Temporarily reduced withholding tax rates have changed. They had been lowered to 5 percent

According to the Presidential decree published in the Official Gazette, the withholding tax rate on accounts with maturities of up to 6 months has increased from 5 percent to 7.5 percent.

The withholding tax rate for accounts with maturities of up to 1 year has increased from 3 percent to 5 percent.

The 'Presidential Decree on Withholding Rates Included in the Provisional Article 67 of the Income Tax Law No. 193' has been published in the Official Gazette and entered into force.

According to the decree, withholding tax rates applied to Turkish Lira deposits have been updated.

Withholding tax will be zero for deposits converted to TL from currency-protected or foreign currency accounts.

The withholding tax rate on accounts with maturities of up to 6 months has increased from 5 percent to 7.5 percent. The withholding tax rate for accounts with maturities of up to 1 year has increased from 3 percent to 5 percent.

The withholding tax rate, which was zero for maturities longer than 1 year, has become 2.5 percent.

INCOME DERIVED FROM INVESTMENT FUNDS

With the decree, in order to encourage investors to turn to securities issued in Turkish Lira, the duration of the reduced withholding tax application on income derived from investment funds whose portfolios consist of Turkish Lira and securities issued in Turkish Lira has been extended until July 31.

To prevent permeability between investment instruments, the withholding tax rate on income derived from Turkish Lira investment funds has been set at 7.5 percent instead of 10 percent.

Furthermore, for income to be derived from this day forward from investment fund participation shares acquired between December 23, 2020, and April 30, 2024, the 0 percent rate that was valid before the change made by this decree will be applied.

For income derived from variable, mixed, Eurobond, foreign debt, foreign, free funds, and investment funds with the word "foreign currency" in their title, a 10 percent withholding tax will continue to be applied as before.

With the decree, the 0 percent withholding tax application for income derived from government bonds and Treasury bills, as well as lease certificates issued by asset leasing companies established by the Treasury, has been extended until July 31.

The withholding tax rate on income derived from these securities will continue to be applied as 0 percent instead of 10 percent.

INCOME DERIVED FROM DEBT INSTRUMENTS ISSUED BY BANKS

With the decree, the duration of the reduced withholding tax application on income derived from bonds and bills issued by banks and income derived from lease certificates where the fund user is these banks has been extended until July 31. In the reduced withholding rates applied according to maturities, changes were made by determining rates based on maturities, as is the case with deposits.

Within the scope of the regulation, the withholding tax rate applied to income derived from these securities will be 7.5 percent for those with maturities up to 6 months (including 6 months), 5 percent for those with maturities up to one year (including 1 year), and 2.5 percent for those with maturities longer than one year, instead of 10 percent.

With the decree, for income to be derived from this day forward from bank bonds and bills acquired between December 23, 2020, and April 30, 2024, and lease certificates where the fund user is these banks, the reduced rates (5 percent, 3 percent, and 0 percent) that were valid before the change made by this decree will continue to be applied.

DURATION EXTENDED FOR REDUCED WITHHOLDING APPLICATION

With the regulation, the validity period of the reduced withholding tax application valid for income and earnings derived from asset-backed securities, mortgage-backed securities, asset-covered securities, and mortgage-covered securities issued by mortgage finance institutions established subject to the provisions of the Capital Markets Law has been extended until July 31, and the reduced withholding tax rate has been set at 7.5 percent.

Additionally, for income to be derived from this day forward from the aforementioned securities acquired between June 28, 2022, and April 30, 2024, the 5 percent rate, which was valid before the change made by this decree, will be applied.

The withholding tax rate applied to interest and profit share income derived from currency-protected deposit accounts will be applied as 0 percent. The application of the reduced withholding tax rate for income derived from these accounts will continue as 0 percent until July 31.

News Source: AA