Will cooperatives make inflation adjustments?
If the cooperative is a corporate tax payer, inflation adjustments will be made.
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Those who will make inflation adjustments are explained in Article 8 of the Communiqué No. 555 of the Tax Procedure Law.
Those who will make inflation adjustments
ARTICLE 8- (1) Inflation adjustments are made by income or corporate tax payers who determine their earnings based on the balance sheet, including collective, ordinary limited partnerships and ordinary companies. Inflation adjustments are made on the balance sheets of collective, ordinary limited partnerships and ordinary companies that keep books based on the balance sheet. The balance sheets of business partnerships that are corporate tax payers are also subject to inflation adjustments.
Example: (A) Ordinary Partnership with two partners that keeps books based on the balance sheet is engaged in construction work. Partners are subject to income tax, and the ordinary partnership is subject to withholding and value added tax. The resulting profit or loss of ordinary partnerships is taxed by the partners forming the ordinary partnership by including it in their own earnings in proportion to their shares.
In this case, the inflation adjustment will be made on the balance sheet of the ordinary partnership and the profit or loss determined as a result of the adjustment will be included in their own earnings by the partners in proportion to their shares, the profit or loss arising from the adjustment of the balance sheet dated 31/12/2023 will not be taken into account in determining the taxable income, and the profit or loss arising from the adjustment made in the following periods will be taken into account in determining the taxable income.
(2) In accordance with the temporary article 33 of Law No. 213, the balance sheet dated 31/12/2023 (for those with a special accounting period ending in 2024) and the balance sheets at the end of the temporary tax and accounting periods in the following temporary tax and accounting periods, depending on the fulfillment/existence of the adjustment conditions, in accordance with the paragraph (A) of the repeated article 298 of the same Law, are required to be subject to inflation adjustment in accordance with the said article and this Communiqué for the taxpayers in question (except for those who are stated in this article of the Communiqué that they cannot make inflation adjustments), and the taxpayers do not have any optional rights in terms of implementation.
(3) Economic state enterprises and public economic institutions that are corporate taxpayers and keep books according to the balance sheet principle, as well as the enterprises and privileged enterprises within them, are required to make inflation adjustments.
(4) Public institutions that are subject to corporate tax and are affiliated with public institutions and organizations and that keep books on the basis of balance sheets, as well as economic enterprises affiliated with associations and foundations, are also required to make inflation adjustments.
(5) Whether taxpayers who have just started a job are subject to inflation adjustments is also determined according to general principles. The date of commencement of employment is of no importance in the application of inflation adjustment provisions for these taxpayers.
In terms of the obligation to make inflation adjustments in periods after 1/1/2024, the last three and the last accounting periods are taken into account in the calculation of whether the conditions have been met, even if they cover periods prior to the date these taxpayers started work.
(6) Taxpayers who determine their earnings according to the business account principle (including agricultural business account) and self-employed taxpayers who keep a freelance earnings book cannot make inflation adjustments. However, they may depreciate their economic assets subject to depreciation based on their adjusted amounts in accordance with this Communiqué.
(7) The following taxpayers cannot make inflation adjustments:
a) Taxpayers who are allowed to keep their records in a currency other than the Turkish currency,
b) Taxpayers who are allowed to keep their records in a currency other than the Turkish currency but have switched to recording in Turkish currency, and those who have not had three accounting periods since the accounting period in which they started recording in Turkish currency.
(8) Income or corporate taxpayers who do not keep books according to the balance sheet method will not be able to make inflation adjustments in accordance with this Communiqué.
However, taxpayers who are active as of 31/12/2023 and who switch to the balance sheet method for the first time in the 2024 calendar year or later shall make their first adjustments as of the date they switch to the balance sheet method in accordance with the temporary article 33 and the third section of this Communiqué; they will make subsequent corrections in accordance with paragraph (A) of Article 298 and the fourth section of this Communiqué.
In addition, since taxpayers who were keeping books on a balance sheet basis as of 31/12/2023 and started to keep books on a business account basis as of 1/1/2024 meet the conditions required to make inflation adjustments as of 31/12/2023, they must correct the balance sheet dated 31/12/2023 and base the business account records and inventory as of 1/1/2024 on the values in the corrected balance sheet.
(9) Taxpayers who are subject to income/corporate tax but whose earnings are exempt from income or corporate tax and who keep books on a balance sheet basis must also make corrections in accordance with the inflation adjustment provisions.
(10) Taxpayers who are exempt from corporate tax and keep their books on the balance sheet basis are not required to make inflation adjustments, but they may do so voluntarily.
Source: Communiqué No. 555 of the Tax Procedure Law
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