Tax Changes To Boost Turkish Derivatives Trade

by Lorys Charalambous, Tax-News.com, Cyprus

27 August 2010

Çetin Ali Dönmez, chief executive of TurkDex, Turkey’s derivatives exchange, expects turnover on the exchange to rise significantly after the banking and insurance transaction tax (BSMV) and withholding tax on derivative products are scrapped this fall.

Dönmez told the Anatolia news agency that daily forward foreign exchange transaction volumes could rise to around USD0.5bn. After trading in options starts next February 2011, overall volumes could double and he predicts a further threefold increase from USD1bn to USD2.5-3bn in the following three to four years.

This optimism also follows the US Commodity Futures Trading Commission (CFTC) decision to allow TurkDex’s flagship Istanbul stock exchange index futures contract, the ISE 30, to be marketed directly in the US.

As recorded in the Turkish Official Gazette dated August 1, 2010, tax regulations were amended to scrap the BSMV, previously 5%, on all futures and options traded on organized exchanges, and allow withholding tax exemption on profits from certain transactions made by institutional investors, otherwise chargeable at 10%. Previously, resident investors paid 10%, while non-residents were tax-exempt.

A comprehensive report in our Intelligence Report series giving a country-by-country analysis of offshore investment funds, stock exchanges and trusts, with an analysis of the US QI regime, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report9.asp

 

Tags: tax | investment | banking | financial services | capital markets | insurance | alternative investment | hedge funds | withholding tax | Turkey | interest | regulation | services

 






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