Turkey Surprise Tax Hike to Boost Budget, Risk Lira Appetite

Turkey raised withholding taxes on lira-denominated deposits and mutual funds, tightening its grip on household savings as it seeks fresh revenue to ease the budget deficit.

The tax on deposits with maturities of up to six months was increased to 17.5% from 15%, according to a presidential decree published on Tuesday. For deposits of up to one year it rose to 15% from 12%. Mutual fund earnings, excluding equity-heavy and long-term real estate or venture capital funds, will be taxed at 17.5%, up from 15%.