Bill excludes banks from inflation accounting

ANKARA

The omnibus bill submitted to parliament excludes banks and financial institutions from inflation-adjusted accounting for two years.

The bill prepared by the ruling Justice and Development Party (AKP) is expected to be discussed at parliament’s planning and budget commission this week, while the debates on the legislation at the general assembly will take place by Dec. 10.

The bill, which also introduces some tax exemptions and heavy fines for exorbitant prices, is designed to mitigate the impacts from the adverse developments on the economy, such as the COVID-19 pandemic, the war between Russia and Ukraine and the devastating earthquakes in February, said Abdullah Güler, the AKP’s parliamentary group chair.

One of the articles in the bill excludes banks and financial institutions from inflation-adjusted accounting in 2024 and 2025.

Inflation accounting shields companies from higher taxes. It is a practice which incorporates high inflation into the financial statements of businesses.

The combined net income of Turkish banks grew by 53 percent in January-September of 2023 from a year ago to 439 billion Turkish Liras, according to data from the Banking Regulation and Supervision Agency (BDDK).

The annual inflation rate was 61.4 percent in October, slowing from 61.5 percent in September.

The bill also foresees that taxpayers will be able to exempt 50 percent of their earnings from income and corporate taxes, provided that all of the dividends earned abroad are brought to Türkiye.

Finance Minister Mehmet Şimşek previously said that the tax regulation aims to boost foreign currency inflows into Türkiye.