Following the Constitutional Court's cancellation in
January1 of the reduced withholding tax rate of
0%2 applicable to capital gains realised by
non-residents in their trading of securities3 in Turkey
(on the basis of unequitability with resident investors who are
subject to 10%) rumors spread on the upcoming legislation
determining the new withholding tax rate (presumably applicable to
both residents and non-residents in accordance with the
Constitutional Court's decision).
On 3 April 2010 the Ministry of Finance finally put an end to
the rumors to a certain extent by issuing a press release
announcing that the new legislation will preserve the zero rate for
non-resident corporate investors and also open it to resident
corporate investors in relation to both equities and government
debt issues (T-Bills and Government Bonds).
Although the legislation is expected to enter into effect by the
end of April 2010, it remains to be seen whether, inter
alias, (i) all types of non-resident investment funds (in
addition to Turkey resident funds registered with the Turkish
Capital Markets Board) will qualify for the zero rate, and (ii)
private debt issues or other non-equity based products
will also benefit from the zero rate or will be subject to a 10%
rate. The press release also announced that individual investors,
both resident and non-resident, will not benefit from the zero rate
- these will be subject to a 10% withholding tax in relation to
investments in government (and probably private) debt issues.
1. By the Constitutional Court's decision published
in the Official Gazette dated 8 January 2010, No. 27456, (entry
into force is expected to be on 8 October 2010 by the end of the
ninth month starting from publication)
2. Promulgated by Law No. 5527 amending Temporary Article
67 of the Income Tax Law (published in the Official Gazette dated 7
July 2006, No. 26221 effective as of 7 July 2006)
3. i.e. Turkish Treasury Bills/Bonds, Turkish and
non-Turkish issues of sovereign and corporate bonds, mutual funds,
equities and derivative instruments.
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guide to the subject matter. Specialist advice should be sought
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