|
In Turkey, The Tax Procedures Code outlines tax environment and procedures, where each tax is governed by a different tax law. The tax laws are administered by the Presidency of Tax Administration of Ministry of Finance. The Council of Ministers has the authority to amend the tax rates and some issues related to taxes.
In general, a tax payer must keep accounting records in sufficient detail complied with the Turkish Uniform Chart of Accounts to show and explain his/her transactions, to disclose at any time with reasonable accuracy his/her financial position, and to enable the tax payer to ensure that his/her accounts give a true and fair view of his/her state of affairs.
Statutory books and books of account required to maintain are journal, general ledger, inventory register and the minute books.
Books of account are kept in the Turkish language and the New Turkish Lira.
The books except general ledger have to be notarized before the new accounting period beginning and prior to their use.
The journal entries must be completed within 10 days for small businesses where 45 days for others from the date of a transaction occurred.
Books of account can be kept manually or on computer.
Tax payers must support all expenses and income by means of documents such as invoices, professional service receipts, retail sales receipts, payrolls and special documents listed in the Tax Procedures Code. In case of the proper documents are not issued or demanded at all or issued erroneously or deceptively, certain penalties will be imposed.
The invoices issued in Turkish and in terms of YTL among the Turkish taxpayers. Billing in terms of foreign currency to the Turkish entities is possible, but writing the exchange rate on the invoice is required. A YTL invoice can be collected in terms of foreign exchange providing that parties of the invoice has been agreed.
Books of accounting and documents must be retained for tax purposes for five years, but for social security and commercial code purposes for ten years following the most recent entry has completed.
The financial statements to be submitted to the tax office are balance sheet, income statement and cost of sales statement.
Assets of which value are up to YTL 560 (about USD 400) can be expensed direct. Assets valued over YTL 560 are subject to capitalisation and depreciation. The fixed assets, which are acquired after 01.01.2004, are subject to depreciation over rates to be determined by the Ministry of Finance, based on their useful life. Note that rates announced differ from 2 % to 33 %.The fixed assets acquired before 01.01.2004 continue to be depreciated over the former application, in which the maximum rate applicable is 20% per year. Depreciation may be calculated by applying either the straight-line or declining-balance method, at the discretion of the taxpayer. All tangibles, except for land, and intangible assets are depreciable over a minimum of five years. Under the previous application, buildings are an exception and are depreciated at a rate of between 2% and 10% per year, over a minimum of 10 or 50 years depending on the type of building. Generally, assets are considered to be placed in service when they are capitalised and ready for use. The applicable rate for declining-balance method is twice the rate of straight-line method. However, maximum applicable rate for declining-balance method is 50 %. On the other hand the declining balance method cannot be used for some items. For example, goodwill is depreciated within 5 years in equal instalments.
In general, taxpayers are allowed to revaluate their non-cash assets if only the increase in the General Wholesale Price Index is higher than 100% for the last three accounting periods and also higher than 10% in the ongoing accounting period. Net book values of the non-cash assets and accumulated depreciation are multiplied by the revaluation rate. Net revaluation increased in the value of the non-cash assets is registered in inflation adjustment fund as a liability in the balance sheet.
Inflation adjustment fund may be retained in the balance sheet or may be added to capital which is not subject to taxation. In cases where inflation adjustment fund is transferred to another account or withdrew from the company is subject to taxation. In case of the sale of the adjusted or re-valued assets, the corresponding value increased must be treated as the cost of the assets.
Applicable tax penalties for the major tax offenses are classified as penalties for general irregularities (e.g. failure to submit returns in due time), for specific irregularities (e.g. failure to prepare an invoice to certify a sale or an expense), for general tax evasion or tax loss (e.g. failure to submit a complete return), for specific tax evasion or tax loss (e.g. deliberately causing a tax loss or preparing or using a fake invoice). For example, the penalty for general tax evasion is the amount determined as a tax loss, plus interest on the late payment. Penalty for specific tax evasion is three times the evaded tax, plus interest on the late payment. In some cases (e.g. fake invoice, fraud), imprisonment may also be imposed.
Corporations should appoint independent tax auditors (Certified Public Accountants) to be certified their transactions and books of accounts for the tax purposes, and independent external auditing firms for general purposes. Only the stock-exchange listed companies in Turkey are under the obligations of external auditing.
Self-assessment taxation system is dominant in Turkey: each taxpayer personally fills his/her tax return and voluntarily pays his/her tax liability. In some cases, tax levies by valorisation, administrative assessment and complementary tax levy are also possible.
|
Taxation in Turkey