The İzmir Tax Office Directorate has provided an opinion in response to your request regarding whether the portion of an export credit insurance policy not covered by the insurer can be recorded as an expense.
Corporate Tax Perspective:
- According to the Corporate Tax Law, corporate tax is calculated on the net corporate income obtained within a fiscal period. Deductions are allowed for expenses listed under the Corporate and Income Tax Laws.
- For any unpaid portion of receivables under an export insurance policy that has been assigned to the insurer, the unpaid amount can be classified as a “worthless receivable” in accordance with Article 322 of the Tax Procedure Law. This is applicable when it is proven that collection is no longer possible through legal means or credible documents.
Worthless Receivables:
- Worthless receivables are defined as those for which collection is no longer feasible, as confirmed by a legal judgment or credible documentation. If the collection of a debt is legally impossible, it may be classified as a worthless receivable and written off as a loss.
Transfer of Receivables:
- In accordance with the Turkish Code of Obligations, transferred receivables become the responsibility of the assignee (e.g., the insurer). Therefore, any amount not covered by the insurer from a transferred debt can be considered worthless and may be written off according to the Tax Procedure Law.
In conclusion, the unpaid portion of the debt under the export credit insurance policy can be treated as a worthless receivable and deducted from taxable income.
Source: Revenue Administration
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