The ministry has started to monitor those companies.

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The Minister of Treasury and Finance, Mehmet Şimşek, announced that taxpayers who make inflation adjustments and are deemed risky based on analyses of their balance sheets will be invited to explain themselves.

Şimşek provided an assessment regarding the work on the inflation adjustment application to AA correspondent.

Stating that they continue to take new steps within the principle of fairness and efficiency in taxation, Şimşek mentioned that the Ministry's units are continuously working in this direction and that inspection activities for inflation adjustments have begun nationwide.

Mehmet Şimşek informed that they are conducting screenings for taxpayers who make inflation adjustments, saying, "Those deemed risky based on analyses of the balance sheets of taxpayers who make inflation adjustments will be invited to explain themselves; those who do not provide explanations or whose explanations are deemed insufficient will be referred for a tax audit."

"OUR TAXPAYERS ACHIEVED 31.5 TRILLION LIRA INCREASE IN ASSETS WITHOUT PAYING TAXES"

Explaining that the inflation adjustment is "the process of correcting financial statements to reflect the true situation," Şimşek continued: "Approximately 1.7 million income and corporate tax taxpayers had the opportunity to correct their balance sheets without tax by the end of 2023. Thus, as of 2023, the total assets of all taxpayers before the adjustment were 17.4 trillion lira, while after the adjustment, it increased to 48.9 trillion lira. In this way, our taxpayers achieved an increase of 31.5 trillion lira in assets without paying any taxes. The increase in the value of assets has provided significant advantages to our taxpayers in terms of costs and depreciation since the beginning of this year and continues to do so." Şimşek recalled that this year, they postponed the inflation adjustment application, which needs to be made with tax effects, for all taxpayers in the first temporary tax period and for those with an annual turnover of less than 50 million lira in the second and third temporary tax periods, stating that they found it appropriate for large taxpayers with an annual turnover of over 50 million lira to make inflation adjustments starting from the second temporary tax period.

"THERE ARE TAXPAYERS WHO APPLY INCORRECTLY"

Pointing out that many incorrect applications and findings deemed risky were encountered in the analysis of the results of the application, Şimşek stated, "While taxpayers with strong equity at the end of the period gain a tax advantage due to the inflation adjustment, taxpayers who acquire their assets through foreign resources, i.e., debt, may face additional taxes after the adjustment. This essentially reflects the fundamental philosophy of the application. In this context, the balance sheets of our taxpayers who provide inflation adjustments are being analyzed for both the second temporary tax period of 2023 and 2024."

Şimşek indicated that there are taxpayers who incorrectly apply the inflation adjustment and provided the following examples: "We see that some taxpayers have increased their capital in their balance sheets without registering the capital increase with the trade registry. Some taxpayers have removed assets such as vehicles, land, and buildings from their balance sheets despite there being no actual sale. Some taxpayers have made transactions in their balance sheets that do not reflect reality to avoid the tax effects of the inflation adjustment, but these transactions are flagged by our risk parameters."

"NO ACTION WILL BE TAKEN ON THOSE WHOSE EXPLANATIONS ARE DEEMED SUFFICIENT"

Emphasizing that the balance sheets of these taxpayers will be brought to the real situation as a result of the invitation to explain, Şimşek stated that no action will be taken against taxpayers whose explanations are deemed sufficient. Minister Şimşek noted that those who do not provide explanations and those whose explanations are deemed insufficient will be referred for a tax audit, adding:

"These taxpayers can correct their mistakes without waiting for our invitation, thus avoiding any penalties. Incorrect application of the inflation adjustment causes significant tax loss from our perspective. Within the framework of our principle of fairness and efficiency in taxation, we have also taken action against those who cause tax loss by incorrectly applying the inflation adjustment. Our inspections will continue to increase across all sectors and all tax applications. We will continue our fieldwork without interruption within the framework of our principle of fairness and efficiency in taxation."