Withholding Tax Rate on Money Market Funds Raised to 10 Percent
With a Presidential Decree published in the Official Gazette, the tax withholding rate on earnings from money market funds has been changed.
The tax withholding rate applied to earnings derived from participation shares of money market funds and open-ended funds with the phrase 'money market' in their titles has been re-determined.
Decree Published in the Official Gazette
The Presidential Decree regarding the tax withholding to be made on earnings obtained from money market funds entered into force after being published in the Official Gazette.
Change in the Withholding Tax Rate
Pursuant to provisional article 67 of the Income Tax Law No. 193, the withholding tax rate, which was previously applied as 0 percent, has been increased to 10 percent.
This rate increase covers only the earnings derived from the participation shares of money market funds and open-ended funds containing the phrase money market in their titles.
Application for Institutional Investors
These withholding amounts deducted from domestic institutional investors can be offset against the provisional tax to be declared in three-month taxation periods.
For foreign institutional investors, the aforementioned 10 percent deduction constitutes final taxation.
Other Funds and Investor Groups
The withholding tax rate will continue to be applied as 0 percent for all other earnings of domestic and foreign institutional investors excluding money market funds.
No changes have been made to the 17.5 percent withholding tax regime applied to the investment fund participation share earnings of domestic and foreign real persons.
Gradual Basis in Terms of Time
A gradual basis was adopted in the application of the rate change in terms of time, and earnings from newly acquired participation shares were directly subjected to this rate.
For participation shares acquired prior to the effective date, earnings generated until the date of publication were excluded from the scope.