“KKM Conversion Exception for Foreign Currency on Balance Sheet”
On May 28, 2022, the Law No. 7407 was published in the Official Gazette No. 31849, amending the temporary 14th article of the Corporate Tax Law. According to this amendment, it is stated that companies may convert their foreign currencies in their financial statements dated March 31, 2022, into Turkish lira deposits and participation accounts until the end of 2022. This conversion should be done based on the exchange rate, and the Turkish lira assets obtained through this conversion must be evaluated in at least three-month term Turkish lira deposits and participation accounts. The income, including the valuation differences at the year-end, as well as the interest, dividend, and other gains obtained at the end of the term, will be exempt from corporate tax.
Additionally, the President has been granted the authority to apply this exemption for foreign currencies in the financial statements dated June 30, 2022, and September 30, 2022.
Based on this authority, the President’s Decision No. 6297, published on October 27, 2022, in the Official Gazette No. 31996, ensures that this exemption is also applied to the foreign currencies in the financial statements dated September 30, 2022.
Therefore, if companies convert their foreign currencies in their financial statements dated September 30, 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 within the scope of the currency protection, will be exempt from corporate tax.
