The Turkish stock market is the market where many financial instruments are traded, including stocks, bonds, funds, futures contracts, and commodities. The Turkish stock market is at an important point among the world stock exchanges with its high liquidity and attractive investment opportunities.
Stock market indices in Borsa İstanbul are calculated by following the prices of stocks traded on the stock market in a certain range. Some of the indices traded in Turkey are BIST 100, BIST 50, BIST 30, BIST Bank, BIST Industrial and BIST Technology indices. The Turkish stock market is also noteworthy for the fact that companies in Borsa Istanbul are consistently profitable (due to fluctuations in exchange rates) while being quite affordable in USD terms. Considering the opinions about the Turkish Stock Exchange, mostly experts state that the rise may continue.( August 2023)
Advantages of Investing in the Turkish Stock Exchange
-High returns – Turkey’s growing economy offers opportunities for foreign investors.
-Attractive stocks- some Turkish companies traded on the stock exchange can be a lucrative investment for foreign investors.
-The Turkish stock market offers a high return potential. In addition, investing in Turkish companies serves as a bridge between Europe, Asia and the Middle East.
Borsa Istanbul (BIST) became the best investment tool in Turkey with a return of105% in 2022.
What Should Be Considered When Investing in the Turkish Stock Exchange?
As with any stock market, the Turkish Stock Exchange is affected by global economic conditions. For this reason, global economic conditions should be followed when investing in BIST. So you can make your investment at the right time.
Stock market indices should be monitored. Tracking the performance of the exchange helps the investor make decisions. Tracking the performance of the exchange helps the investor to make decisions. Stock market indices reflect the overall performance of the stock market.
Company shares should be investigated. Before investing, it is important to conduct thorough research on Turkish companies. Gaining insight into company management, financial performance, and futures helps investors minimize their risk.
Taxation of Non-Resident Foreign Investors on the Turkish Stock Exchange
If a foreign person is not settled in Turkey, he/she is considered a limited taxpayer according to Article 6 of the Income Tax Law. Accordingly, taxation procedures will be carried out in a way that covers limited taxpayers. Article 6 of the Income Tax Law states that limited taxpayers are “taxed only on the earnings and revenues they earn in Turkey.” In Article 7 of the same law, the counting of securities as earnings or income in Turkey is subject to the condition that “the capital is invested in Turkey”.The earnings of the limited taxpayer investing in the stock market in Turkey will be taxed. Taxation of transactions made on the stock exchange is done on the spot therefor it is the final tax. When you trade on the exchange, the amount credited to your account is taxed income. In this information note, in the taxation of a foreigner who is not considered to be settled in Turkey while trading on the stock exchange, first the earnings obtained from the purchase and sale of shares will be evaluated, and then the earnings obtained with dividends will be evaluated:
1-Earnings from the Purchase and Sale of Shares Traded on BIST
Regarding the taxation of the earnings from the trading of shares on the stock exchange for limited taxpayers, it is necessary to first look at whether the share is an “investment partnership” share. If the share is not an investment trust share, the withholding tax rate has been determined as 0% according to the provisional article 67 of the Income Tax Law. If the share belongs to an investment trust, the holding period of the share is considered first. Withholding tax is not applied if the share has not been sold for more than 1 year. However, if the investment trust share is held for less than 1 year, 10% withholding tax is applied.
2-Dividend Income from Shares Traded on BIST
Companies whose shares are traded on the Borsa Istanbul may distribute dividends to their shareholders in line with the decisions taken at their general assembly. First of all, it should be noted that dividends are taxed before they are deposited into the accounts, they do not need to be declared. When companies traded on the Borsa Istanbul distribute dividends, the taxes on dividends are as follows: 0% if the share is an investment trust company share. If the share is not an investment trust company share, a 10% withholding tax is applied.
Seyhan Law Office
Note: What is written in this article is not investment advice.