Turkey’s Ministry of Treasury and Finance has issued a Circular No. 176 on 1 November 2024 offering detailed explanations on the implementation of inflation adjustment procedures under the Tax Procedure Law (TPL). It addresses various issues raised by taxpayers and professionals.
Procedures for inflation adjustments in financial statements and correction processes are defined for 2023 and 2024 accounting periods.
Circular No. 176 provides comprehensive guidance on applying inflation adjustment procedures under the Tax Procedure Law (TPL). Addressing key taxpayer and professional concerns, the circular clarifies several areas. It outlines the applicable corporate tax rates on profits or losses resulting from inflation adjustments, particularly in cases involving reduced tax rates. Additionally, it specifies the treatment of inflation adjustment profits or losses for taxpayers with partial tax exemptions when calculating the tax base.
Further, the circular explains whether adjustments made to Research and Development (R&D) accounts can be deducted. It also sets out the tax rates for profits or losses from inflation adjustments for businesses involved in export, production, and other income-generating activities. Lastly, the circular defines the term “previous interim tax period” as it applies to the simple average method used in stock adjustments.
