Independent Accountant and Financial Advisor Emre Özerçen said that during inflationary periods, the difference between the values of taxpayers' assets in the accounting records and their real values increases.
Özerçen noted that the inflation adjustment, which will protect businesses against inflation tax, will be applied to the financial statements dated December 31, 2023, if there is no postponement.
Stating that inflation accounting was last applied to the balance sheets dated 31 December 2004, Emre Özerçen said, “Income and corporate taxpayers who determine their earnings on the balance sheet basis subject their financial statements to inflation correction. Non-monetary items are the basis for correction. All real estate, including vacant land and lands, and all ATİKs (Depreciable economic assets) are subject to inflation correction. Inflation adjustment is not permanent, but it is mandatory. "It ends unless the increase in the price index is more than 100% in the last three accounting periods, including the current period, and more than 10% in the current accounting period."
PREPARATIONS SHOULD START BEFORE 2023 END
Pointing out that financial data containing inflation does not show the company's real profit, Emre Özerçen gave the following information: “Inflation correction procedures will prevent the payment of fictitious taxes for companies that finance their activities with equity capital. For example, adjusted stock costs will be considered as cost of goods sold starting from 2024, and companies will pay less tax if this item is disposed of. Companies will be able to allocate more depreciation based on the adjusted values of their ATİKs starting from 2024. "Since the correction will be applied to the financial statements dated December 31, 2023, it will have a positive impact on companies in terms of taxation in the 2024 calendar year with the new values of fixed assets."
Emphasizing that the Ministry of Finance has not yet published a communiqué on the subject, Özerçen continued his words as follows: “The inflation adjustment application met the necessary conditions to be applied to the financial statements dated 31.12.2021; However, with the legal regulation, it was postponed to be applied to the financial statements dated 31.12.2023. “We believe that it would be an appropriate decision for companies to start preparations before the end of 2023 in order to ensure a healthy implementation.”