As of 1st of October 2006 the income tax gained from mutual funds, amended within the meaning of the Interim Article No. 67 of the Income Tax Law. This is not a new taxation or a calculation system but a change in the collection way of calculated taxes.
In this application;
10 % withholding tax will be taken from the income of the fund participation certificate sold back by the investor. There won't be any withholding tax on incomes gained from the participation certificates of mutual funds including minimum 51% of equity constant in their assets and are sold after being held for more than 1 year.
- As a result of the amendment on tax law, the internal taxation of mutual funds has been outlawed and external taxation system has been adopted. In respect of this system, there shall be no deduction so long as the fund investor holds the fund participation certificate and a withholding tax of 10% shall be applied to the income received during the sale. As a consequence, the fund investor can postpone the accrued tax until s/he sells the fund participation certificate.
- The closing price of the last trading day of September will be taken into account as cost of purchase for the customers who have mutual funds in their assets before the date of 01.10.2006.
- In mutual fund sales operations of customer, tax assessment will be calculated on First in First out (FIFO) basis and rate of 10 % Income Withholding Tax will be taken on income gained the moment the operation is made.
- By the ending of the taxation on mutual fund asset and passing to the customer based taxation, there have not any changes in the total paid tax amount occurred according to the current applications. However, tax payment of the customer is postponed to the date when the mutual fund is resold to the founder.
- Corporations can deduct 10 % of withholding tax from their corporate taxes.
© 2007 Garanti Bank
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