Turkey’s Revenue Administration has introduced Presidential Decision No. 8434, which brings significant adjustments to the withholding tax rates applied to various forms of income, particularly those from Turkish lira (TRY) deposit accounts.
This decision, initially scheduled to conclude on 30 April, 2024, is now extended until 31 July, 2024.
Here are the key modifications:
- For TRY deposit accounts maturing within 6 months and current call accounts, the withholding tax rate has been raised to 7.5% from the previous 5.0%.
- TRY deposit accounts maturing between 6 months and 1 year will now incur a withholding tax rate of 5.0%, up from the previous 3.0%
- TRY deposit accounts with a maturity exceeding 1 year will have a withholding tax rate of 2.5%, compared to the previous 0.0%
- TRY deposit accounts with a variable rate based on inflation and maturing over 1 year will maintain a 0% withholding tax rate.
Moreover, the decision extends the 0.0% withholding tax rate on earnings accrued from TRY deposit and participation accounts converted from foreign currency and gold-denominated accounts.
Additionally, the reduced withholding tax rates on income from bank bonds, bills, and lease certificates, where the fund user is a bank, have been adjusted as follows:
- For securities maturing within 6 months, the withholding tax rate increases to 7.5% from 5.0%.
- Securities maturing within 1 year will now face a withholding tax rate of 5.0%, up from 3.0%.
- Securities with a maturity exceeding 1 year will incur a withholding tax rate of 2.5%, compared to the previous 0.0%.
These adjusted rates also apply to gains from the disposal of such securities.
This decision, effective from 1 May, 2024, marks a significant change in Turkey’s withholding tax regime, impacting various forms of income and extending the implementation period for reduced withholding tax rates until the end of July, 2024.
