29.01.2023/24
Exemption Applicable to Currency Protected Deposit Conversion (KKM) for Foreign Currencies in the Balance Sheets as of 31.12.2022
With the Law No. 7407 published in the Official Gazette dated 28.5.2022 and numbered 31849, an amendment was made to the temporary 14th article of the Corporate Tax Law, providing support for the conversion of foreign currencies listed in institutions’ balance sheets as of 31.03.2022 into Turkish Lira deposits and participation accounts until 31.12.2023. According to the regulation, institutions must convert foreign currencies into Turkish Lira at the conversion rate and hold the resulting Turkish Lira assets in Turkish Lira deposit and participation accounts with at least a three-month maturity. The interest, dividend, and other income obtained at the maturity, including those arising from the year-end valuation of these accounts, will be exempt from corporate tax.
Additionally, the President has been authorized to apply this exemption separately or together for the foreign currencies in institutions’ balance sheets until 31.12.2023 at the end of each provisional tax or annual accounting period.
Based on this authority, the Presidential Decree No. 6728, published in the Official Gazette dated 26.12.2023 and numbered 32085, ensures the application of this exemption for foreign currencies in the balance sheets as of 30.09.2022 as well.
Accordingly, if institutions convert foreign currencies in their balance sheets as of 31.12.2022 into KKM accounts and hold them in these accounts for at least three months, the interest, dividend, and support payments under the currency protection will be exempt from corporate tax.
On the other hand, since the mentioned exemption does not cover foreign exchange gain income, foreign exchange gain obtained during the conversion to KKM accounts will be subject to tax.
You can access the relevant Presidential Decree here.
Sincerely,
BİLGENER
