New tax regulation for deposits and exchange-protected accounts: Withholding tax rate increased

According to the decision published in the Official Gazette, changes have been made to the withholding tax rates applied to capital market instruments to increase fairness and efficiency in taxation.

Starting today, the withholding tax rates to be applied to interest and profit shares paid on time deposit/participation accounts opened or renewed will be 15 percent for accounts with a maturity of up to 6 months (including 6 months), 12 percent for accounts with a maturity of up to 1 year (including 1 year), and 10 percent for accounts with a maturity longer than 1 year. These rates will continue to be applied as 10 percent, 7.5 percent, and 5 percent for accounts opened/renewed between November 1, 2024, and January 31, 2025; 7.5 percent, 5 percent, and 2.5 percent for accounts opened/renewed between May 1 and October 31, 2024; and 5 percent, 3 percent, and 0 percent for those opened or renewed before May 1, 2024.

FX-PROTECTED DEPOSITS

In order to address areas of incomplete taxation, the withholding tax rates applied to interest and profit shares obtained from FX-protected deposit and participation accounts have been increased to align them with other Turkish Lira deposit and participation accounts.

Accordingly, starting today, the withholding tax rates to be applied to interest and profit shares paid on FX-protected deposit/participation accounts opened or renewed will be applied in line with other Turkish Lira deposit accounts as 15 percent for accounts with a maturity of up to 6 months (including 6 months), 12 percent for accounts with a maturity of up to 1 year (including 1 year), and 10 percent for accounts with a maturity longer than 1 year.

These rates will be maintained at 10 percent, 7.5 percent, and 5 percent for accounts opened or renewed between November 1, 2024, and January 31, 2025; 7.5 percent, 5 percent, and 2.5 percent for accounts dated between August 1 and October 31, 2024; and 0 percent for accounts opened or renewed before August 1, 2024.

INCOME FROM DEBT INSTRUMENTS

To strengthen macro-financial stability, the reduced withholding tax rates applied to income from debt instruments issued domestically by banks have also been reverted to general rates.

Accordingly, the withholding tax rate to be applied to income obtained from these securities acquired starting today will be 15 percent for those with a maturity of less than 1 year, and 10 percent for others.

For income obtained from bank bonds and bills acquired before the decision, as well as lease certificates issued by asset leasing companies where the fund user is these banks, the previously determined rates based on maturity and holding period will be applied.

INVESTMENT FUNDS

With the regulation made to ensure efficiency in taxation and in line with the Ministry's principle of "taxing those who earn more," the withholding tax rate applied to investment funds, which was 10 percent, has been increased to 15 percent for gains to be obtained from investment fund participation shares acquired starting today.

For income to be obtained from participation shares acquired before the decision, the withholding tax rates for the relevant periods will continue to apply.

There was no change to the 0 percent withholding tax rate applied to gains from equity-intensive fund participation shares and from venture capital investment fund and real estate investment fund participation shares held for more than two years.

CERTAIN SECURITIES INCOME

In order to eliminate tax advantages between different instruments, the 7.5 percent reduced withholding tax rate application valid for income and gains from asset-backed, mortgage-backed, asset-covered, and mortgage-covered securities issued by mortgage finance institutions established under Capital Markets Board (SPK) provisions has been terminated, and the 10 percent general rate application has been adopted.

For income to be obtained from these securities acquired before the decision, withholding tax rates will continue to be applied as 7.5 percent for those acquired between May 1, 2024, and January 31, 2025, and 5 percent for those acquired before April 30, 2024.

The 0 percent reduced withholding tax rate application for income obtained from government bonds and Treasury bills, as well as lease certificates issued by asset leasing companies established by the Treasury, will be maintained.

In this context, the withholding tax rate for income to be obtained from these securities acquired until April 30 will continue to be applied as 0 percent.