Banking and Insurance Transactions Tax Rates Applicable to Foreign Exchange Sales

According to the Article 28 and subsequent Articles of the Expenditure Tax Law numbered 6802 (in Turkish, “Gider Vergileri Kanunu’’, hereinafter referred to as the “Code”), Banking and Insurance Transactions Tax (“BITT’’) (in Turkish, “Banka ve Sigorta Muameleleri Vergisi’’) shall be applied to transactions as follows:

• The income generated by banks in cash or on account are subject to BITT regardless of the nature of the transaction.
• The income acquired by banks from financial leasing in the scope of Financial Leasing Law (in Turkish, “Finansal Kiralama Kanunu”) is not subject to “BITT’’.
• For foreign exchange purchase and sale transactions, BITT is calculated based upon the rates determined every six months by the Ministry of Trade.

The Presidential Decree No. 1106 Amending the Cabinet Decree No.2008/13459 Regarding the Banking and Insurance Transactions’ Tax Rates published at the Official Gazette on 15 May 2019 and entered into force on the same date applies to Foreign Exchange Purchase and Sale Transactions.

As per the aforementioned Presidential Decree No. 1106, “BITT’’ Rates have been designated;

1. as 1 ‰ (one per thousand) for foreign exchange sales based upon the sales price,
2. as 0 ‰ for foreign exchange sales based upon the sales price:

1. 1. made between banks and authorized institutions,
   2. made to the Ministry of Treasury and Finance.
   3. Made to the loan borrower for the payment of foreign currency loans by the intermediary bank or the bank from which the foreign currency loan was used.

Our Law Firm remains at your disposal for any further clarifications you may need.