Permanent vs Non‑Permanent Employees in Income Tax Article 21

The Directorate General of Taxes (DGT) issued guidance on the distinction between permanent and non‑permanent employees for Income Tax Article 21. The guidance was released on 6 November 2025 and cites PMK No. 168/2023 and the Labor Law.

Under PMK 168/2023, a permanent employee receives regular income, works full‑time in an assigned position, and is usually bound by a written contract. A non‑permanent employee is paid only for days worked, output units, or completion of a specific task. The Labor Law mirrors this classification with fixed‑term (PKWT) and indefinite‑term (PKWTT) contracts.

The status determines the method of withholding under Article 21, requiring employers to calculate tax based on each employee’s characteristics. Accurate classification is essential for payroll processors, including outsourcing firms, to avoid withholding errors and possible penalties.