Türkiye's Treasury and Finance Ministry has completed its assessment and preliminary work on measures aimed at redirecting short-term capital flows concentrated in money market funds toward longer-term and productive investments, a report said Tuesday.
The ministry is reportedly preparing to impose a 10% withholding tax on gains earned by corporate investors from money market funds, the report by private broadcaster Bloomberg HT said, citing sources familiar with the matter.
The move would form part of the government's efforts to limit the risks associated with short-term capital inflows and encourage capital to remain in Türkiye for longer periods and contribute more directly to investment and production.
According to the report, the proposed measure would apply to gains from money market funds earned by both resident Turkish corporate taxpayers and nonresident corporate taxpayers.
Turkish taxpayers would reportedly be able to offset the withholding tax against their provisional corporate tax liabilities. For foreign corporate investors, however, the withholding tax would serve as the final tax, the report said.
The withholding tax on gains earned by resident and nonresident individual investors from money market funds is not expected to change. Under the reported plan, the existing 17.5% withholding tax for individuals would remain in place.
That would leave the proposed new regime focused specifically on corporate investors, including foreign institutions using money market funds for short-term investments.
The proposed regulation is expected to apply only to gains accrued after the decision is published, rather than retroactively taxing earlier gains.
Under the example cited by Bloomberg HT, a corporate investor that purchased a money market fund one month before the decision was published and sold it two months afterward would only be subject to the 10% withholding tax on the gain attributable to the two-month period following publication.
The reported proposal comes after the Treasury and Finance Ministry began examining the growing concentration of short-term capital in money market funds and the role of institutional investors in those funds.
The broader objective is to make capital flows into Türkiye more permanent and channel a greater share toward long-term, productive investment.
