Readjustment of economic assets of shareholders registered as current assets

Dear Fortune readers,

In this article, I will share my insights on the arrangement regarding the readjustment opportunity for certain economic assets issued in law on restructuring certain receivables, also named tax amnesty.

As you all know, the last inflation adjustment was made in 2004. Nonetheless, conditions for another inflation adjustment were not met and economic assets remained in registries of taxpayers as historic costs.

An adjustment in 2018 made it possible merely for estates, among all economic assets registered to current assets of income and corporate taxpayers, to be readjusted by the end of 2018 with reference to National Producer Price Index.

This latest adjustment made it possible for both estates registered to income and corporate taxpayers’ current assets, and other economic assets subject to depreciation to be readjusted by 31.12.2021.

Accordingly, estates which are not subject to depreciation (vacancy and unused land), real estate subject to depreciation (including their component parts and particulars), facilities and land adjustments (including orchards, mulberry groves, hazelnut groves, olive groves and rose beds in agricultural enterprises and fig orchards and vineyards in agricultural facilities), machines, ships, vehicles, immaterial economic assets, inventory stocks, leasehold improvements amount, other economic assets subject to depreciation (betterment, capitalized first facility or organization costs, R&D costs, cinema movies) fall within the scope of the readjustment.

On the other hand, economic assets subject to sales-leasing-repurchasing operations or lease certificate exportation, as well as assets acting as commodities registered to current assets of people who regularly deal with sales and purchases of economic assets and construction are not subject to readjustment.

Limited taxpayers, bookkeepers working on operating accounts (including agricultural enterprise accounts), freelancers, people working in finance and banking sectors, insurance and reinsurance companies, pension companies and private pension funds, people who regularly and exclusively deal with processed gold, silver sales-purchases and manufacturing and people who are allowed to keep records on a foreign exchange rate will not benefit from the readjustment.  

The tax amount calculated as 2% of ratio on the value increase manifest in a private passive funding account upon readjustment will be notified in the form of a special notification arranged for this purpose by the evening of the last date of the month following the readjustment and it will be paid in three equal installments. I need to add that this separate private fund will be subject to taxation in case it is transferred to another account for purposes other than withdrawal or capitalization.

This adjustment has significant advantages. First and foremost, it provides a significant cost advantage, as it makes it possible for economic assets which are not yet amortized to be re-amortized based on a readjusted value. It will also reduce the cost of taxpayers, using credits via a private fund for equity increase purposes, subject to thin capitalization and financing expense restrictions. It can also provide taxpayers with a significant amount of saving in case said economic assets will be subject to taxation in the future upon disposal.