How will the amount to be considered as non-tax-deductible expenses within the scope of financial expense restriction be calculated and its accounting record be?
In the actual situation, there is a practice such as transferring the financial expense restriction amount from the 7-fold accounts to the account numbered 689. However, we would like to state that this is not correct. Account numbered 689 in the uniform account plan is not the KKEG account. It is an account where the unforeseen expenses and losses of the enterprise are tracked. Unforeseen expenses and losses may include expenses that are KKEG in terms of tax legislation, as well as expenses that can be taken into account in whole or in part in determining the tax base. The uniform account plan should not be designed only for the legislation related to taxation, but also for accounting standards.
Accordingly, the tracking of financial expenses should be done in the account numbered 780 FINANCIAL EXPENSES, the financial expense restriction amount should be followed in the sub-accounts to be opened in the 900-fold off-balance accounts, and the KKEG table in the declaration; According to the provisions of Article 11 of the Corporate Tax Law, deductions that are not accepted must be reported in the line (Corporate Tax Law Article 11/1-i financial expense restriction).
Example Calculation
- Data1- Equity: 5,000,000 TL
2- Total Liabilities (Assets – Equity): 18,000,000 TL
3- Liabilities Exceeding Equity (2-1): 13,000,000 TL
4- Ratio of Excess to Liabilities: (3/2)
5- Financing Expense Amount (accounts like 780, 660, 656, etc.): 1,000,000 TL
6- Financing Expense Related to Disguised Capital (KKEG) (if disguised capital exists)/Financing Income Obtained Due to the Same Liability (KVKGT 11.13.8.): NONE
7- Financing Expense to be Considered in the Calculation (5-6): 1,000,000 TL
8- Financing Expense Attributable to the Excess Portion (4*7): 722,222.22 TL
9- Financing Expenses to be KKEG (8*10%): 72,222.22 TL
1_______________________ 30.06.2024 _________________________
900 OFF-BALANCE SHEET ACCOUNTS (DEBIT) 72,222.22 TL
… Account 780 Financing Expense Limitation
950 OFF-BALANCE SHEET ACCOUNTS (CREDIT) 72,222.22 TL
… 780 Account – Financing Expense Limitation
__________________________ / _________________________
Financing Expenses: These consist of any expenses and cost elements incurred under names such as interest, commission, maturity difference, profit share, exchange difference, discount amounts paid to factoring institutions, etc., arising due to the use of foreign liabilities. The amounts in accounts like 780, 660, 656, and similar accounts where these amounts are recorded will be subject to limitation.
Equity: This is the equity in the balance sheet drawn up as of the period in which the expense limitation will be made, and a balance sheet must be drawn up at the end of each period. For example, the equity in the balance sheet dated 30.06.2024 will be taken into account for 2024/2. Temporary.
Liabilities: Refers to the total of short-term liabilities and long-term liabilities in the balance sheet. (Assets – Equity)
Expenses Not Subject to Financing Expense Limitation: Expenses not related to the use of any foreign liabilities, such as guarantee letter commissions, printing and similar expenses related to bond issuance, and mortgage expenses, are not subject to expense limitation. Similarly, early payment discounts or cash payment discounts, which are not financing expenses but are in the nature of reducing financing income, are also excluded from the scope of expense deduction limitation.
Expenses that Do Not Arise Due to the Duration of the Use of Foreign Liabilities: Expenses and cost elements such as stamp duty paid in relation to loan agreements or banking and insurance transaction taxes paid in relation to bank transfer fees, which do not arise due to the duration of the use of foreign liabilities, will not be subject to expense deduction limitation.
Financing Expenses Related to Ongoing Investments: All depreciable economic assets, including the amounts tracked in the “Investments in Progress” account until the relevant fixed asset is ready for use, whether with or without an incentive certificate, will not be subject to financing expense limitation.
Application in Long-Term Construction Works: Since the financing expenses related to the foreign liabilities used by those engaged in these works should be taken into account as an expense or cost element in the calculation of the final profit or loss of the work, the expense limitation application will also be made in the same period. If multiple construction and repair works are carried out together or if there are other jobs in addition to long-term construction and repair works, the financing expenses will be subject to expense deduction limitation in the year in which they are taken into account in determining the profit or loss.
Direct Financing Expenses in the Income Statement: These will be subject to limitation. If an amount from these expenses is transferred to the investment cost, the transferred amount will not be subject to limitation, and the remaining amount will be considered in the limitation.
Source: UNION OF CHAMBERS OF CERTIFIED PUBLIC ACCOUNTANTS AND CERTIFIED PUBLIC ACCOUNTANTS OF Türkiye
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