Speaking to business reporters in Ankara, Akgiray said the Finance Ministry and the SPK were carrying out joint studies to make the withholding tax on bonds and stock shares equal for domestic and foreign investors and that the decision to this end would be made shortly.
In October 2009 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 on withholding tax. Asked about the studies, Akgiray said they were continuing to work on the issue and that he expected the withholding tax rate may be set at 10 percent for both local and foreign investors.
Recalling that a 10 percent withholding tax is the lowest level in Europe, Akgiray said they would agree to stipulate the amount as 10 percent should the Finance Ministry approve this rate. He said they do not think the rate would deter foreign investors. As for any potential negative impact on Turkish investors who operate under foreign company names in the market, Akgiray said the SPK is not interested in whether they will be affected or not. Some local investors who did not have the advantage of zero withholding tried to find a solution by creating a legal foreign entity abroad to benefit from the advantages provided for foreigners. These types of investors are called “foreigners with a moustache,” which indicates that they are not really foreign investors but rather Turks who are trying to take advantage of regulations governing foreign investors.
Mentioning an earlier court decision to annul withholding tax for foreign investors, he said this was a “wrong decision.”
