Turkey extends tax cut on bank deposits to help bolster lira – report

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Turkey’s government extended a temporary cut to taxes on bank deposits until the end of July, the Yeni Şafak newspaper reported on Tuesday citing unidentified Treasury sources.

The reductions, introduced in September, were due to expire on June 1.

Turkey has sought to make the lira more attractive as a means of investment after the currency sank to successive record lows against the dollar. It dropped to a fresh all-time low of 8.61 per dollar on Friday.

The government reduced a withholding tax on interest earnings on lira deposits of more than one year to zero from a previous 10 percent on Sept. 30. It also lowered a charge on deposits of between six months and one year to 3 percent from 12 percent and on deposits of up to six months to 5 percent from 15 percent.

The lira traded little changed at 8.48 per dollar on Tuesday morning in Istanbul. It has lost about 12 percent of its value this year.

The average interest rate on one-month lira deposits stood at 17.33 percent on May 21, according to central bank data. That compares with annual consumer price inflation of 17.1 percent. The average rate on three-month and six-month deposits was 18.68 percent and 17.85 percent, respectively.

Ahval

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