Will there be no inflation adjustment for the Other Intangible Fixed Assets Account No. 267?

Will there be no inflation adjustment for the Other Intangible Fixed Assets Account No. 267?

It is not possible to directly consider the “267 – Other Intangible Fixed Assets” account, which is not included in the lists of the Tax Procedure Law Communiqué No. 555 (Annex 1) and (Annex 2), as a non-monetary asset in the inflation adjustment application and subject it to adjustment. First of all, the nature of the assets monitored in this account should be determined, in other words, it should be subjected to a monetary or non-monetary distinction and the necessary action should be taken.

***

Tax Procedure Law Communiqué No. 555
Basic principles to be considered during correction

ARTICLE 5- (1) When making inflation adjustments, the following principles shall be taken into consideration along with the principles included in the following sections of the Communiqué:

a) The lists showing monetary and non-monetary values ​​included in the annex of the Communiqué have been prepared based on the principle that only the Turkish Lira is used as money in businesses.

b) Taxpayers shall continue to evaluate their transactions in foreign currencies in accordance with the current provisions of Law No. 213 and shall not make any additional corrections for them. In the application of this Communiqué, foreign currencies and values ​​expressed in foreign currencies (such as receivables and payables) shall be considered as monetary values.

c) Some economic values ​​included in economic enterprises (such as provisions) do not have a primary value and are included in the financial statement in accordance with a certain economic value. Such assets will be subject to monetary or non-monetary distinction according to the economic value they are attached to. In other words, the source to which they are allocated as a provision should be taken into account in the inflation adjustment, depending on whether it is a monetary or non-monetary value. The provisions that will be subject to the adjustment process are the provisions that can be separated according to the provisions of Law No. 213. Accordingly, a provision that cannot be separated according to the provisions of Law No. 213 will not be taken into account in the inflation adjustment even if it is included in the balance sheet. For example, provisions such as severance pay provisions and guarantee expense provisions will not be taken into account in the inflation adjustment since they are not among the provisions listed in Law No. 213. The provisions for doubtful receivables allocated in accordance with the provisions of Law No. 213 will not be subject to inflation adjustment since they are of a monetary nature.

ç) Shares are essentially a non-monetary economic asset and the adjustment process will be carried out by multiplying them with the adjustment/carryover coefficient.

However, it has been deemed appropriate to adjust the foreign currency shares, participations and advances in the assets of the enterprises with the exchange rate on the date of adjustment, based on the authority granted by subparagraph (8) of paragraph (A) of Article 298 of Law No. 213.

d) It is mandatory to document the affiliation of the non-monetary assets included in the economic enterprise and subject to the adjustment process with the enterprise, the date of the adjustment and the amounts.

With your special notice request form registered in the interest, our Presidency has been requested to provide an opinion on whether the table you have viewed in the “256- Other Tangible Fixed Assets” account and old items such as mugs, taps, cauldrons, pitchers, buckets, etc. will be taken into consideration as non-monetary assets in the inflation adjustment application.

In the subparagraph (A) of Article 298 of Tax Procedure Law No. 213, “…

2. The following provisions are included in the implementation of this article;

a) Non-monetary values; refers to values ​​other than monetary values,

b) Monetary values; refers to values ​​whose purchasing power changes in the opposite direction according to price movements, while their nominal values ​​remain the same against changes in the value of the Turkish Lira (Foreign currencies are also considered as monetary values).

…

The procedures and principles regarding the financial tables to be subject to inflation adjustment for the 2023 accounting period and the subsequent accounting periods (including temporary tax periods) depending on the realization/existence of the adjustment conditions and the correction transactions to be made according to Article 298 of Law No. 213, subparagraph (A) and temporary article 33 dated 30/12/2023 It has been determined by the Tax Procedure Law General Communiqué No. 555 published in the Official Gazette No. (2. Duplicate), and the General Communiqué in question;

– In its 9th article titled “Assets to be subject to adjustment in the balance sheet”, “(1) …

a) Monetary Assets: Assets whose nominal values ​​remain the same against changes in the national currency value, but whose purchasing power changes in the opposite direction according to price movements.

b) Non-monetary Assets: Assets other than monetary assets, in other words, assets whose purchasing power does not change despite changes in the national currency value.

…

Monetary assets (monetary assets and monetary resources) are not subject to inflation adjustment. Because the value of the monetary value appearing on the balance sheet also shows the purchasing power of that value as of the balance sheet date. However, since the values ​​of non-monetary assets (non-monetary assets and non-monetary resources) appearing on the balance sheet do not show the purchasing power of these assets as of the balance sheet date, non-monetary assets are subject to inflation adjustment in order to ensure that the balance sheet is free from the effects of inflation.

(2) The monetary and non-monetary values ​​of the values ​​included in economic enterprises by type are included in the lists annexed to this Communiqué (ANNEX 1 and ANNEX 2). Although equity items are not included in the said lists, provided that there is no provision to the contrary and no determination is made in the Communiqué, equity items are considered as “non-monetary values” in the application of this Communiqué.”,

– In footnote number 6 in ANNEX-1, monetary values, in footnote number 8 in ANNEX-2, for non-monetary values, “The economic values ​​included in the lists are shown with the account codes they are followed in the “Uniform Account Plan” for the convenience of the implementers. The economic assets not included in these lists are subject to treatment as the closest economic asset in the lists in terms of their nature.”

In addition, it is not possible to directly consider the “256- Other Tangible Fixed Assets” account, which is not included in the lists of the annexes of the Communiqué (Annex 1) and (Annex 2), as non-monetary assets in the inflation adjustment application and subject to adjustment. First of all, the nature of the assets monitored in this account should be determined, in other words, it should be subject to monetary or non-monetary distinction and the necessary action should be taken.

Accordingly, in the concrete case, the aforementioned assets stated to be monitored in the “256- Other Tangible Fixed Assets” account by your company should be considered as non-monetary assets in the inflation adjustment application and subject to adjustment within the scope of the relevant legislation/regulations.

Source: Istanbul Chamber of Certified Public Accountants
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.