The withholding tax rate on dividends has been increased from 10% to 15% following the issuance of Presidential Decree numbered 9286 (“Decree”), published in the Official Gazette numbered 32760 on 22 December 2024 and effective from the same date. For dividend distributions made after 22 December 2024, the withholding tax rate will be 15%.
Under the Decree, the withholding tax rate has been increased from 10% to 15% for the following types of dividend distributions:
- Dividends distributed by full taxpayers to full taxpayer individuals, those who are not subject to income or corporate tax, and individuals exempt from income tax,
- Dividends distributed by full taxpayers to non-resident individuals and non-resident individuals exempt from income tax,
- Dividends distributed to tax-exempt entities,
- Dividends distributed by full taxpayers to non-resident corporate entities or corporate entities exempt from corporate tax, excluding those who earn dividends through a permanent establishment or permanent representative in Türkiye,
- Amounts transferred by non-resident corporate entities that submit annual or special tax returns from the remainder of their calculated corporate profits after deducting corporate tax, prior to any deductions or exemptions, to their head quarter.
Additionally, in the announcement issued by the Revenue Administration on 22 December 2024, the following points were highlighted in relation to the above change:
- Half of the dividend income obtained by individuals is exempt from income tax. If the remaining amount exceeds the second tax bracket of the income tax rate for the relevant year (for 2024, this threshold is TRY 230,000), it must be declared in the annual income tax return. The tax paid via withholding will be fully offset against the tax calculated in the return.
- For non-resident individuals and entities, as well as those not subject to income or corporate tax and exempt from income tax, the withholding tax is considered the final tax.
Should you have any questions or require more detailed information on this matter, please feel free to contact us.
Best regards,
DT Law