Corporate tax exemption granted to companies trading foreign currency

Corporate tax exemption granted to companies trading foreign currency

In order to avoid foreign currency fluctuations and increase the demand for Turkish lira, with the bill submitted to the Speaker of the Assembly on January 13, the foreign currency will be converted to TL from 31.12.2021. exemption from corporation tax was envisaged.

It was announced on 31.12.2021 that legal entities wishing to benefit from the corporate tax exemption must have foreign currencies in their foreign currency deposit accounts with the Bank and participating banks. It has been clarified that taxpayers who wish to benefit from the tax exemption in their 2021 declarations (for the past) must also exchange their foreign currency until 17.02.2022 and transfer it to a currency protected deposit account.

İlyas Emre Yayla, Former Account Specialist, Certified Public Accountant, Mazars Turkey Tax Partner, said that in case the law comes into effect, it is important for taxpayers who deposit their foreign money (including an account of gold) in TL on 31.12.2021 and deposit them in an exchange rate protected deposit account which also guarantees future foreign currency earnings said it will provide significant tax advantages for the past and the future.

What tax benefits are offered?

Emre Yayla, tax services partner of Mazars Turkey, said that with the law, past and future exemptions are provided. According to regulations; The share of foreign exchange gains resulting from the valuation at the end of the third period of foreign currencies in taxpayers’ assets as of 31.12.2021, which corresponds to the last months of 2021 (i.e. between 3 and 1.10. 2021), provided that the taxpayers value them in TL deposit and participating accounts with a maturity of at least 31.12.2021 months. He indicated that they will be exempt from tax and therefore will not pay the corporation tax related to this exchange income in the provisional declaration of income tax and corporation tax of 4 2021.

Yayla, exchange gains on the date of conversion of foreign currencies into TL (positive exchange differences in 2021) and interest, profit shares and other income (including support payments made by the Central Bank) for deposit accounts and participation in TL protected against open currencies from Corporate Tax Here he pointed out that the withholding tax on the income obtained from the protected currency deposit account is 0% and, therefore, l The final tax to be deducted from income with this regulation is 0 (zero).

Who can benefit ?

With the exception of banks and other financial institutions determined by the Central Bank, it was announced that all legal entities that have foreign currencies on their foreign currency deposit accounts with the Bank and participating banks as of 31.12.2021 .

There are 2 conditions to benefit from the exception

It was announced that taxpayers must have foreign currencies in their foreign currency deposit account on 31.12.2021 and convert these amounts into Turkish lira and deposit them in the foreign currency protected deposit account for at least 3 months. Tax service partner Yayla pointed out that the deposited amount can only be cashed out at the end of the due date and if cashed out before the due date, the tax exemption will be canceled and the underpaid tax will be collected with late fees and tax loss penalty. He mentioned that taxpayers would benefit from determining the size of their deposits based on their cash flow. He said that taxpayers who wish to benefit from the tax exemption in their 2021 returns (for the past) must change their foreign currency until 17.02.2022 and transfer to a currency-protected deposit account.

It will be useful to wait for the secondary settlement

Emre Yayla, Mazars Turkey Tax Services Partner, gave information on the currencies that will be included in the scope; “All currencies that can be converted into Turkish lira are included in the scope of “foreign currencies”. Therefore, it is necessary not to think only in terms of Euro and USD. Also; As follows from the reasoning, taxpayers will be able to benefit from the exceptions when converting their foreign currency deposit and participating accounts into TL deposit and participating accounts, and from 31.12.2021 they will no longer be able to benefit from this foreign currency opportunity foreign currencies in their safes and foreign currencies in foreign accounts.However, it would be useful to wait for secondary regulations to clarify this question.

Exceptions have been made for taxpayers with gold accounts

In case taxpayers convert their gold accounts and gold accounts for scrap gold and/or converted into Turkish liras above the conversion price and deposit them in a currency-protected deposit account , the assessment will occur in the conversion kazanmoney they will get from their deposit kazan accountIt was announced that all will be exempt from corporate tax in the same way.
Yayla said that another very important regulation is about to be implemented in order to increase the demand for Turkish lira and thus avoid exchange rate fluctuations, and that this regulation is very important so that taxpayers benefit from the currency-protected deposit account, which also provides income from rising exchange rates, and excluding income from these accounts. He said that for the time being, the inclusion of foreign currencies in the official secure account ledger will both prevent discrimination between taxpayers and be a supporting factor for the return to the Turkish lira and entry into the banking system in accordance with the purpose of the request.