With the reduction of the withholding tax rates from Turkish Lira deposit accounts, the size of TL deposits increased, albeit limited. According to data published by the central bank for the week ending October 9, the total amount of TL deposit accounts reached 1 trillion 573 billion 827 million 911 thousand TL, stating an increase of 37.1% compared to the same period last year.
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ISTANBUL (TR) - By the decision of the president, the tax deduction rates on interest paid on TL deposits published in the Official Gazette were reduced as of September 30, 2020. According to the weekly money and bank statistics for the week ending October 9, announced by the Central Bank of the Republic of Turkey (CBRT), the size of TL deposit accounts increased by 0.44% in the first week of the decision to comply, reaching TL 1 trillion 573 billion 827 million 911 thousand. Compared to the same period last year, TL deposits increased by 37.1%.
The total amount of deposits in the banking sector increased by 1.80% in the week ending October 9, reaching 3 trillion 601 billion 483 million 442 thousand TL. Deposits in foreign currency amounted to 1 trillion 891 billion 401 million 202 thousand liras.
Making an assessment on the issue, Hesapkurdu.com Credit Product Manager Ersin Yaşar explained that the move was aimed at increasing the attractiveness of TL and said, “The reduction of the withholding tax rates has been positive in terms of returning TL deposits over inflation and strengthening the real income position. With the reduction of the withholding tax rates on TL deposit interest, a step was taken to make TL deposit investments more advantageous, especially over foreign currency deposits. Although the effect of this was limited in the week ending October 9, interest in TL will increase with similar steps. In addition, we anticipate that the savings under the mattress will be brought into the economy by channeling the savings to TL deposit and participation accounts.
Stating that the deposit interest rate was 10.69% with an average increase of 1.13% in October 2020 compared to the previous month, Yaşar said, “While the average of 2020 was 8.93%, the highest average in the year was realized in October. On the other hand, the average for 2019 was 15.95%. In 2019, the highest average was in May with 20.17%. ".
Noting that deposit interest rates are basically determined in parallel with loan interest rates, Ersin Yaşar said, “This is because banks determine the loan interest rates by adding a certain profit margin to the interest they pay to collect deposits. As with loan interest rates, deposit rates are determined as sensitive to inflation to avoid any loss of value. In fact, the number of deposit accounts has been increasing recently, depending on the inflation rate. ".
Explaining that the most important change in the tax cut is the withdrawal from 10% to 0% from the Turkish Lira deposit account with a maturity of more than 1 year, Yaşar said, “According to the decision, the tax rate from 10 percent was reduced to 0 percent. In other words, money deposited in banks for more than 1 year for investment purposes will not be taxed. It will be a major factor for foreign investors to prefer Turkish banks. We will follow up the investment amounts from weekly and monthly data to be announced by the Banking Regulation and Supervision Agency
As a result of the change, a 15 percent deduction for due and notified accounts and futures accounts up to 6 months (including 6 months) was reduced to 5 percent, a 12 percent deduction for futures accounts up to 1 year (including 1 year) was reduced to 3 percent, and a 10 percent deduction for accounts longer than 1 year was reduced to 0%.
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