A new era for money market funds: Withholding tax rate changes

Turkey has introduced a 10% withholding tax on earnings from money market funds, ending the 0% rate previously applied to certain institutional investors. The change took effect after a presidential decree was published in the Official Gazette.

The new rate applies to corporate income taxpayers, investment funds and investment partnerships earning income from money market funds. It also covers unregulated funds whose names include the phrase “money market.”

The regulation does not change the 0% withholding tax applied to these taxpayers’ earnings from funds outside the money market funds and the specified unregulated funds. The distinction leaves the existing treatment of other fund earnings in place.

The change also includes funds purchased before the decree was published. The 10% rate will apply to funds bought from the publication date onward. If funds purchased before the decision are sold later, a transitional provision will apply to the portion of earnings attributable to the period between the decree’s publication and the sale date.