Turkish restaurants seek solutions as traditional tipping fades

ISTANBUL

With card payments now accounting for over 80 percent of transactions in Türkiye’s restaurants, confusion over tipping practices has grown, prompting officials to explore ways to ensure tips reach workers more directly.

Currently, when tips are added via card payments, they are often processed as part of a “service charge” on the bill.

This means they are treated as business income and subject to tax deductions of up to 55 percent.

As a result, the actual amount reaching restaurant workers is significantly reduced, discouraging tipping and reducing overall earnings. 

In response, the Turkish revenue administration has been working on a new proposal, shaped in consultation with restaurant industry stakeholders. Under the revised system, customers would still be able to tip by card, but the payments would be recorded explicitly as tips.

These tips would then be transferred directly to employees’ accounts after a 10 percent tax deduction, lowering the current tax burden.

Industry representatives say the original draft of the proposal, introduced last year, was misunderstood by the public.

“There was a false perception that this would add new taxes,” stakeholders explained, stressing that the goal is to reduce the current deductions and formalize tip payments in a way that benefits workers.

Tourism Restaurant Investors and Gastronomy Enterprises Association (TURYİD), which previously published statements on the issue, highlighted that card-based tipping systems are already common abroad.

The All Restaurants and Tourism Association (TÜRES) also emphasized the importance of reform.

“We proposed this bill to parliament last year, but it was shelved due to negative public perception,” TÜRES said in a statement. “Workers, employers, unions and the government all support it. Most payments today are made with credit cards. By facilitating tipping through these payments, we seek to help workers earn more and reduce turnover in the sector.”

TÜRES stated that currently, if a customer leaves a 100 Turkish Lira ($2.5) tip on a 1,000 lira ($25.6) bill, only 40 liras ($1) reach the worker. 

“Under the new system, this would increase this figure to 90 liras ($2.3). We estimate this change could raise workers’ tip income by at least 50 percent,” the association said.