According to the decree published in the Official Gazette, the tax advantage in lira deposit accounts has been extended until the end of the year. The decree also extends the tax cut on income from lira-denominated mutual funds, bonds and Islamic debt issued by banks until the end of the year. In September last year, tax breaks were introduced on lira deposits to support the currency.
The withholding rates applied to TRY deposits have been applied as follows since September 2020:
· From 15% to 5% for accounts with a maturity of up to 6 months (including 6 months),
· From 12% to 3% for deposit accounts up to 1 year (including 1 year),
· It was reduced from 10% to 0% for accounts with a maturity longer than 1 year.
With the extension of the withholding tax exemption, the net return effect from lira deposits will not be reduced. If the tax advantages were not extended, there would be additional deductions with tranches varying according to the maturity. As inflation rises above interest rates, there will be a decrease in rates applied to lira deposit accounts after the last Central Bank cut. In terms of real returns, this will reduce the attractiveness of local money and increase the tendency of foreign currency deposits. Re-increasing the tax brackets would further reduce the net income effect. The withholding tax, which is zero in terms of more than 1 year, also aims to encourage savers to longer maturities. Because the most common terms are usually 1 and 3 months.
Kaynak Tera Yatırım-Enver Erkan
Hibya Haber Ajansı
