The Official Gazette Published: Tax Rates Raised on Certain Purchases. The tax rates applied to financing bonds, foreign currency and gold purchases have been increased. Financing bonds, which banks issue and have been favored due to their lower taxation, and transactions involving purchases of foreign currency and gold are now subject to higher tax rates. According to the decision published in today’s Official Gazette and enacted by presidential decree, the withholding tax on financing bonds has been raised from 10% to 15%. With this increase, the tax rate on these instruments is now aligned with the deposit tax rate. In addition, the Banking and Insurance Transactions Tax (BSMV) applied to foreign currency and gold purchase and sale transactions has been raised from 0.2% (per mille 2) to 1%.
These changes take effect immediately to secure resources and mitigate the economic impacts of the coronavirus pandemic. The new measures respond to recent trends where banks increasingly used short-term financing bonds as an alternative to deposits and a source of funding, which led to tax revenue losses. As a result, withholding tax on interest earned by individual investors from short-term deposits and financing bonds has been equalized.
Withholding Remains Zero for Institutional Investors
Withholding tax for financing bonds held by institutional investors will continue to be applied at a 0% rate. Regarding the Banking and Insurance Transactions Tax, foreign currencies such as dollars and euros sold by banks, authorized institutions and financial organizations, as well as non‑physical gold sales tied to accounts opened at banks (such as gold or deposit accounts), are subject to a foreign exchange transaction tax based on the value of those sales.
However, BSMV is applied at a zero rate for the following foreign exchange transactions.
- Foreign exchange sales conducted between banks and authorized institutions or among themselves,
- Foreign exchange sales made to the Treasury and Ministry of Finance,
- Foreign exchange sales made by a bank that provided or facilitated a foreign currency loan for the repayment of that loan to the borrower,
- Foreign exchange sales to businesses that hold industry and registration certificates,
- Foreign exchange sales intended for exporters who are members of exporters’ associations.