Turkey: Recent tax developments

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Turkey: Recent tax developments

intl-updates-small.jpg

Turkish tax law has been changed to include measures to protect the Turkish lira's value and a recent tax amnesty for the repatriation of foreign assets.

New withholding tax rates on savings

Turkey has recently faced currency problems, and the lira has been devalued by more than 40% against the US dollar since the beginning of the year.

The lira's weakness has led the government to introduce new monetary and fiscal policies, including recently issuing a presidential decree to counter lira volatility.

The decree introduced a temporary tax regulation on lira and foreign currency savings, the aim of which was to reduce lira fluctuations and create a stable investment environment in Turkey.

The regulation is applicable for three months from August 31 2018, and will allow interest and profit sharing to be paid to accounts which are opened or renewed in the next three months.

Accordingly, withholding tax rates applicable for the three-month period are shown in Table 1 alongside the previous ones.

Table 1

Account Type

Term

Previous Ratio

New Ratio

Foreign Exchange Deposits and Foreign Exchange Participation Accounts

Drawing and current call accounts and up to 6 months deposit accounts

18%

20%

Up to 1-year deposit accounts

15%

16%

More than 1-year deposit accounts

13%

13%

Turkish Lira Deposits and Turkish Lira Participation Accounts

Drawing and current call accounts and up to 6 months deposit accounts

15%

5%

Up to 1-year deposit accounts

5%

3%

More than 1-year deposit accounts

12%

0%


The table shows a considerable decrease in withholding rates on lira deposits and participation accounts. Particularly for funds held in savings accounts for more than a year, no withholding tax is applicable. This clearly indicates that the government supports long-term lira savings with its tax policy.

Amendment of recent tax amnesty

Turkey has introduced a new tax amnesty law (No. 7143) for the repatriation of foreign assets. One important aspect of the amnesty is that it allows tax exemption for the following incomes of individual and corporate income taxpayers (including those obtained before October 30 2018):

  • Income from the alienation of foreign participation shares;

  • Income from foreign participation;

  • Income from subsidiaries and permanent establishments.

This exemption also includes income from liquidation of foreign entities by individual and corporate income taxpayers.

The single requirement to benefit from the amnesty programme is to transfer this income to Turkey by December 31 2018 (the start date was May 18 2018).

The president is authorised to extend these dates for six months under the tax amnesty law, and he has used this authorisation.

Accordingly, income from: (i) the alienation of foreign participation shares; (ii) foreign participation; (iii) subsidiaries and permanent establishments including that received by April 30 2019; and (iv) income from the liquidation of foreign entities, including that obtained by June 30 2019, will be tax-exempt provided that it is transferred to Turkey by June 30 2019.

more across site & shared bottom lb ros

More from across our site

Saffery cautioned that documentation requirements in new government proposals must be limited if medium-sized companies are not exempted from TP
The global minimum tax deal is not viable without US participation, Friedrich Merz has argued
Section 899 of the ‘one big beautiful’ bill would have spelled disaster for many international investors into the US, but following its shelving, attention turns to the fate of the OECD’s pillars
DLA Piper’s co-head of tax for the US and Latin America tells ITR about her fervent belief in equal access to the law, loving yoga, and paternal inspirations
Tax expert Craig Hillier agrees with the comparison of pillar two to using a sledgehammer to crack a nut
The amount is reported to be up 57% from the £5.6bn that the UK tax agency believes was underpaid in the previous year
The US president also unveiled a new 50% levy on copper imports; in other news, a UK wealth tax proposal has been criticised by the Institute for Fiscal Studies
Wim Wuyts, who had been head of the specialist tax network since 2017, is moving on to a new role with WTS’s Belgian member firm
MNEs are increasingly using algorithmic tools in TP. Sahasranshu Dash argues that data ethics should therefore plug directly into the TP design process
The Institute of Chartered Accountants in England and Wales also queried whether HMRC resources could be better spent scrutinising larger entities
Gift this article