Legal framework of generally accepted accounting principles in Turkey


Accounting rules in Turkey regulate:

  • Tax code of the Republic of Turkey
  • The commercial code of the Republic of Turkey
  • Stock market laws

Accounting method in Turkey

Accumulation method of accounting (accrual basis).

Financial documentation required to provide the tax office in Turkey:

  • Balance sheet of the company
  • Profit and loss statement
  • Explanatory notes to financial instruments
  • Table of distribution of profits among the founders of the company in Turkey

Turkish Base of generally accepted accounting principles

  • Organizations should use the prescribed Plan of accounts defined in the Turkish tax code.
  • Staff documentation (accounting register, the main book, the book of inventory accounting for each fiscal year should  be certified by a notary public prior to the start of the new year (each page).
  • Staff documentation must be conducted in the Turkish language and the currency should be "new Turkish Lira" (TL). However, records in a foreign language are also permissible under certain conditions (Act No. 5228) (minimum authorized capital share in dollars-100 million and a minimum of 40% of foreign capital).
  • There is a possibility to resolve the foreign currency accounting for organizations, at least 40% of the share capital of which is owned by non-residents, provided that the proportion of their capital is more than 100 million dollars or equal amount in terms of foreign currency.
  • Native documentation may contain data in a foreign language, provided that the tax base is not broken.
  • Invoicing in foreign currency is allowed (even for resident parties).
  • Native documentation should be provided to the tax authorities in printed form upon request. Electronic copies are no longer accepted. However, the Ministry of finance is empowered to authorize electronic version of reference staffing documentation.
  • Reporting year usually starts January 1 and includes 12 months. Separate reporting periods are also possible with the authorization of the Ministry of finance.
  • Required: parent company must comply with the separate reporting period, as set forth in its Charter.
  • The Statute of limitations for tax purposes and maintaining native documentation is 5 years.
  • The period of limitation for the purposes of the application of the Turkish commercial code is 10 years.
  • Any change in the name, address and tax status of the taxpayer should be reported to the tax authority within the period established by the tax code.
  • Notification of the opening of a new business: within 10 days (the relevant organ of the commercial register).
  • Notification of other changes: within one month (the taxpayer).
  • All entries in the regular documentation must be supported by relevant documents (original bills, cumulative receipts of tax authorities, tax payment receipts).
  • Funds and liabilities denominated in foreign currencies shall be translated into Turkish Lira (based on course purchases by the Central Bank of Turkey) at the balance sheet date. Final losses because of currency exchange are deductible as long as income subject to taxation.
  • Received or paid by the funds may be valued at their current price, based on the discount rate.
  • There are certain rules regarding the possible interest of the sum of the taxable income.
  • Score financial-leasing transactions in Turkey is currently being conducted in accordance with international accounting standard no. 17.

Inflation accounting (valid from January 1, 2004)

Requirements of reference of inflationary accounting in Turkey:

Industrial price index growth > 100%

(for 3-piece past reporting periods)

and

Industrial price index growth > 10%

(past 12 months)

Restatement of fixed assets in Turkey is no longer applicable.

Turkey's Finance Ministry has been authorized to install:

  • types of financial indicators recalculation
  • where the recalculation of indicators can be applied for quarterly tax periods
  • by types of taxpayers, professional groups or the volume of current assets

Depreciation in accounting in Turkey (in force since January 1, 2004)

Accepted methods of calculating depreciation in Turkey:

  • linear method
  • the reducing balance method (max 50%).

Depreciation rates, based on periods of «beneficial use» are defined by the Ministry of finance each year.

Some depreciation rates in Turkey 2009.

Type of tool

The period of useful life (years)

Depreciation (line method)

Administrative buildings

50

2%

Production facilities

40

2.5%

Changes to the production infrastructure (roads, etc.)

8

12.5%

Furniture and equipment

5

20%

Mobile phones

3

33.33%

Personal computers and servers

4

25%

Computer programs

3

33.33%

Intangible rights

15

6.66%

 

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