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Withholding tax

Withholding tax is tax deducted at source from investment income at the time of payment and transferred to the state. Withholding tax is deducted by the bank or broker and paid to the Treasury on income such as deposit interest, fund returns, bond coupons and dividends.
Contents
  1. 1.Key points
  2. 2.Formula / calculation
  3. 3.Interpretation
  4. 4.Pitfalls
  5. 5.Frequently asked questions

Key points

  • In most cases investors do not file a separate return; the withholding is the final tax.
  • Net return = Gross return × (1 − Withholding rate).
  • rates change often; check current legislation.

Formula / calculation

Common rates (subject to periodic change): deposit interest is tiered by maturity; fund returns 0–15% by fund type (0% on equity-intensive funds held longer than a year); BIST stock trading gains 0%; dividends 15% (half exempt in filing); early BES exit 15%.

Interpretation

Rates can change by presidential decree.

Net return: Net return = Gross return × (1 − Withholding rate). For the same gross return, a lower-withholding instrument yields more net; withholding rates must therefore be considered when comparing deposits with funds.

Pitfalls

rates change often; check current legislation. Foreign stock and crypto gains are taxed differently. Income subject to withholding may need to be declared when it exceeds certain thresholds.

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Frequently asked questions

Withholding tax is tax deducted at source from investment income at the time of payment and transferred to the state.

Common rates (subject to periodic change): deposit interest is tiered by maturity; fund returns 0–15% by fund type (0% on equity-intensive funds held longer than a year); BIST stock trading gains 0%; dividends 15% (half exempt in filing); early BES exit 15%.

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