Sign up for tax alert emails    GTNU homepage    Tax newsroom    Email document    Print document    Download document

January 19, 2022
2022-5071

Turkey introduces bill that postpones inflation accounting and announces new corporate income tax exemptions on gains in case of conversions into Turkish Lira

On 17 January 2022, new draft legislation (the Bill) was accepted by the Turkish Parliament’s Planning and Budget Commission and presented to the Turkish Parliament. The Bill proposes the postponement of inflation accounting until 31 December 2023. This Bill proposes to add a temporary article 33 to the Tax Procedure Code and under this article, even if all necessary conditions are met for inflation accounting in 2021, 2022 fiscal periods (including quarterly tax periods) and 2023 quarterly periods, inflation accounting will not be applicable.

Also, irrespective of whether conditions are met, balance sheets of 31 December 2023 will be subject to inflation adjustments. However, these adjustments will have no effect on the tax calculations of 2023. 

The Bill further proposes a corporation income tax exemption on the gains occurred in relation to the foreign currency accounts of the companies which are converted to Turkish Lira (TRY) time deposit accounts. Under this proposal, the following income would be exempt from corporate tax: 

  • If taxpayer companies convert their foreign currencies, which are available on the balance sheet of 31 December 2021, into a TRY time deposit or participation account with at least three months maturity until the submission date of the Q4/2021 advance corporate tax return (i.e.,17 February 2022):

    • F/X gains in relation to the period 1 October 2021 through 31 December 2021

    • F/X gains generated in relation to conversion of such foreign currencies

    • Interest, profit shares and other earnings

  • If taxpayer companies convert their foreign currencies which are available on the balance sheet of 31 December 2021 into a TRY time deposit or participation account with at least three months maturity, anytime within the quarterly tax periods of 2022:

    • F/X gains corresponding to the period between the last day of the relevant quarterly tax period and the date on which foreign currencies are converted into a TRY account

    • Interest, profit shares and other earnings

The Bill will enter into force and be in effect once all the legislative procedures are completed.

_________________________________________

For additional information with respect to this Alert, please contact the following:

Kuzey Yeminli Mali Müsavirlik A.S., Istanbul

Ernst & Young LLP (United States), Turkish Tax Desk, New York

 
 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 2024, Ernst & Young LLP.

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

 

"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

 

Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct Opt out of all email from EY Global Limited.

 


Cookie Settings

This site uses cookies to provide you with a personalized browsing experience and allows us to understand more about you. More information on the cookies we use can be found here. By clicking 'Yes, I accept' you agree and consent to our use of cookies. More information on what these cookies are and how we use them, including how you can manage them, is outlined in our Privacy Notice. Please note that your decision to decline the use of cookies is limited to this site only, and not in relation to other EY sites or ey.com. Please refer to the privacy notice/policy on these sites for more information.


Yes, I accept         Find out more