Turkish Tax News

New Tax Rates on Interest Payment to Abroad by by Turkish Resident Companies

Withholding tax rate on interest from bond issued by Turkish resident companies in abroad has been changed.

Before the change, rate structure was as follows; 

  • Interest from the bonds which has maturity less than 1 year 10 %,
  • Interest from the bonds which has maturity more than one year but less than three 7 %,
  • Interest from the bonds which has maturity more than three years but less than five 3 %,
  • Interest from the bonds which has maturity more than five years 0 %

The new rate structure on the interest from bond is as follows;

  • Interest from the bonds which has maturity less than 1 year 7 %,
  • Interest from the bonds which has maturity more than one year but less than three 3 %,
  • Interest from the bonds which has maturity more than three years 0 %,

On the other hand, withholding tax rate on interest paid by Turkish resident banks on

  • subordinated loans from abroad and
  • loans on securitizations in abroad

 has been changed from 1% to 0%.

The change is in fact a reduction of the withholding tax on the bonds, subordinated loans and loan on securitizations. It seems that Turkey tries to reduce cost of funding even for the short-term borrowings from abroad of the Turkish banks and other resident companies..

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