Inflation Accounting Application Published in the Official Gazette

Prepared by the Revenue Administration of the Ministry of Treasury and Finance Tax Procedure Law General Communiqué It came into force from today. In fact, the regulation, which was to come into force in 2021, was postponed to this year in line with the demand from the market. inflation accounting The method called has actually been applied before in our country.

What is inflation adjustment or inflation accounting?

At the end of the year, companies’ tables contain information such as their assets, receivables and debts. First of all, these values non-monetary is detected. For example, a land owned by the company is a non-monetary asset. When writing to the table, the value of the land is generally written according to the year it was purchased.

Afterwards, while transferring the information to the tables, non-monetary values ​​are included. with corrected values, we need to transfer monetary assets to the financial statement without making any adjustments. Thus, inflation adjustment is made. Technically, we also use it in some content.It was purchased for X million dollars in 2006, with today’s money “Y million dollars” In sentences such as, the change between Y and X is an example of this arrangement.

Is inflation accounting mandatory for everyone?

All companies that are considered full taxpayers and keep books on a balance sheet basis, individual business owner income taxpayers and corporate taxpayers are required to perform inflation accounting. Well two criteria aforementioned:

• Income or Corporation tax be liable
• On balance sheet basis bookkeeping

Why is inflation accounting done?

In fact, this application is already was in the law However, it is only applied when certain conditions are met. The conditions required for the application of this method, which was last applied in the 2003-2004 period, are as follows:

• Domestic PPI The increase must be more than 100% in the last three accounting periods, including the current period.
• In the current accounting period Domestic PPI increase of more than 10%.

If the correction conditions continue, the following temporary period end-of-tax balance sheets It will continue to be prepared by making corrections. Equity items will also receive their share from these regulations.

Does the correction affect the tax payable?

In the first stage, no. 2023 Financial Statements The previous year’s profit determined by inflation adjustment will not be subject to tax, and the previous year’s loss will not be considered as loss. After the regulation is implemented, tax transactions will be carried out according to the corrected table. For this reason, Taxpayers who do not regulate Tax losses that will occur due to differences between their real situation and balance sheets during audits in future periods may be collected with interest rates determined by the relevant institutions and penal action may be applied.

So how will the correction coefficient be calculated?

Actually, this process is quite simple. Republic of Turkey Ministry of Treasury and Finance According to the description “It is obtained by dividing the D-PPI of December or November 2023 by the D-PPI of December 2022.” According to TUIK, this figure will increase in November 2023 2882.04 It has not been announced yet for December 2023. If we were to consider the November months of both years, this rate would be the same as in November of last year. 2026.08Considering the PPI of approx. 1,205 it would be. In other words, the value of the land we bought for 10 million lira would now be on our balance sheet as 12,050,000.

Adjusted balance sheet, January 1, 2024There will be the opening balance sheet of the companies in .

Resources:

Republic of Turkey Ministry of Treasury and Finance, A STUDY ON BASIC TRANSACTIONS IN INFLATION ACCOUNTING APPLICATIONS, Tax Procedure Law