Turkey increases taxes on deposit and investment income to reduce budget deficit

The Turkish authorities have decided to increase tax rates on income from deposits in Turkish lira and mutual funds in an effort to strengthen public finances and reduce the growing budget deficit. This was reported by Bloomberg, citing an official decree from President Recep Tayyip Erdoğan.

According to the document published in the Official Gazette, the tax rate on income from short-term lira deposits (up to six months) has been raised from 15% to 17.5%. For deposits up to one year, the rate increased from 12% to 15%. Similar changes apply to income from mutual funds — the tax was raised from 15% to 17.5%.

Thus, the government is tightening fiscal policy as part of efforts to address the budget deficit, which has worsened due to inflation, the depreciation of the lira, and large-scale public spending.

Nevertheless, analysts warn that increasing taxes on financial instruments denominated in the national currency could jeopardize efforts to de-dollarize the economy. Ankara’s push to reduce reliance on foreign currencies may face challenges if lira-based investments become less attractive to savers and investors.