312 NEWSLETTER 2021 Emphasizing that the CTLArticle entered into force on 01.01.2013, it is stated therein that the financing expenses arising from procurement of the financing services or signing the loan agreements as of this date (including this date) will be considered in the calculation of the limitation on financing expense deduction. Although the effective date of the Article is 01.01.2013, the limitation was not put into practice due to the fact that the rate was not determined for eight years. In this regard, through the Presidential Decree dated 04.02.2021, incorporating the foreign liabilities that entered into the enterprise as of 01.01.2013, might be evaluated to be contrary to the legal security and certainty principles amongst the constitutional taxation principles. In fact, the regulation in the same direction, which was implemented in the years between 1995-2004, was canceled by the Council of State due to “damage to the principles of trust in the law and stability.”5 Therefore, if the updated Draft Communiqué is published in this way, it may be brought before the Council of State with a claim of cancellation. Foreign Exchange Differences In accordance with the Draft Communiqué, the exchange rate difference expenses arising from the use of foreign liabilities are subject to the limitation with their actual amounts calculated by considering the changes in foreign exchange rates, including the determination of the income of 2021. In the face of the predominant opinion that the exchange difference income should also be regarded in the calculation of the actual amount, it is regulated in the Updated Draft Communiqué that exchange rate income and expenses may be netted, provided that they are related to the same liability. On the other hand, it is not possible to offset the foreign exchange income based on different sources and the income, such as deposit interest, from foreign liabilities. Therefore, considering the exchange difference income and expenses related to the same foreign resource, the net exchange difference expense will be subject to the limitation on financing expense deduction. 5 Council of State, 4th Chamber, No. 1997/636 E. 1997/3797 K. 27.10.1997.
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