“Corporate Tax Exemption for the Conversion of Foreign Currency Deposits in Banks into Currency-Protected Deposits”
On 28.05.2022, in the Official Gazette No. 31849, with Law No. 7407, an amendment was made to the temporary 14th article of the Corporate Tax Law. According to this amendment, companies are encouraged to convert their foreign currencies in the balance sheets as of 31.03.2022 into Turkish lira deposit and participation accounts by 31.12.2023 at the conversion rate. If the Turkish lira obtained through this conversion is kept in Turkish lira deposit and participation accounts with at least three-month maturities, the interest, profit shares, and other gains obtained at maturity, including those arising from the year-end valuation of these accounts, will be exempt from corporate tax.
Furthermore, the President was authorized to apply this exemption to the foreign currencies in companies’ balance sheets at the end of each temporary tax or annual accounting periods, either separately or together, until 31.12.2023.
Based on this authorization, with the Presidential Decree No. 7165 published in the Official Gazette No. 32171 on 25.04.2023, this exemption has also been applied to the foreign currencies in the balance sheets as of 31.03.2023.
Accordingly, if companies convert their foreign currencies in the balance sheets as of 31.03.2023 into KKM accounts and hold them for at least 3 months, the interest, profit shares, and support payments under the currency protection scheme will be exempt from corporate tax.
However, since this exemption does not cover foreign exchange gain income, the foreign exchange gains obtained during the conversion to KKM accounts will be subject to tax.
You can access the relevant Presidential Decree here.
Sincerely,
BİLGENER
