09.07.2025 08:20
The withholding tax rates applied to investment funds and short-term deposits have been increased by a decision published in the Official Gazette. For deposit accounts with maturities of up to 6 months, the rate has been raised from 15% to 17.5%, and for accounts with maturities of up to 1 year, it has increased from 12% to 15%.
The withholding tax rate applied to deposits and funds has been increased by a decision published in the Official Gazette. While the withholding tax on investment funds has risen from 15% to 17.5%, for term accounts, the withholding tax has increased from 15% to 17.5% for accounts with a term of up to 6 months, and from 12% to 15% for accounts with a term of up to 1 year.
INTEREST RETURNS WILL DECREASE
Those who invest their money in investment funds or deposits will see a decrease in their interest returns. In an environment where a rate cut is expected from the Central Bank, an indirect interest rate reduction has begun for investors.
WHAT WILL BE THE LOSS?
The withholding tax is deducted from the interest return, not the principal. For example, if a depositor has 1 million lira and ties their money to a 32-day interest at an annual interest rate of 48%, the monthly gross interest return amounts to 42,082 lira.
When the withholding tax was 15%, a deduction of 6,312 lira was made, while with the current update, the deduction with the increased withholding tax of 17.5% amounts to 7,364 lira. In other words, due to the change in the withholding tax rate, depositors who will open new term accounts will forfeit 1,052 lira from their interest returns.
15% VALID FOR EXISTING DEPOSITS
For deposits and funds that have not matured and are currently available, the old withholding tax rates will remain valid. In the case of renewing deposits, the new withholding tax will be applicable. For existing funds, the old rates will apply, while the withholding tax will increase for new funds. If additional contributions are made to existing funds, the withholding tax rate will rise to 17.5%. Therefore, it would be more reasonable to be cautious when making additional contributions to funds, either by using different accounts or by selecting funds with similar returns.
WHAT WILL INVESTORS DO NOW?
The rising withholding tax rates, along with the expected decrease in deposit interest rates, have led to an increased expectation that investors will turn to different instruments. Investment decisions are expected to be made by calculating the returns and expectations from foreign currencies and gold. Since there is no withholding tax on physically held gold and foreign currencies, investors are expected to act carefully when making savings decisions.
A DECISION WAS EXPECTED ON JULY 31
With the recently announced withholding tax regulation, the change was expected to take place on July 31, 2025. On this date, a decision will again be published in the Official Gazette, and if deemed necessary, the withholding tax rates may be changed.
THE CENTRAL BANK WILL HAVE THE FINAL SAY
The Monetary Policy Committee of the Central Bank of the Republic of Turkey will meet on July 24, 2025, to announce the new interest rate decision. Market expectations indicate that a reduction of 350 basis points is likely. The current policy interest rate of 46% is expected to decrease to around 42.5%.