Tax advisors, accountants, auditors, lawyers in Malta
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The Government of Türkiye (formerly Turkey) has introduced new tax regulations. These include the extension of currency-protected deposits and a tax on inflation profits. It has also been decided that the additional tax is constitutional. The Ecovis consultants explain the latest developments.
Extension of currency-protected deposits
As part of the policy to protect the value of the Turkish lira (TRY) in Türkiye, for the first time on 23/02/2022, with the Exception in the Fourth Paragraph of the Provisional Article 14 of the Corporate Tax Law, foreign currencies in the balance sheets dated 21/12/2021 and 31/12/2022 were converted into TL so regulation has been exempted interest, dividends, and exchange rate differences from income and corporate taxes by depositing them into Exchange Protected Deposit accounts.
The period has been extended to 31/12/2022 in the regulation regarding the exemption of interest, dividends, and exchange rate differences from income and corporate taxes if converted into TL and deposited into Exchange Protected Deposit accounts. Accordingly, corporate tax exemption will be valid for interest, dividends, exchange rate differences, and other earnings obtained within the scope of the evaluation of foreign currencies in corporate taxpayers’ balance sheets as of 31/12/2022, within the scope of Currency Protected Deposit.
Inflation adjustment: Inflation gains will be subject to tax as of 2024
Under Turkish tax law, the financial statements of income and corporate taxpayers who determine their earnings on a balance sheet basis are subject to inflation adjustment if the increase in the price index is more than 100% in the last three accounting periods, including the current period, and more than 10% in the current accounting period.
General Communiqué No. 555, published on 30 December 2023 and the TPL Circular No. 165, published on 20 February 2024, provide comprehensive explanations of the methods and rules concerning inflation adjustment.
As a rule, assets, liabilities, costs, and equity items are valued on the date they are recorded. In simple terms, the inflation adjustment increases the values of non-monetary assets, liabilities, and equity items included in the balance sheets by the inflation rate (calculated from the PPI index on the date they are recorded in the books and the PPI index on the relevant balance sheet date) to make them realistic in terms of purchasing power.
We support companies in correctly implementing the new tax regulations. Mustafa Bulut, CPA, Partner, ECOVIS DİPLOMAT DENETİM VE YMM A.S., Izmir, Türkiye
Until the end of the 2023 accounting period, the profit/loss resulting from the inflation adjustment made on the balance sheet will be shown in the “retained years’ profit/loss” accounts. However, in 2024 and subsequent periods, earnings resulting from inflation adjustment will be included in normal period earnings and will be subject to tax.
Although inflation adjustment conditions were put in place for the first provisional tax period of 2024 (January – March 2024), the Ministry of Finance announced in the General Communiqué that this would not be the case.
Additional tax not unconstitutional
The 2023 earthquakes in the east and southeast of Türkiye put a heavy burden on public finances. Law No. 7440, published on 12 March 2023, required some corporate taxpayers to pay an additional tax of 5% – 15% as part of their corporate tax for 2022. The tax was the subject of lawsuits claiming that it violated the principle of equality in taxation and created a retroactive tax liability. However, on 14 March 2024, the Constitutional Court rejected the claim that the additional tax was unconstitutional.
For further information please contact:
Mustafa Bulut, CPA, Partner, ECOVIS DİPLOMAT DENETİM VE YMM A.S., Izmir, Türkiye Email: mbulut@diplomatymm.com.tr
Efil Çetin, CPA, ECOVIS DİPLOMAT DENETİM VE YMM A.S., Izmir, Türkiye Email: ecetin@diplomatymm.com.tr
WKO Advantage Austria: Ecovis China are trusted experts for Chinese legal, tax and financial insights – a case study
15.07.2024
WKO Advantage Austria has built a long-term and successful business relationship with ECOVIS Richard Hoffmann Law Firm & ECOVIS Ruide Shanghai, led by partners Richard Hoffmann and Pingwen Hu.
WKO Advantage Austria (WKO is the Austrian Economic Chamber), the leading organisation supporting Austrian businesses abroad, is at the forefront of providing in-depth information and strategic insights into various international markets. Their focus is on promoting economic connections and assisting Austrian companies in their global expansions.
By leveraging the global Ecovis network with its specialist expertise, WKO and Ecovis have together created the China Specialist Report – Taxes and Accounting (China Fachreport – Steuern und Buchhaltung), which offers in-depth insights and updates on tax, accounting, and bookkeeping in China. This report has been an indispensable tool for companies operating in the Chinese market for over a decade.
The positive feedback from WKO Advantage Austria underlines our commitment and professionalism in supporting our clients in their international business endeavours. Richard Hoffmann, Lawyer, ECOVIS Rechtsanwaltskanzlei Richard Hoffmann, Heidelberg, Germany
Dr. Michael Berger, Commercial Counsellor explains: “For more than two decades, Ecovis, especially the Partners Richard Hoffmann and Pingwen Hu, have been pivotal figures in our legal, tax, accounting and auditing consulting network. Their commitment and comprehensive support have solidified them as trusted allies for our organisation.
Their extensive expertise and deep understanding of the Chinese business landscape ensure that the tax guide is not only comprehensive and accurate, but it is also presented in a highly accessible manner, contributing to its widespread popularity among readers. We are very grateful for the continued support and professionalism exemplified by Mr Hoffmann and Ms Hu.”
For further information please contact:
Richard Hoffmann, Lawyer, ECOVIS Rechtsanwaltskanzlei Richard Hoffmann, Heidelberg, Germany Email: richard.hoffmann@ecovis.com
VAT Finland: The changes companies need to prepare for
15.07.2024
From September 2024, there will be significant VAT changes in Finland, impacting various industries. Companies must understand the changes and prepare for the new challenges in order to maintain their financial stability and competitiveness.
The changes will affect various sectors differently and require careful preparation and efficient business management. It is essential to understand their impact and plan accordingly. The Ecovis experts know that effective management and proactive preparation will help businesses adapt to the new VAT rates and maintain their competitiveness in the market.
Key changes to VAT in Finland
Increase in standard VAT rate: From 1 September 2024, the standard VAT rate will increase from 24 to 25.5 percent. This affects all goods and services not covered by reduced VAT rates.
Changes in reduced VAT rates: The reduced VAT rate of 10 percent will increase to 14 percent, except for newspapers and periodicals. This change affects books, passenger transport, accommodation services, pharmaceutical products, and admission fees to cultural and entertainment events.
We can help you to maintain the competitiveness of your company despite new VAT regulations in Finland. Jaana Palomäki, CEO, ECOVIS Finland Oy, Helsinki, Finland
How to prepare for the changes
Efficient management: Businesses must update their accounting and invoicing systems to reflect the new VAT rates. This may require software updates and staff training on new procedures.
Pricing strategy: It is essential to assess the impact of price increases and communicate to customers why prices are rising. Reviewing your pricing strategy helps minimise the risk of reduced demand.
Financial planning: Companies should update their financial forecasts and budgets to align with the new VAT rates. This helps maintain cash flow management and anticipate potential economic impacts.
Consultation and support: It is advisable to consult a tax expert to understand the implications of the changes and ensure compliance with the new regulations.