28.06.2022/43
Extension of the Period for the Application of Discounted Withholding Tax on Certain Taxes Under Article 67 of the Income Tax Law
Summary: With Presidential Decree No. 5752, published in the Official Gazette No. 31880 on 28.06.2022, amendments were made to the Council of Ministers Decision No. 2006/10731, extending the period for the application of discounted withholding tax rates on income from deposit and participation accounts, as well as income from some investment funds and bank financing bonds, until 31.12.2022. Additionally, the withholding tax rate on income and gains derived from products issued by mortgage financing institutions has been set at 5% until 31.12.2022.
According to the Decision, the following withholding tax rates apply:
1) Withholding Tax Rates on Deposit Interest and Profit Shares
a) Withholding Tax Rates on Deposit Interest
i) 5% on non-interest-bearing and notice accounts and accounts with maturities up to (and including) 6 months,
ii) 3% on accounts with maturities up to (and including) 1 year,
iii) 0% on accounts with maturities exceeding 1 year,
iv) 0% on accounts with variable interest rates based on inflation over 1-year maturities,
v) 0% on foreign currency protected deposit accounts and foreign currency deposit accounts converted to Turkish lira at the exchange rate,
vi) 0% on gold-based deposit accounts converted to Turkish lira at the conversion rate.
b) Withholding Tax Rates on Profit Shares Paid Against Participation Accounts by Participation Banks
i) 5% on non-interest-bearing, notice, and special current accounts, and accounts with maturities up to (and including) 6 months,
ii) 3% on accounts with maturities up to (and including) 1 year,
iii) 0% on accounts with maturities exceeding 1 year,
iv) 0% on foreign currency protected participation accounts and participation fund accounts converted to Turkish lira at the exchange rate,
v) 0% on gold-based participation fund accounts converted to Turkish lira at the conversion rate.
2) Withholding Tax Rates on Bank Bonds and Bills and Lease Certificates Issued by Asset Leasing Companies, and Withholding Tax on Earnings from Investment Funds
a) Withholding Tax Rates on Lease Certificates
i) 5% on income from certificates with maturities up to (and including) 6 months,
ii) 3% on income from certificates with maturities up to (and including) 1 year,
iii) 0% on income from certificates with maturities exceeding 1 year,
iv) 5% on capital gains from the sale of certificates held for less than 6 months,
v) 3% on capital gains from the sale of certificates held for less than 1 year,
vi) 0% on capital gains from the sale of certificates held for more than 1 year.
b) Withholding Tax Rate on Earnings from Investment Funds
A 0% withholding tax will apply to income and gains derived from investment funds (excluding variable, mixed, eurobond, foreign debt, foreign, free funds, and funds with “foreign exchange” in the title).
3) Withholding Tax Rate on Income and Gains from Products Issued by Mortgage Financing Institutions
With this Decision, Temporary Article 5 was added to the Council of Ministers Decision No. 2006/10731, and the withholding tax rate on income and gains derived from asset-backed securities, mortgage-backed securities, and collateralized securities issued by mortgage financing institutions will be set at 5% until 31.12.2022, for those acquired between the effective date of the Decision (28.06.2022) and 31.12.2022 (inclusive).
You can access the relevant Decision here.
Best regards,
BİLGENER
