Tax Hike on TL Deposits and Funds Cuts Into Investor Returns

Türkiye has once again raised withholding tax (stopaj) rates on Turkish lira (TL) time deposits and investment funds, a move expected to lower net interest income for investors. The updated tax rates were announced in the Official Gazette following a presidential decree.

Under the new regulation, short-term savings instruments now face higher tax burdens. The withholding tax rate on TL deposits with maturities up to 6 months has risen from 15% to 17.5%, while accounts with maturities of up to 1 year will now be taxed at 15%, up from 12%. Likewise, investment fund earnings will also be taxed at 17.5%, up from the previous 15%.

These adjustments mean that investors will now see a reduction in net returns, particularly on short-term holdings.

Previous Tax Hike Was in February

This is the second tax increase this year. The last revision came on February 1, 2025, when the government raised withholding tax on TL deposits to 15% for up to 6 months, 12% for up to 1 year, and 10% for terms beyond 1 year.

Those rates were supposed to remain in effect until July 31, 2025, following a decision published on May 1, 2025. However, the latest decree brings forward another hike before that period expired.

Lower Yields and Shift to Alternatives

As net interest yields decline due to the increased tax burden, analysts expect a rise in investor interest toward alternative financial instruments. The change particularly affects short-term deposit holders, who may now reevaluate their savings strategies in search of better after-tax returns.