January 19, 2022
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:
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