Approval of the Law Exempting Deposits Converted into Turkish Liras from Corporate Tax

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A law approved by Turkey’s parliament on Thursday offers a corporate tax exemption on gains on deposits of funds converted into Turkish lira from foreign currencies, in a further step to support the country’s currency.

By law, interest and profits earned on accounts converted to lira with a maturity of at least three months will be exempt from tax if converted before the filing date of the fourth quarter tax return, i.e. February 17.

On January 11, Turkey’s Official Gazette announced that Ankara had included companies’ foreign currency and gold deposit accounts converted into liras in the program that protects local currency savings against exchange rate volatility.

The initiative, announced by President Recep Tayyip Erdoğan in December, compensates depositors for any loss in value of the lira incurred during the term of the deposit.

Deposits under the program have so far reached TL 163 billion ($12.1 billion), Erdoğan said on Wednesday.

The program was unveiled after the pound fell to a record low of 18.4 to the dollar, before rebounding sharply to just over 10 and then settling at current levels just below 14 for the currency. the United States.

The volatility came after the Central Bank of the Republic of Turkey (CBRT) cut its benchmark interest rate by 500 basis points to 14% from 19% since September.

It halted the easing cycle and kept its key rate stable on Thursday.

The lira stabilized this month. It was 0.8% lower at 13.43 against the dollar on Friday.

Also under the legislation, the recognition of inflation will be postponed until December 31, 2023, even if all the necessary conditions are met for the recognition of inflation in the financial years 2021, 2022 and the quarterly periods 2023.

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