The Draft General Communiqué ofthe Tax Procedure Law Regarding Inflation Adjustment (Draft No. 2023/102) waspublished by the Turkish Ministry of Treasury and Finance in October 2023. Thedraft aims to establish the principles and procedures for inflation adjustmentof financial statements and adjustment processes applicable to the fiscal yearending 2023 and subsequent periods.
Key Provisions:
Financial statements subject toinflation adjustment include: balance sheet, income statement, statement ofchanges in equity, cash flow statement, and financial statement footnotes.
Inflation adjustment will be madeusing the inflation rate valuation method.
The difference resulting from theinflation adjustment will be added to or subtracted from the net income or lossfor the period.
Implications:
The implementation of the draftwould mark a return to inflation adjustment practices. This practice isgenerally employed during periods of high inflation to protect tax revenues andensure the accuracy of the tax system.
Specific Details:
Inflation adjustment will applyto the fiscal year ending 2023 and subsequent periods.
Taxpayers subject to inflationadjustment will file an inflation adjustment declaration by the end of March2024.
Current Status:
The draft is awaiting publicationin the Official Gazette and subsequent entry into force.
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