Emerging Markets Rates and Currencies Handbook

Tax Summary – Turkiye Turkiye W/H Tax • • Under certain tax treaties can be reduced to 5- 10% • • From non- financial Inter-Co WHT 10% • • Interest is also subject to 18% reverse charge VAT • • 0% WHT • • No reverse charge VAT • • NoWHT applies to local (3rd party) bank, however 5% BITT applied on interest and no reverse charge VAT • • If lender not a bank, interest is subject to 18% VAT • N/A • • 10%WHT on dividends • • Under certain tax treaties can be reduced to 5% • • Note: dividend distributions to resident entities and branches of non-resident entities are not subject to WHT. Deductibility of interests • • Interest is deductible, up to portion D/E > 3 (Thin cap 3:1) • • In case D/E > 3, exceeding portion of the debt is considered thin capital and corresponding interest and FX losses are not deductible. • • Corresponding interest will be treated as disguised dividend distribution and is subject to dividend WHT • • Transfer pricing rules apply (i.e. arm’s length rule) • • Financing Expense Restriction («FER») : In case the liabilities of the company exceeds the equity of a Turkish company, then up to 10% of the total amount of the expenses made under the name of the interest, • • Fully deductible • • FER applicable • N/A • N/A Country Deductibility and Considerations Inter-Co Debt Offshore Bank Loans Offshore Local Borrowing Derivatives Equities