Tax Exemption for Converting Foreign Currencies into Turkish Lira

Yayınlanma Tarihi: 10 Şubat 2022



A provisional article is included in the Corporate Tax Law (CTL) as an incentive to convert the foreign currencies into Turkish Lira (TL). According to this Provisional Article 14, both corporations and individuals who are using balance-sheet method can benefit from the tax exemptions. In a nutshell, Turkish tax system will not tax the earnings arising from the foreign exchange gains if they convert their foreign currencies into TL according to the procedures prescribed by the Central Bank of Türkiye and deposit these TL in at least 3 months/ 6 months time currency protected deposit accounts. Further details can be summarised as below:

  • The foreign currencies that are eligible for the tax exemption are limited to the amount already appearing at the 31.12.2021 balance-sheets.

  • Taxpayers are not obliged to convert all their foreign currencies into TL. They might convert a proportion into TL, but continue to hold the remaining part in a foreign currency. The tax exemption applicable to the foreign exchange gains will be calculated according to the ratio of the foreign currency amount converted into TL to the foreign currency amount present at the the 31.12.2021 balance sheet.

  • The critical date is 17.02.2022. Companies are expected to convert their foreign currencies into TL if they want to be eligible for the tax exemption for the foreign exchange gains resulting from the 01.10.2021-31.12.2021 period. If the conversion is done by 17.02.2022, the foreign exchange gains up until the conversion date is also exempt from tax (ex: if the conversion is done at 11.02.2022, the foreign exchange gains between 31.12.2021-11.02.2022 is also tax exempt). The relevant interest income accrued with these foreign currencies will also be tax exempt.

  • The interest income from the TL time deposit accounts gained at the due date of the deposit account is also exempt from tax.

  • The procedures about the conversion and the details about the banking operations should be discussed with the banks prior to the conversion in order to maintain the tax exemption eligibility criteria.

  • The tax exemption will also be applicable for the taxpayers that convert their foreign currencies into TL until the end of 2022. However, in this case the exemption will be limited to foreign exchange gain between the last interim tax valuation date and the conversion date. The interest income at the due date is also tax exempt.

  • The gold accounts that are converted into at least 3 months/ 6 months time deposit accounts will also benefit from similar tax exemptions.

  • If there is a withdrawal from these time deposit accounts before the due date, the tax forgone will be collected with the legal interest and the tax penalty.


For further information, please contact us: vergi@kpmg.com.tr