The publishing sector goes through many different processes, from the preparation of intellectual and artistic works to the printing and sales phase. In particular, editorial services are a critical element that increases the quality of a work and guides the publication process. So, which tax withholding should be made on the fees paid for the editorial services received for the works whose publishing rights are purchased before they reach the printing and sales stage? Here are the details.
Editorial Service and Scope of Taxation
Within the framework of Law No. 5846 on Intellectual and Artistic Works, it is an inevitable necessity for publishers to undergo editorial processes for the works whose publishing rights have been purchased. However, the editorial service provided in this process is divided into different categories in terms of tax legislation.
Editorial Services According to Income Tax Law
According to Article 18 of the Income Tax Law No. 193, the sale or transfer of works such as poems, stories, novels, articles, scientific research by right holders are subject to certain exemptions. However, this exemption does not apply to editorial services.
Article 65 of the Law defines self-employment activities based on personal knowledge and skills rather than capital. Editorial services are generally considered within this scope and taxed as self-employment income.
Tax Withholding Rates
Under Article 94 of the Income Tax Law, withholding rates have been determined for certain types of services:
Editorial Services within the Scope of Self-Employment Income: If the editorial service is provided independently and without being subject to an employer, the income obtained is considered as self-employment income. In this case, income tax withholding at the rate of 20% must be made on the payments made.
Editorial Services within the Scope of Remuneration: If the editor works at a specific workplace under the employer and performs the service in accordance with the employer’s orders and instructions, this service is considered as wage. In this case, income tax is withheld on the payments made at rates ranging from 15% to 40%, which are applicable for wages.
Conclusion
The taxation of editorial services provided before the publication and sale of works for which publishing rights have been purchased varies depending on the type of service. While 20% income tax withholding is applied for freelance editors, standard wage taxation principles apply for editors working for an employer. It is of great importance for publishers to manage their financial processes by taking this issue into consideration in order to avoid tax problems that may arise in the future.
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