Money market funds enter a new era as zero withholding tax ends

Turkey has ended the zero-withholding-tax period for certain money market fund gains, raising the rate to 10 percent under a presidential decision published in the Official Gazette.

The new rate applies to gains earned by corporate income taxpayers, investment funds and investment partnerships from money market funds and free funds whose names include the phrase “money market.” The rate previously stood at zero percent.

The decision does not alter the zero-percent withholding rate for the same taxpayers’ gains from other funds outside the specified money market funds and related free funds.

The new rule applies to gains from funds purchased from the date the decision was published. It also includes a transition provision for funds bought before the decision took effect.

If those earlier funds are sold later, the portion of the gain earned between the decision’s publication date and the sale date will be subject to the 10 percent withholding tax.