Turkey's Revenue Administration has announced the publication of Decision No. 3321 of 22 December 2020, which provides for an extension of the reduced withholding tax rates applicable to interest on deposit accounts denominated in Turkish lira (TRY). Previously scheduled to expire on 31 December 2020, the reduced rates now apply until 31 March 2021 as follows:

• TRY deposit accounts with a maturity of up to 6 months and current call accounts - 5%
• TRY deposit accounts with a maturity of up to 1 year - 3%
• TRY deposit accounts with a maturity exceeding 1 year - 0%

Decision No. 3321 also sets reduced withholding tax rates on income from bank bonds, and bills and lease certificates issued by asset leasing companies for which the fund user is a bank. The reduced rates apply from 23 December 2020 until 31 March 2021 as follows on income derived from or gains from the disposal of:

• Bank bonds, and bills and lease certificates with a maturity of up to 6 months - 5%
• Bank bonds, and bills and lease certificates with a maturity of up to 1 year - 3%
• Bank bonds, and bills and lease certificates with a maturity exceeding 1 year - 0%

In addition, Decision No. 3321 provides for a 0% withholding tax rate on income and earnings obtained by investment funds between 23 December 2020 and 31 March 2021. However, several fund types are excluded, including variable, mixed, Eurobond, foreign borrowing, foreign, hedge funds, and investment funds with the expression "foreign currency" in their title.

Lastly, Decision No. 3321 abolishes the withholding tax on capital gains from free foreign exchange funds, which had been increased from 10% to 15% in June 2020. The withholding tax is abolished with effect from 1 January 2021.