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Türkiye has extended a tax incentive that exempts income from certain government debt instruments from withholding tax, allowing investors to continue benefiting from a 0% rate through the end of 2026.
The extension was enacted through a presidential decree published in Saturday's Official Gazette, moving the measure's expiration date from June 30, 2026, to Dec. 31, 2026.
The decision covers income and capital gains generated from Turkish government bonds and Treasury bills, as well as lease certificates issued by asset leasing companies.
By extending the measure for another six months, Ankara preserves a tax advantage that has been used to support demand for government debt securities and maintain their attractiveness to both individual and institutional investors.
Under Türkiye's tax system, income earned from many financial assets is subject to withholding tax, which is deducted at source before investors receive their returns.
First introduced in December 2021, the incentive has been extended repeatedly as authorities sought to bolster demand for government debt instruments and encourage investment in lira-denominated assets.
The extension helps preserve the appeal of Türkiye's fixed-income market for foreign investors. The country remains among the world's highest-yielding major markets, attracting demand for local debt securities, particularly from carry trade investors seeking to benefit from interest rate differentials.
Since the launch of the current economic program in mid-2023, foreign investors have steadily increased their exposure to Turkish government debt securities.
Net purchases reached $2 billion in 2023 and surged to $16.1 billion in 2024, before easing to $2.9 billion in 2025.
Before the Iran war began in late February, the market attracted $4.6 billion in net inflows during the first two months of the year.
Since the conflict erupted, however, foreign investors have withdrawn a net $6.2 billion from Turkish government debt securities through the week ended June 12, turning earlier inflows into a net outflow of roughly $1.6 billion for the year.
Despite the pullback, foreign holdings of Turkish government debt securities stood at $14.6 billion.
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