28.07.2022/57
Exemption to be Applied in the Conversion of Foreign Currency in Balance Sheets as of 30.06.2022 to Currency-Protected Deposits (KKM)
With the Law No. 7407 published in the Official Gazette No. 31849 on 28.05.2022, a provision was added to the temporary 14th article of the Corporate Tax Law. According to this provision, institutions are supported in converting the foreign currency in their balance sheets as of 31.03.2022 into Turkish Lira deposit and participation accounts until the end of 2022, and by converting them at the conversion rate, the Turkish Lira assets obtained must be held in accounts with at least a three-month maturity. In such cases, interest and dividend income, as well as other gains obtained from these accounts, including those resulting from end-of-period valuation, will be exempt from corporate tax.
Additionally, the President has been authorized to apply this exemption to foreign currencies in balance sheets as of 30.06.2022 and 30.09.2022.
Based on this authority, with the Presidential Decree No. 5872 published in the Official Gazette No. 31905 on 07.07.2022, it has been ensured that this exemption also applies to foreign currencies in balance sheets as of 30.06.2022.
Accordingly, if institutions convert the foreign currency in their balance sheets as of 30.06.2022 into KKM accounts and keep them in these accounts for at least 3 months, the interest and dividend income, as well as the support payments provided under currency protection, will be exempt from corporate tax.
On the other hand, since this exemption does not cover exchange rate gain, any exchange rate gains obtained during the conversion to KKM accounts will be subject to tax.
You can access the related Presidential Decree here.
Best regards,
BİLGENER
