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Why and for which purposes are taxes spent? amount upon deduction of exemption is compared with
the declaration threshold of TL 49.000. If it is less than TL
Tax expenditure is privileges or exceptions and exemptions 49.000, it is not required to be declared. If it is exceeding
in standard tax system decreasing the tax income of a such threshold, whole amount remaining after exemption
jurisdiction. Tax expenditures of Turkey has reached 25% of should be declared. Whole taxes levied by the entity (15% or
net tax income in 2021. Therefore, ineffective exception, 0%) making dividend payments can be deducted from the tax
exemption and reductions should be reviewed and abolished calculated based on declared dividend income.
and converted to tax income. 10% saving in terms of tax
expenditures means a tax income of TL 77,3 billion during Declaration threshold in terms of dividend income obtained
the following three years period. from sales of foreign shares during 2020 is applied as TL
2.600. If the related amount is less than such threshold,
In our view, application of wealth tax based on wealth of such income is not declared. If an income exceeding such
individuals living in high inflation environment, compared to threshold is obtained, whole income should be declared.
other developed and developing countries, shall be nowhere C. Income from Government Bonds and Treasury Bonds
near fair.
Interest income and trading profits obtained by individual
This is the summary of the article published in the investors from Government Bonds and Treasury Bonds are
Ekonomist magazine’s issue 2021/3, dated 07.02.2021. subject to 10% of withholding. On the other hand, such
withholding is applied as 0(zero)% in terms of interest income
obtained from gold-based government debt security.
Taxation of income, gained from Such income is not declared since withholding is deemed as

securities during 2020 final tax in terms of individual investors whether withholding
rate is 10% or 0%.

Taxation principles of income and profits gained by resident D. Income from Eurobonds
individuals from securities, issued or acquired after 2006,
during 2020 are as follows. Coupon interest income obtained from Eurobonds is
translated to Turkish Lira based on exchange buying rate of
I. Taxation of Income gained on the basis of Central Bank of Turkey on collection date of such coupon
securities regardless of its issuance date. Capital exchange differences
of Eurobonds are not deemed as income. If interest income
A. Income gained from sales of shares obtained from such securities exceeds TL 49.000 complete
amount should be declared.
Income gained from sales of securities investment fund
shares, traded on Istanbul Stock Exchange (BIST), are subject The income obtained from disposal of Eurobonds issued
to 10% of withholding (no withholding is applicable for those after January 1, 2006 in 2020 should be calculated through
held more than 1 year). Withholding rate for income obtained deducting TL equivalent of foreign exchange amount paid
from sales of other shares traded on BIST is determined as for buying these Eurobonds from the TL equivalent of
0%. Such income is not declared since withholding is deemed foreign exchange amount received in return for purchasing
as final tax. such bonds. Cost indexing method can be used during such
calculation. However, domestic PP difference should exceed
Trading (buying and selling) income which is not gained 10% in order to utilize this method.
through banks and intermediary institutions (e.g. shares not
listed on stock exchange) is declared according to general There is no exemption in terms of income calculated as
provisions of Income Tax Law. above and it is required to be declared regardless of income
amount.
Income gained from disposal of foreign shares in 2020 is
not subject to withholding. Trading income gained in 2020 E. Repo income
from such securities is required to be calculated on the
basis of Turkish Lira. Indexing method can be used in case A withholding of 15% is required to be made based on repo
the inflation difference (Domestic PPI) is over 10% between income obtained by resident taxpayer individuals in 2020.
buying and selling dates during the calculation of income. Such income is not declared since this withholding is deemed
Complete amount of such income, calculated accordingly, is as final tax in terms of individual investors.
required to be declared through income tax return.
F. Interest on deposits
B. Stock dividends (Dividend income)
Withholding rate applicable for foreign exchange deposit
Withholding is required to be made during distributing profit accounts are as follows.
share (dividend) to individual shareholders by resident Withholding
taxpayer entities. Such withholding rate is applied as 0% in rates
terms of dividend income obtained from shares of securities
investment partnership (mutual fund), real estate investment For drawing and call account and accounts having a 20%
trust and venture-capital trust while as 15% in terms of maturity up to 1 year (including 1 year)
dividend income obtained from other shares.
For accounts having a maturity more than 1 year 18%
50% of gross dividend income obtained from sales of shares
during 2020 is exempted from income tax. The remaining
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