Istanbul: Turkey's Finance Ministry envisages zero withholding tax on Turkish bond transactions for companies including mutual funds, but a 10 per cent tax for individuals under current reform plans, it said on Saturday.
Its statement came after sources told media foreign investors may face a 10 per cent withholding tax under a draft proposal to be presented to Turkey's Prime Minister Tayyip Erdogan this week.
Turkey exempted foreign but not local investors from withholding tax in 2006 in order to attract inflows, but the Turkish Constitutional Court ruled last year this breached laws stipulating equal treatment, ordering the government to overhaul the legislation.
"It is envisaged that the withholding tax imposed on companies [including mutual funds] will be zero per cent and on other tax payers [individuals and other bodies] will be 10 per cent," the statement said.
It said the withholding tax on share transactions would remain zero for all investors. Foreigners or non-residents hold around 7.5 per cent of Turkish bonds, according to Treasury data.
