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10% Withholding on Money Market Funds: Who Is Covered by Decision No. 11734?
Türkiye's Decision No. 11734 did not impose a blanket 10% withholding rate on every investor or fund. Investor status, fund classification and acquisition date determine the result.
In this article
Law check: This guide reflects Presidential Decision No. 11734 dated 4 September 2026 (Official Gazette No. 33361 of 5 September 2026), Provisional Article 67 of Income Tax Law No. 193, Article 2/1 of Corporate Tax Law No. 5520, the schedule to Decision No. 2006/10731 and the Revenue Administration’s official explanatory note, as checked on 27 October 2026. Later amendments must be tested before a transaction.
The 60-second answer. Decision No. 11734 raised the withholding rate from 0% to 10% for the institutional investors defined by the Decision, but only on gains from money market fund units and hedge-fund units whose registered name contains the expression “money market”. It took effect on 5 September 2026. The Decision did not change the rate for individuals or for institutions outside the existing 0% category. For units acquired before publication, only the gain attributable to the post-publication period is subject to 10%; the earlier period remains under the prior regime.
What did Decision No. 11734 change?
The amendment is narrow. It changes subparagraph (2) of paragraph (a) of Article 1/1 of the schedule to Decision No. 2006/10731. Provisional Article 67/17 of the Income Tax Law authorises the President to set the applicable withholding rates; Decision No. 11734 uses that power for a defined investor-and-fund combination.
Two gates must open at the same time:
- The investor gate. The investor must fall within the institutional category described by the amended rule: taxpayers within Article 2/1 of Corporate Tax Law No. 5520 and the other taxpayers specifically described in the Decision, including entities that the Ministry of Treasury and Finance determines to be comparable to investment funds and investment companies.
- The instrument gate. The gain must arise from units of a money market fund or a hedge fund whose registered name contains the expression “money market”.
When both gates open, the rate is 10%. If either gate fails, Decision No. 11734 does not change the applicable rate. A corporate investor earning income from a foreign-currency fund, for example, is not brought into the amendment merely because it is an institution.
When did the 10% rate take effect?
The Decision took effect on 5 September 2026, the date of publication in Official Gazette No. 33361.
There are three timing scenarios:
| Acquisition date | Disposal or redemption | Treatment under Decision No. 11734 |
|---|---|---|
| 5 September 2026 or later | Any later disposal or redemption | 10% on the gain from covered units for covered investors, subject to later amendments |
| Before 5 September 2026 | 5 September 2026 or later | 10% only on the portion attributable to the publication-to-disposal period; the earlier portion remains under the prior regime |
| Before 5 September 2026 | Before 5 September 2026 | Decision No. 11734 does not apply |
Article 2 of the schedule states that the new rate applies to the portion of gains on previously acquired units attributable to the period from publication until disposal. The legal split is clear, although the official materials reviewed for this article do not prescribe a complete calculation formula.
Which institutional investors are covered?
The rule identifies two routes into scope.
The first is Article 2/1 of the Corporate Tax Law: capital companies, comparable foreign entities, funds supervised under capital-markets rules and comparable foreign funds. The second covers taxpayers operating exclusively to earn returns and capital gains from securities and other capital-market instruments, where the Ministry determines that they are comparable to funds and investment companies established under Capital Markets Law No. 6362.
The Revenue Administration’s explanatory note gives sovereign funds, institutional funds and investment organisations as examples in the foreign-investor context. Those examples do not eliminate the statutory comparability and Ministry-determination conditions.
The practical file should therefore show both the legal route into scope and the investor classification held by the bank or intermediary. For a non-resident institutional investor, Turkish withholding and the investor’s final global tax burden are not the same question. The applicable double-tax treaty and the law of the residence jurisdiction must be reviewed separately.
Which money market funds are covered?
The instrument side contains two groups:
- collective investment vehicles classified as money market funds under the Capital Markets Board framework; and
- hedge funds whose registered name contains the expression “money market”.
The registered name in force on the relevant date should be evidenced from the prospectus and Public Disclosure Platform (KAP) record. A marketing label is not a substitute. Expressions such as “liquid”, “cash management” or “short term” do not expand the wording of the Decision.
Keep a copy of the prospectus and the KAP name record. They support the classification, but they do not replace the separate tests for investor status, acquisition date and gain calculation.
Did the rate change for individuals?
No. According to the Revenue Administration’s explanatory note, Decision No. 11734 did not change the existing 17.5% rate for individuals and institutions outside the existing 0% category.
This does not mean that every fund unit held by an individual is always taxed at one rate. Historic acquisition periods, equity-intensive funds, and special holding-period rules for qualifying venture-capital and real-estate investment funds must still be checked.
The Revenue Administration’s 2026 guide explains that withholding is the general taxation method for individual investment-fund income. If the income is earned within a commercial activity, however, it enters the business-income return and the tax withheld is credited. Optional return, credit and refund rules described in the guide may also become relevant. A blanket statement that “there is never a return or credit” would therefore be unsafe.
What did not change for other funds and instruments?
Decision No. 11734 did not raise the rate on all investment funds. The Revenue Administration’s explanatory note confirms that the existing 0% rate for the covered institutional category was not changed for other securities and capital-market instruments within Provisional Article 67/1, including:
- units of investment funds other than money market funds and hedge funds bearing “money market” in their registered name;
- share gains; and
- bond gains.
The relevant instrument’s own conditions still apply. The Decision also does not regulate digital-asset income. That subject belongs to a separate legal and tax analysis.
Units acquired before 5 September 2026
For pre-publication units, Article 2 requires a period split: only the part of the gain attributable to 5 September 2026 through disposal is subject to the new 10% rate. The part attributable to the earlier period remains under the previous regime.
The Decision establishes the split but the official sources reviewed here do not set out the complete computational method. FIFO is not that method. FIFO determines which acquisition lot and cost basis are used when only part of identical instruments acquired on different dates is sold. The allocation of gain between pre- and post-publication periods must be documented separately.
Do not select a method unilaterally. Obtain the intermediary’s lot matching, the calculation used at the publication date and the legal basis in writing. A mismatch in acquisition or settlement dates requires transaction-specific review.
What should be checked in bank and intermediary records?
Keep four items in the accounting and tax file:
- Prospectus and KAP name. Evidence of whether the registered fund name contains “money market”.
- Investor-status evidence. Incorporation and regulatory documents supporting the Article 2/1 or comparable-investor classification used by the intermediary.
- Lot-level acquisition dates. The basis for separating units acquired before and after 5 September 2026.
- Withholding statement. A document showing the transaction, tax base, rate and amount withheld. Do not confuse the intermediary’s investor statement with its own withholding return.
Whether withholding is creditable in an annual return is not automatic. The answer depends on whether the gain enters the return, whether the investor is fully or limited liable and the relevant credit rules.
Decision matrix
| Investor | Instrument | Acquisition date | Result under this Decision |
|---|---|---|---|
| Article 2/1 institution or other investor defined by the Decision | Money market fund / hedge fund whose name includes “money market” | 5 September 2026 or later | 10% on the gain, subject to later changes |
| Same covered investor | Same covered fund groups | Before 5 September 2026 | Period split: post-publication portion at 10%; earlier portion under the prior regime |
| Same covered investor | Other fund, bond or share within Provisional Article 67/1 | Instrument-specific conditions | Existing 0% treatment was not changed by this Decision |
| Individual | Money market fund | Check acquisition period and special rules | Existing 17.5% treatment was not changed by this Decision |
| Individual | Other investment fund | Check fund type, acquisition date and holding period | Instrument-specific rate; no change under Decision No. 11734 |
| Institution outside the existing 0% category | Investment fund | Check fund type and acquisition date | Existing 17.5% treatment was not changed by this Decision |
The central point is simple: the 10% result requires the investor scope, fund scope and timing rule to align.
Risks and common errors
- Overgeneralising the headline. “Money market funds are now taxed at 10%” is false for an individual investor.
- Relying on a marketing name. “Liquid” or “short term” does not automatically satisfy the registered-name test for a hedge fund.
- Skipping the treaty analysis. For a non-resident institution, 10% Turkish withholding does not by itself state the final global burden.
- Confusing FIFO with the period split. FIFO identifies the disposed lot; it does not by itself allocate the gain between periods.
- Applying 10% before publication. Decision No. 11734 does not apply to a disposal completed before 5 September 2026.
Frequently asked questions
Did withholding on every money market fund become 10%?
No. The increase applies only to the investors defined by the Decision and the two specified fund groups.
What is the rate for individuals?
Decision No. 11734 did not change the existing 17.5% treatment. The concrete rate still depends on the fund, acquisition period and any special rule.
Are hedge funds with “money market” in their name covered?
Yes. The registered name in the prospectus and KAP record is the relevant evidence.
What happens to units acquired before 5 September 2026?
Only the gain attributable to the period from publication through disposal is subject to 10%; the earlier period remains under the prior regime.
Did the 0% rate on other fund units change for covered institutions?
No. The Decision left the existing 0% treatment for other qualifying instruments unchanged.
Is the withholding separately reported in the annual return?
There is no universal answer. Inclusion and credit depend on investor status, full or limited tax liability and whether the gain is taxed in the relevant return.
Six-step action list
- Document the investor’s legal and intermediary classification.
- Record each fund’s complete registered name from KAP.
- Track acquisition dates at lot level, separating pre- and post-5 September units.
- Compare the rate applied with the intermediary’s detailed withholding report.
- For non-resident institutions, test the treaty and residence-country rules.
- Determine annual-return inclusion and credit treatment from the investor’s tax status.
Official sources
- Income Tax Law No. 193, Provisional Article 67 — current text on mevzuat.gov.tr
- Corporate Tax Law No. 5520, Article 2/1 — current text on mevzuat.gov.tr
- Article 1 of the schedule to Decision No. 2006/10731 — current consolidated Revenue Administration text
- Presidential Decision No. 11734, Official Gazette No. 33361 of 5 September 2026
- Revenue Administration explanatory note on Decision No. 11734
- Revenue Administration 2026 guide to Provisional Article 67 for individuals
- Revenue Administration announcement
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