The Income Tax General Communique No. 258 has been updated by the Turkish Ministry of Finance. Communique No.258 was approved by the Parliament and promulgated in the Official Gazette No. 26305 dated 30 September 2006.
The highlights of the Communique 258 are as follows: Non-resident investors are required to submit CoRs (Certificate of Residency) in order to benefit from 0 percent withholding tax rate. The Ministry of Finance proposed a transition period until the end of the year in the communique. The certified incorporation documents will be sufficient for non-resident institutional investors until 1 January 2007 and 0 percent tax rate will apply to these investors until such date. Starting from 1 January 2007, non-resident institutional investors will not be able to benefit from 0 percent withholding tax rate on capital gains unless they submit Certificate of Residence. The CoR for non-resident institutional investors is valid for 3 years. Non-resident investors who are unable to submit CoRs (e.g. investment funds) by 1 January 2007 will not benefit from 0 percent withholding tax. The tax rate to be applied to those investors is not clearly stated, but a tax rate of 15 percent is highly probable.