Turkey Exempts Converted Lira Deposits from Corporate Tax

The Turkish parliament approved a law late on Thursday to exempt transferred lira deposits from foreign currencies under a lira support scheme from corporate income tax on gains from conversion.

Interest and profits earned on transferred lira accounts with a period of not less than three months will be exempted from tax if they are transferred by the date of submitting the fourth quarter tax return, February 17, according to Anadolu News Agency.

The official Gazette announced on Jan. 11 that Ankara had included foreign currency and gold deposit accounts of companies converted into lira in the scheme that protects local currency savings from exchange rate fluctuations.

President Recep Tayyip Erdogan announced in Dec. compensating depositors for any loss in the value of the lira they incur during the term of the deposit.

Meantime, the lira plunged 44% against the dollar last year after the central bank cut its benchmark interest rate by 500 basis points to 14% since September. The lira stabilized this month. It was 0.8% weaker at 13.43 per dollar on Friday.

On Wednesday, Erdogan said that deposits under the plan had so far reached 163 billion liras ($12.1 billion), however, Reuters reported that most of this amount comes from current lira accounts, not dollars or euros.

Also, inflation accounting will be deferred until December 31, 2023, even if all the necessary conditions for inflation accounting for the 2021, 2022 and 2023 quarterly periods are met.