March 20, 2012 / 10:34 AM / 6 years ago

Turkey may adjust tax to lengthen deposits-officials

* Turkey working on progressive withholding tax on deposits

* Lower tax envisaged for longer-term deposits

* Aims to allow banks collect long-term resources

ANKARA, March 20 (Reuters) - Turkey may switch its withholding tax on bank deposits to a progressive system depending on maturities, a move that would help banks obtain resources on a longer-term basis, economy officials told Reuters.

Currently, there is a 15 percent withholding tax applied to the interest consumers get from all fixed-term bank deposits, but the officials said the tax may be lowered on longer-term savings, falling to zero for money deposited for a fixed period of three years.

“Work is continuing on enabling banks to obtain resources on a longer-term basis. There is nothing decided yet. There could be a gradual tax on maturities such as 0-3 months, 3-6 months, 6 months, 1 year, up to 1-3 years, 3 years and longer,” one official said.

“The withholding tax may be zero percent for deposits of 3 years and more. The 15 percent withholding tax will gradually decline to zero percent through intermediate steps,” the official said.

Finance Minister Mehmet Simsek said late last month that Turkey was considering tax changes to persuade depositors to place money with banks for longer. Deputy Prime Minister Ali Babacan last week also pointed to measures to increase savings in pension funds.

The country runs a large current account deficit - estimated at around 10 percent of gross domestic product in 2011 - that reflects the gap between its savings and investment needed to push forward its still fast-growing economy.

The government is working on strategies to boost the rate at which Turks save, currently at a historically low level of 12 percent of national output. (Reporting by Orhan Coskun; Writing by Seltem Iyigun; editing by Patrick Graham)

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below