Withholding Tax in Türkiye: 2026 Outlook and Investment Fund Changes
Withholding tax is an income tax deducted at source and remitted directly to the tax authorities. In Türkiye, significant amendments regarding the taxation of investment fund gains will come into force in 2026.
Definition and Scope of Withholding Tax
Withholding tax applies to certain types of income, including those from securities. It is deducted at source by the payer and transferred to the tax office. In Türkiye, this mechanism is regulated under the Income Tax Law, Temporary Article 67, which governs the taxation of capital market returns through withholding.
Changes in Investment Fund Withholding Rates in 2026
According to the Presidential Decree, effective March 27, 2026, significant changes will apply to the taxation of investment fund income:
| Fund Type | Withholding Rate (2026) |
|---|---|
| Equity-intensive funds traded on TEFAS | 0% |
| Venture capital funds traded on TEFAS (held for 2+ years) | 0% |
| Real estate investment funds traded on TEFAS (held for 2+ years) | 0% |
| Unlisted free equity-intensive funds | 17.5% |
| Other investment fund gains | 17.5% |
Key Change
The most notable adjustment is that unlisted free equity-intensive funds are no longer subject to a 0% withholding rate; instead, they now carry a 17.5% tax rate. This change specifically targets funds not traded on the Türkiye Electronic Fund Trading Platform (TEFAS), aligning taxation with market transparency goals.
Important Implementation Details
Transition rules: The new withholding rates apply to fund participation shares purchased on or after March 27, 2026. Investments acquired before this date will continue to benefit from the previous tax rates. However, any additional purchases of existing funds after this date will be subject to the updated rate.
Extension of Temporary Article 67: The regulation governing the withholding taxation of capital market income has been extended until 2030, confirming the central role of this mechanism in Türkiye’s medium-term tax strategy.
Zero Withholding on Government Bonds
Government bonds and treasury bills continue to enjoy preferential tax treatment. Gains from instruments acquired between December 22, 2021, and June 30, 2026, are exempt from withholding—subject to a 0% rate. This policy supports investment in state securities and encourages participation in the domestic debt market.
Strategic Takeaways for International Entrepreneurs
- Fund selection optimization: The 17.5% tax difference between funds traded on TEFAS and unlisted funds can significantly affect net returns and should be incorporated into investment strategy planning.
- Long-term investment benefits: Venture capital and real estate funds held for more than two years can qualify for 0% withholding, reinforcing Türkiye’s policy to promote long-term capital commitment.
- Timing considerations: Additional investments made after March 27, 2026, may fall under the new withholding regime, even if the original holdings were purchased earlier.
- Taxation of capital markets: The withholding tax mechanism ensures that investment income in Türkiye is taxed directly at source, eliminating the need for income declaration and simplifying compliance for both resident and foreign investors.