Bosses want cabinet to make inflation adjustment to boost balance sheets

Sefer Levent - ISTANBUL

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A detailed inflation adjustment reform must be made to see actual and better financial performances of Turkish companies in a move to increase their reach to new financing sources, the head of Turkey’s Union of Chambers and Stock Exchanges (TOBB) has said. 

“Tax policy is a key to understanding sustainability rates and the actual market value of businesses. The better the companies’ balance sheets reflect the realities, the more financing sources they can reach. The realization of an inflation adjustment, which was last made in 2004, matters a lot here. Many companies, which are in a very good position financially, now cannot reflect their real values to their balance sheets due to the lack of such adjustment,” TOBB head Rifat Hisarcıklıoğlu said. 

A draft tax procedure law by the Finance Ministry was supposed to include inflation adjustments in companies’ balance sheets in 2016, but the issue has remained unchanged as the draft package did not pass in parliament. 

He noted that a detailed report was submitted to Finance Minister Naci Ağbal by the association. 

“We have actually believed that a bigger reform, which will make the reevaluation of fixed assets once in three to five years, will be healthier than a one-time inflation adjustment. We are working on what can be done,” he added. 

He noted that parity differences also mattered when creating accurate balance sheets, adding that another regulation should be made in the field. 

Hisarcıklıoğlu said companies have to write their long-term debts or receivables as profits or losses by using the year-end foreign exchange rates. “Especially due to increases in foreign exchange rates in recent years, many companies saw deterioration in their balance sheets. We recommend the long-term foreign exchange-based liabilities to be assessed when the liabilities are paid back. Thus, the parity differences should be written separately. We have voiced our demand to the Finance Ministry as well. Technical works are underway right now,” he added.