TAXATION OF TRAVEL ALLOWA (HARCIRAH) PAYMENTS AND UPDATED TAX-EXEMPT AMOUNTS FOR THE PERIOD 1 JULY – 31 DECEMBER 2026

TAXATION OF TRAVEL ALLOWANCE (HARCIRAH) PAYMENTS AND UPDATED TAX-EXEMPT AMOUNTS FOR THE PERIOD 1 JULY – 31 DECEMBER 2026

Payments made by employers to cover the meal, lodging and related expenses incurred by employees or board members while traveling on business are referred to in Turkish practice as harcırah (travel allowance / per diem). Such payments may be exempted from income tax under one of two distinct methods, and combining these methods within the same trip results in the entire additional payment being treated as taxable wage income, exposing the employer to retroactive tax assessment risk. In addition, the tax-exempt ceiling applicable under the fixed per diem method has changed effective 1 July 2026, following the semi-annual update to civil servant salary coefficients. This circular sets out both the underlying mechanics of the exemption and the updated amounts.

The amount and principles of travel allowances payable to civil servants are governed by Law No. 6245 (Travel Allowance Law). Private-sector employers falling outside the scope of this Law are not subject to any statutory cap on the amount of travel allowance they may pay. However, under Article 24/2 of the Income Tax Law, a portion of the travel allowance paid by private-sector employers is exempt from income tax, with the ceiling of this exemption determined by reference to the per diem amount payable to a civil servant of the equivalent salary grade. These ceiling amounts are revised twice a year in line with updates to civil servant salary coefficients, and this circular addresses the update applicable to the 1 July – 31 December 2026 period.

Before turning to the updated amounts, it is important to understand how the exemption operates in practice, as the majority of errors observed in practice arise not from misapplying the amounts themselves, but from combining the two methods described below.

Transportation Costs Are Treated Separately

Transportation expenses (airfare, bus, rail or similar travel tickets) are fully exempt from income tax without any monetary ceiling, provided they are supported by documentation, and fall entirely outside the method selection discussed below. The principal distinction under the exemption arises in relation to meal and lodging expenses.

Two Alternative Methods for Meal and Lodging Expenses

Employers may cover meal and lodging expenses using one of the following two methods:

Method one — actual expense (documented) method: The employee submits a hotel invoice and meal receipts, and the employer reimburses the full amount stated on these documents. Under General Communiqué on Income Tax No. 138, this method is not subject to any comparison against the civil servant per diem ceiling; the reimbursed amount is fully exempt, provided it is business-related and reasonable in amount.

Method two — fixed per diem method: A predetermined fixed cash amount is paid to the employee without any requirement to submit supporting documents. This payment is exempt up to the ceiling determined by the employee's gross monthly salary level, as set out in the tables below; any amount paid in excess of the ceiling is treated as taxable wage income.

Illustrative Example: Consider an employee with a gross monthly salary of TRY 35,000 who is sent on a three-day domestic business trip and is paid a fixed per diem of TRY 1,000 per day. As this gross salary level falls within the TRY 27,236.51 – 33,546.42 band, the applicable exemption ceiling is TRY 860 per day. The daily excess of TRY 140 (TRY 420 in total over three days) is treated as wage income, added to gross salary, and subjected to income tax and stamp duty withholding; the remaining TRY 860 per day remains exempt.

The Two Methods May Not Be Combined

Where both a documented actual-expense reimbursement and an additional fixed per diem are paid in respect of the same trip, the prevailing tax authority position is that the entire amount of the additional per diem — not merely the portion exceeding the exemption ceiling — is treated as taxable wage income (General Communiqué on Income Tax No. 138). In practice, where an employer both reimburses a documented hotel/meal expense and separately pays the employee a fixed per diem for the same trip, the entire amount of that additional payment may be reclassified as wage income and taxed retroactively, regardless of the exemption ceiling. Accordingly, documenting which method is applied for each individual trip provides an important line of defense in the event of a tax audit.

Treatment Under Social Security Legislation

The exemption ceiling described above applies solely for income tax purposes; a different standard applies under social security legislation. Under Article 80 of Law No. 5510, payments in the nature of "official travel allowance" (görev yolluğu) are excluded from the basis for social security contributions. However, this exclusion does not follow merely from labeling a payment as "travel allowance" — it depends on the payment genuinely arising from an actual assignment or business trip, supported by appropriate documentation and an assignment order. Court of Cassation (Yargıtay) rulings similarly focus on substance over form: payments that are, in substance, regular or recurring supplementary payments, or that are not tied to an actual business trip, may be reclassified as wages and included in the social security contribution base regardless of their designation as "travel allowance." Genuine travel allowance payments meeting these conditions, however — including the portion exceeding the income tax exemption ceiling and taxed as wage income — remain excluded from social security contributions.

Updated Tax-Exempt Amounts for the Period 1 July – 31 December 2026

Under Circular No. 5 of the General Directorate of Public Financial Management and Transformation of the Ministry of Treasury and Finance, dated 02.07.2026, the relevant coefficients for the period 1 July – 31 December 2026 have been redetermined, and the exempt amounts applicable under the fixed per diem method have been updated accordingly.

Domestic travel:

International travel: The exempt amount depends on both the employee's gross monthly salary level and the destination country; the amount applicable to the country in the column corresponding to the relevant salary band is used.

(The full list covers 26 countries and can be provided separately to clients upon request.)

When determining the applicable gross salary level, an additional amount calculated based on the employee's length of service must be added to gross salary (years of service × 20 × monthly coefficient, capped at 25 years). For example, for an employee with 30 years of service, this addition is calculated as 25 × 20 × 1.575512 = TRY 787.76.

Conclusion and Recommendations

The amounts set out above apply for the period 1 July – 31 December 2026 and will be revised again with effect from 1 January 2027. In light of the above, we recommend that your Human Resources and Accounting departments review the following points:

• The actual-expense and fixed per diem methods should not be combined for the same trip; the method applied should be documented on a per-trip basis.
• Under the fixed per diem method, the employee's gross salary band — including any length-of-service addition — should be correctly determined.
• For fixed per diem payments to qualify for the social security exemption, they should be supported by documentation evidencing a genuine assignment or business trip.
• For international per diem payments, the TL equivalent should be calculated using the CBRT foreign exchange selling rate applicable on the payment date.
• For trips covering multiple countries, the per diem for each country should be calculated in proportion to the time spent there.