Bad news for those with foreign currency accounts at banks

Authorization is being sought to increase the tax paid by those who have foreign currency accounts at banks, those who purchase foreign currency-denominated Treasury securities, and those who earn income from stocks to up to 40 percent.

With a new omnibus bill submitted to the Grand National Assembly of Turkey (TBMM) by AKP deputies, President Tayyip Erdoğan is being granted the authority to increase the tax rates applied to interest income earned from foreign currency and money earned from the stock market to up to 40 percent. The economic administration had previously imposed a series of additional burdens on banks, including increasing reserve requirements, to curb savers' demand for foreign currency. Now, preparations for additional costs aimed directly at pruning the foreign currency earnings of savers are underway.

THE STOCK MARKET IS THE SECOND TARGET

With the 12th article of the omnibus bill, it is envisaged that the President will be granted the authority to levy a tax of up to 40 percent on returns provided from securities issued in foreign currency (Eurobonds or dollar-denominated debt instruments) and on interest and profit-share income obtained from accounts opened in banks in foreign currency. The current authority to increase is limited to 30 percent, and the tax burden has risen to 25 percent. Once the law enters into force, if the authority is fully utilized, it will become more advantageous to purchase Turkish Lira-denominated debt instruments from the Treasury instead of foreign currency and to open TL accounts at banks instead of foreign currency accounts. The omnibus bill proposes to increase the President's authority to raise tax rates applied to gains obtained from stock market trading from 'up to 15 percent' to 'up to 40 percent'. This authority can be used at different rates depending on the issuance date of the stock, the issuers, and the opening date and type of the account. The tax authority is currently being used in the direction of reduction rather than an increase.

ADVANTAGE FOR ATHLETES EXTENDED

The application of low-rate income tax on earnings obtained by athletes, primarily football players, was normally set to end at the end of this year. However, with the omnibus bill, this period is being extended for another 5 years until the end of 2028, and the President is being granted the authority to extend it for an additional 5 years in the future. Currently, 20 percent tax is collected from the earnings of athletes playing in the top league in league-based sports, 10 percent from athletes in the league below, and 5 percent from those in other leagues and those not subject to a league system.

News Source: 12punto