31.12.2022 Exemption Applicable for Conversion to Currency Protected Deposit (FXPD) for Foreign Currencies in Balance Sheets as of 31.12.2022
With Law No. 7407 published in the Official Gazette No. 31849 on 28.05.2022, an amendment was made to the temporary 14th article of the Corporate Tax Law. The amendment supports the conversion of foreign currencies listed in companies’ balance sheets as of 31.03.2022 into Turkish Lira deposits and participation accounts by the conversion rate, and if these foreign currencies are converted into Turkish Lira and held in at least three-month-term Turkish Lira deposit and participation accounts, the income, including those arising from period-end evaluations, such as interest, profit shares, and other earnings obtained at maturity, will be exempt from corporate tax.
Furthermore, the President was authorized to apply this exemption for foreign currencies in the companies’ balance sheets until 31.12.2023, either separately or together, at the end of each provisional tax or annual accounting period.
Based on this authorization, with the Presidential Decision No. 6728 published in the Official Gazette No. 32085 on 26.12.2023, this exemption was also applied for foreign currencies in the balance sheets dated 30.09.2022.
Accordingly, if companies convert the foreign currencies in their balance sheets as of 31.12.2022 into KKM accounts and hold them for at least 3 months, the interest and profit shares obtained from the account, as well as the support payments provided under the currency protection scheme, will be exempt from corporate tax.
On the other hand, since this exemption does not cover foreign exchange gain, any exchange gain obtained during the conversion into KKM accounts will be subject to tax.
You can access the related Presidential Decision here.
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BİLGENER
