The Anatolia news agency, quoting anonymous sources, reported on Tuesday that the Revenue Administration (GİB) and the General Directorate of Revenue Policies have held a series of meetings to determine a new withholding tax regime. In October of last year, the Constitutional Court ruled that it was unconstitutional not to charge foreign investors a withholding tax while Turkish nationals are forced to pay 10 percent. The court gave the government nine months to change the law regarding the withholding tax.
The officials found that eliminating the withholding tax on bonds and shares for both domestic and foreign investors would result in a loss of TL 1.2 billion in tax revenue, the sources said, which made it possible to eliminate the withholding tax for both domestic and foreign investors. To avoid losing such a large amount of revenue, Finance Ministry officials are considering fixing a rate of between 5 percent and 10 percent for both domestic and foreign investors. Sector representatives participating in the meetings said the new withholding tax will be between 3 and 5 percent, Anatolia said.
In regards to wage earners and other income earners, the sources said that two alternatives were discussed during the meetings. According to one alternative, two different withholding tax levels will be applied to wage earners and other income earners, while the other option is to retain the same tax levels for both sets of tax brackets. The Finance Ministry looks more favorably on the second alternative, the sources said, adding that the government’s final decision will be one of these two options.
