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Turkey may exclude banks from inflation-adjusted accounting -minister


ANKARA, Nov 1 (Reuters) – Turkey will move to
inflation-adjusted accounting, but financial institutions may be
excluded from the practice, Finance Minister Mehmet Simsek said
late on Tuesday.

Turkish companies’ end-2023 balance sheets will be inflation
adjusted, with the practice expected to continue until 2026 due
to current inflation forecasts, the Treasury told Reuters last
week, a change analysts said would most affect the country’s
banks.

“We will move to inflation accounting. Maybe there’ll be an
exception for financial institutions, and we’ll not include them
to the practice. But apart from that, we will move into that
practice,” Simsek told a parliamentary commission.

The Treasury’s revenue administration published a draft
regulation this month detailing a move to inflation accounting.

Turkish annual consumer price inflation climbed to 61.53% in
September, the most recently available data.

In the last two years, companies have sought to protect
themselves from high inflation by purchasing fixed assets rather
than leaving money in bank accounts. Those that have turned to
non-monetary fixed assets are expected to receive higher profits
and pay correspondingly higher taxes in 2024.

Turkish banks, which saw their average profit increases slow
to 50% in the first half of this year following a 366% surge in
2022, would be among those affected most negatively by the move
to inflation-adjusted accounting, analysts said.

“Banks will report perhaps a quarter of the profits they
used to report,” Soner Gokten, assistant professor for
accounting and finance at Turkey’s Baskent University, said last
week.
(Reporting by Nevzat Devranoglu; Writing by Huseyin Hayatsever;
Editing by Jamie Freed)



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