As of 30.06.2023, Exchange Rate Protected Deposits (FXPD) will be applicable for foreign currencies held in banks.
With the Law No. 7407 published in the Official Gazette dated 28.05.2022 and numbered 31849, the provisional article 14 of the Corporate Tax Law was amended to include the foreign currencies of the institutions in their balance sheets dated 31.03.2022 as of 31.12.2022.2022 at the conversion rate within the scope of supporting the conversion to Turkish lira deposits and participation accounts until 31.12.2022, and if the Turkish lira assets obtained in this way are utilized in Turkish lira deposits and participation accounts with a maturity of at least three months, the interest and dividends and other gains obtained at the end of the maturity, including those arising from the end-of-period valuation of such accounts, will be exempt from corporate tax.
In addition, the President of the Republic is authorized to apply this exemption separately or jointly for foreign currencies included in the balance sheets of corporations as of the end of each temporary tax or annual accounting period until 31.12.2023.
Pursuant to this authorization, with the Presidential Decree No. 7408 published in the Official Gazette dated 29.07.2023 and numbered 32263, this exemption was also applied to the foreign currencies included in the balance sheets dated 30.06.2023.
Accordingly, in case the corporations convert the foreign currencies in their balance sheets dated 30.06.2023 into RCC accounts and keep them in this account for at least 3 months, the interest and dividends to be obtained from the account and the support payments to be provided within the scope of exchange rate protection will be exempt from corporate tax.
On the other hand, since the mentioned exemption does not cover foreign exchange gains, foreign exchange gains to be obtained during the conversion to KKM accounts will be subject to tax.
The relevant Presidential Decree is available here.
Sincerely,
BİLGENER
