155
Issues and challenges Demand (buy side) opportunities
Withholding tax
LCY issuance
Revenues that real person resident and
non-resident taxpayers generate from
lease certificate trading and coupon
payments are subject to a withholding of
10% on income tax
FCY issuance
Earnings from offshore lease
certificate issued with a maturity
of one year
10%
Earnings from offshore lease
certificate issued with a maturity
of one and three years
7%
Earnings from offshore lease
certificate issued with a maturity
of three to five year
3%
Earnings from offshore lease
certificate issued with a maturity
of up to five year
0%
Under the Tax Amnesty Law 2011, ALCs are
exempted from value-added tax on transfers of
assets backing the lease certificates, stamp duty on
the conveyancing of assets, duties/fees arising from
title-deed transfers and corporate tax. This includes
the waiver of withholding tax for longer-dated debt
securities with maturities of not less than 5 years.
Removal of withholding taxes on lease certificates
will facilitate a greater flow of investments into
Turkey’s capital markets and improve
intermediation by NBFIs.
Sources: RAM, ISRA
Table 4.26: Recommendations to Improve Supply (Sell Side) – Medium-Term Solutions
Issues and challenges Supply (sell side) opportunities
The dearth of investment instruments for
participation banks’ liquidity management
has resulted in an uneven playing field.
Growing demand from participation banks can
be met by public and corporate issuances.
Efforts should be made to promote SOEs, GLCs
and blue-chip corporates. Specific focus on
utilities-backed companies (e.g.
telecommunication, electricity, water, power)
or corporates with infrastructure projects (e.g.
municipality company).
Limitations and/or restrictions on the
capital markets.
Revision of regulations to allow:
Multinationals operating in Turkey to issue TL
bonds. Issuance of FCY bonds in the domestic
bond market since Turkish financial
institutions are allowed to lend in FCY.
Sources: RAM, ISRA