01.02.2025 10:22
In line with the principle of "taxing those who earn more" set by the Ministry of Treasury and Finance, the withholding tax rate applied to the gains from investment fund shares has been increased to 15% while making regulations on the taxation of financial investment instruments. This rate will be the highest tax deduction ever applied to deposit interest in the history of the Republic of Turkey.
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According to information obtained from the Ministry, with the Decision, changes were made to the withholding tax rates applied to capital market instruments to increase fairness and efficiency in taxation.
In order to contribute to the balanced distribution of the tax burden, the reduced withholding tax rates applied to interest and profit shares obtained from Turkish lira deposits and participation accounts were increased, returning to the general rates.
As of today, the withholding tax rates to be applied to interest and profit shares paid on newly opened and renewed term deposit/participation accounts will be 15% for accounts with a term of up to 6 months (including 6 months), 12% for accounts with a term of up to 1 year (including 1 year), and 10% for accounts with a term longer than 1 year.
These rates will continue to be applied as 10%, 7.5%, and 5% for accounts opened/renewed between November 1, 2024, and January 31, 2025; 7.5%, 5%, and 2.5% for accounts opened/renewed between May 1 and October 31, 2024; and 5%, 3%, and 0% for those opened or renewed before May 1, 2024.
INCREASE IN TAX ON CURRENCY-PROTECTED DEPOSITS
To complete the areas of under-taxation, the withholding tax rates applied to interest and profit shares obtained from currency-protected deposits and participation accounts were increased to align with other Turkish lira deposits and participation accounts.
Accordingly, as of today, the withholding tax rates to be applied to interest and profit shares paid on newly opened or renewed currency-protected deposit/participation accounts will be 15% for accounts with a term of up to 6 months (including 6 months), 12% for accounts with a term of up to 1 year (including 1 year), and 10% for accounts with a term longer than 1 year, in line with other Turkish lira deposit accounts.
These rates will be maintained as 10%, 7.5%, and 5% for accounts opened or renewed between November 1, 2024, and January 31, 2025; 7.5%, 5%, and 2.5% for accounts dated August 1 to October 31, 2024; and 0% for accounts opened or renewed before August 1, 2024.
INCREASE IN WITHHOLDING TAX ON INCOME FROM DEBT INSTRUMENTS
To strengthen macro-financial stability, the general rates were restored for the reduced withholding tax rates applied to income obtained from debt instruments issued domestically by banks. Accordingly, as of today, the withholding tax rate on income obtained from these securities acquired will be 15% for those with a term of less than 1 year and 10% for others.
For income obtained from bank bonds and bills acquired before the decision, as well as from lease certificates issued by asset leasing companies where the fund user is these banks, previously determined rates will be applied based on terms and holding periods.
INCREASE IN TAX RATE ON INVESTMENT FUNDS
To ensure efficiency in taxation and in line with the Ministry's principle of "collecting more tax from those who earn more," the withholding tax rate applied to investment funds, which was 10%, has been increased to 15% for gains obtained from investment fund participation shares acquired as of today. The withholding tax rates for income obtained from participation shares acquired before the decision will continue to apply as per the relevant periods.
No changes were made to the withholding tax rate of 0% applied to gains obtained from participation shares of equity-heavy funds and venture capital investment funds and real estate investment fund participation shares held for more than two years.
The general rate application has also been implemented for some securities income.
END OF DISCOUNTED WITHHOLDING TAX APPLICATION
To eliminate tax advantages among different instruments, the 7.5% discounted withholding tax rate applicable to income and gains obtained from asset-backed and mortgage-backed securities issued by mortgage finance institutions established under the provisions of the Capital Markets Board has been terminated, and the general rate of 10% will be applied.
For income obtained from these securities acquired before the decision, the withholding tax rates will continue to be applied as 7.5% for those acquired between May 1, 2024, and January 31, 2025, and 5% for those acquired before April 30, 2024.
The 0% discounted withholding tax rate applied to income obtained from government bonds and treasury bills, as well as from lease certificates issued by asset leasing companies established by the Treasury, will continue to be applied.
In this context, the withholding tax rate on income obtained from these securities acquired until April 30 will continue to be applied as 0%.
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