The income tax withholding regulation applied for Turkish Lira deposits expires on April 30. While the withholding tax rate continues to be 5 percent for accounts opened until this date, the withholding tax rate may increase to 15 percent if the regulation is not extended for later.
Withholding tax rates according to the maturity of deposits are determined as follows: Withholding tax will be applied as 5 percent for maturities up to 6 months, 3 percent for maturities up to 1 year, and 0 percent for maturities longer than 1 year. However, if no regulation is made, withholding tax rates are expected to increase to 15 percent in all maturities.
By renewing the maturity periods of deposits, investors can benefit from 5 percent income tax withholding until April 30, 2024. In this way, a higher return can be achieved than the interest income from the principal.
On the other hand, banks started to increase interest rates due to the increase in the Central Bank’s policy interest rate. While the increasing trend in interest rates continues, the expectation of economic recovery and price stability under control stands out as the dominant view in the markets. In this case, deposit interests are expected to provide real returns above the current inflation rate.
Low withholding tax rates applied to Turkish Lira deposits were introduced to support the liraization strategy.
It is not clear whether this regulation will be extended after April 30.
Increasing withholding tax rates will reduce the income of depositors.
Tags: Attention invest money deposits Interest Income Receive Bank Decrease
