Turkey has lowered the level of withholding tax on lira bank deposits of more than one year to zero from 10%, the Official Gazette said on Wednesday.

The move aims to protect the value of the Turkish lira, to ensure that savings are kept in deposit and participation accounts opened in Turkish lira and to encourage the use of under-pillow savings in these accounts.

It said the withholding tax on deposits of up to one year was cut to 3% from 12% and the tax on deposits of up to six months was cut to 5% from 15%.

Meanwhile, the tax rates on forex deposits were not changed.

The changes will be in effect for three months.

Analysts stated that by reducing rates, lira deposit investments will be much more advantageous than foreign currency deposits, and that a certain amount of savings will be expected to shift from foreign currency to lira.

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