Turkey proceeded with an increase in withholding taxes in deposit interest and the profits from reciprocal funds in Turkish pounds, intensifying control over household savings in the government’s attempt to reduce the budget deficit.

In particular, according to the Presidential Decree published on Tuesday, the tax on deposits of up to six months increased to 17.5% from 15% previously and deposits up to one year to 1% from 12%.

Also, the profits from mutual funds, with the exception of equity capital and long -term capital or capital businessmen, will now be taxed at a rate of 17.5% from 15%.

This decision was taken following the admission of Turkey’s Minister of Economy and Finance, Mehmet Simsek, in a speech in London on Tuesday, on a weak state of the state budget revenue.

The government’s goal is to make a budget deficit of 3.1% of GDP in 2025, “it may not be achieved as revenue is not as strong as it expected,” Simsek said, according to the state -run Anadolu news agency.

However, although the increase in tax rates may boost public revenue and help the country tackle the expanding budget deficit, at the same time complicates the efforts of the central bank of Turkey to eliminate the Turkish economy and encouraging deposits in Turkish pounds.

Most analysts estimate that the central bank will reduce its interest rates in July.

“This increase in withholding tax was a surprise,” said Batuhane Ozahin, head of investment in ATA Portfoy. “Since these are both deposits and pound funds, there are not many alternatives to the investor in terms of transition from one product to another,” he added.

Ohmanli Portfoy, Managing Director, said that this move could push investors to the shares.

Turkey’s state budget deficit climbed £ 650 billion ($ 16 billion) in the first five months of 2025, recording a 38% jump compared to the same period last year. Expenditure increased by 44%, partly due to the increase in interest payments.

The government aims at a deficit of 1.93 trillion. Pound for this year, with its medium -term program providing a 3.1% deficit of GDP.

Meanwhile, the amount of funds raised in investment funds was 6.25 trillion. Pounds on July 8, according to data from the central repository of values.

It is worth noting that after the arrest of Constantinople Mayor Ekrem Iimoglou in March, the political upheaval that followed caused turmoil in Turkish markets, which forced the central bank to respond with interest rates and additional measures.

Although these moves made mutual funds attractive, the central bank also exhausted its excess liquidity many times to raise deposit rates.

The Turkish pound has been depreciated by almost 12% this year, marking the worst performance in the world after the Argentine peso.