Turkish Companies’ Balance Sheets Inflation-Adjusted Until 2026: Treasury
The end-2023 balance sheets of the Turkish companies will be adjusted for inflation, with adjustments expected to continue until 2026 in light of current inflation forecasts, the Treasury said Wednesday.
The move comes after inflation soared above 85% last year following an aggressive rate-cutting cycle that was accompanied by a steep depreciation in the Turkish lira.
Inflation declined but rose again in recent months, reaching 61.5% in September.
In written answers to questions from Reuters, the Treasury said any profit or loss resulting from inflation adjustments in end-2023 balance sheets would not affect companies’ 2023 tax bases but could affect them in subsequent years.
The Treasury made the comments after its revenue administration published a draft regulation last week detailing a move to inflation accounting, marking a return to the practice after a break of about 20 years.
In the last two years, companies have sought to protect themselves from high inflation and those that have turned to non-monetary fixed assets are expected to receive higher profits and pay correspondingly higher taxes in 2024.
Treasury and Finance Minister Mehmet Şimşek has led a return toward more conventional economic policies since his appointment following the May elections.
The new administration reversed the yearslong easing cycle and aggressively lifted interest rates to conquer inflation, rebuild foreign currency reserves and curb the chronic current account deficit.
Since June, the country’s central bank hiked its key policy rate by a combined 2,150 basis points, while other macroprudential measures, such as credit tightening to cut domestic demand, were also implemented.
As it continues to tighten policy to ensure disinflation, the bank is expected to deliver another hefty rate hike of 500 basis points on Thursday, according to surveys and analysts.
Source: Daily Sabah
