a for companies). A work that starts and ends within one year has none.

The base is E

Line E of the payment cover: this payment without VAT, price adjustment included.

The rate follows the payment date

The general rate is 5% on payments from 01.03.2021 and 3% from 01.01.2007 until then. Each decision applies to payments from the first day of the month after its publication.

1% on some works

Payments for railway, tram, metro and urban rail works and for ship construction and repair from 01.04.2025 (Presidential Decision 9707), and for nuclear power plants from 01.06.2026 (Presidential Decision 11344), are withheld at 1%.

Advance offset

Tax is withheld from advance payments too (Income Tax Law art. 94, Corporate Tax Law art. 15/1). Where tax was withheld on the advance, some administrations take the advance offset off the base and some keep the whole E. Check your contract and the administration's practice.

On the cover

It is the first line of the deductions on the payment cover: "a) Gelir / Kurumlar Vergisi ( E x % 5 )".

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