Turkey’s Ministry of Treasury and Finance has clarified how inflation adjustment differences in the Investments‑in‑Progress account will be handled under the Tax Procedure Law. A new circular requires these amounts to be transferred to special fund accounts, excluded from taxable profit during the investment phase, and later recognized in installments once the investment is capitalized.
Turkey’s Ministry of Treasury and Finance has issued a new Tax Procedure Law Circular (VUK-196/2026-2) on 9 February 2026, outlining how inflation adjustment differences in the Investments-in-Progress account will be treated for tax purposes.
The guidance, published by the Revenue Administration, specifies that such differences must be transferred to a special fund account, excluded from taxable profit during the investment period, and subsequently increased annually by the revaluation rate.
The regulation stems from amendments introduced by Law No. 7529 in October 2024, which added subparagraph (10) to repeated Article 298/A of Law No. 213. Under the provision, balances in the special fund account are recognised as taxable profit in equal instalments over five fiscal periods beginning with the year the investment is capitalised.
The circular provides detailed examples of how revaluation rates apply both during the investment phase and after capitalisation. It confirms that revaluation increases cannot be added to the cost of the asset and must instead be accounted for separately in determining taxable income.
Officials emphasised that these rules apply not only to annual tax calculations but also to provisional tax periods. The Revenue Administration stated that the clarification aims to ensure consistent application of inflation adjustments and prevent misinterpretation of special fund balances.
