Inflation Accounting in Turkey for Foreign Subsidiaries (2026): Tax Inflation Adjustment vs IAS 29 Explained
Why do your Turkish subsidiary’s tax books, statutory accounts and group IFRS numbers show different results? Turkey’s tax inflation adjustment is suspended for 2025–2027 — but IAS 29 hyperinflation accounting still applies to group reporting. A licensed Turkish CPA explains what each set of numbers needs.
- Tax books: inflation adjustment under Tax Procedure Law Repeated Art. 298/A was applied at 31 December 2023 and in 2024, but Law No. 7571 suspends it for the 2025, 2026 and 2027 periods (Tax Procedure Law Provisional Art. 37), including provisional tax periods — with a narrow exception.
- Group reporting: Turkey remains a hyperinflationary economy for IFRS purposes, so IAS 29 restatement still applies to the subsidiary’s figures in IFRS group accounts.
- Result: three different sets of numbers — unadjusted tax books, statutory/TFRS-or-BOBİ FRS statements where required, and IAS 29-restated group reporting.
- The suspension can be extended by Presidential decision for up to three more periods.
- A monthly bridge between Turkish books and IAS 29 group figures avoids year-end surprises for auditors and HQ.
Struggling to explain Turkish numbers to HQ? Tell us your group reporting framework and auditor. A licensed CPA replies personally with how to bridge Turkish tax books to IAS 29 group reporting.
WhatsApp a CPARequest an IAS 29 bridge reviewKey facts: inflation accounting in Turkey (2026)
| Item | 2026 position | Basis |
|---|---|---|
| Tax inflation adjustment (first application) | Balance sheet at 31 Dec 2023; 2024 periods | Tax Procedure Law Repeated Art. 298/A; Provisional Art. 33 |
| Tax inflation adjustment 2025–2027 | Suspended, including provisional periods (narrow exception for Repeated Art. 298/A item 9 taxpayers) | Law No. 7571; Tax Procedure Law Provisional Art. 37 |
| Possible extension | Up to three further periods by Presidential decision | Law No. 7571 |
| Group IFRS reporting | IAS 29 restatement for hyperinflationary economies | IAS 29 |
| Statutory financial reporting framework | TFRS for large/public-interest entities; BOBİ FRS for other audited entities | KGK standards |
Is inflation accounting required in Turkey in 2026?
Answer: For tax purposes, no: Law No. 7571 suspends Turkey’s tax inflation adjustment for the 2025, 2026 and 2027 periods, including provisional tax periods, with a narrow exception. For group reporting, yes: Turkey is still treated as hyperinflationary under IFRS, so foreign parents reporting under IFRS must restate their Turkish subsidiary’s figures under IAS 29.
SYSTEMS CPA — one Turkish ledger, three reconciled views
We keep the Turkish tax books and deliver an IAS 29-ready bridge every month, so your auditors and HQ see numbers they can trust.
- Monthly bridge from Turkish statutory books to the group chart of accounts.
- IAS 29 support data: acquisition dates and indices for non-monetary items.
- Tax position under the 2025–2027 suspension, including revaluation rules.
- Auditor-ready reconciliations between tax, statutory and IFRS figures.
- A licensed CPA keeps the books. Evren Özmen, CPA, TÜRMOB Reg. No. 35675.
Tax inflation adjustment vs IAS 29 in Turkey
| Criterion | Tax inflation adjustment (VUK) | IAS 29 (IFRS group reporting) |
|---|---|---|
| Purpose | Tax base | Group financial statements |
| 2025–2027 | Suspended | Applies while Turkey is hyperinflationary |
| Index | Domestic producer price index (Yİ-ÜFE) | General price index chosen under IAS 29 |
| Who prepares | Turkish CPA in the statutory books | Group finance with local data |
| Main risk | Applying or skipping adjustments incorrectly | Unreconciled differences at year-end audit |
What drives the effort of inflation reporting?
| Driver | Why it matters |
|---|---|
| Non-monetary assets | Fixed assets, inventory and equity need date-based restatement |
| Reporting frequency | Monthly vs quarterly group packs |
| Data quality | Acquisition dates and historical records |
| Group auditor requirements | Level of reconciliation detail expected |
| Intercompany balances | FX and inflation effects must match at both ends |
Case analysis: the profit that disappeared at group level
Facts (anonymised, illustrative of a typical engagement): A foreign subsidiary reported a healthy Turkish tax profit, but the group’s IFRS consolidation showed a loss for Turkey after IAS 29 restatement.
The obvious answer: the Turkish accounts must be wrong.
Why it failed: nothing was wrong — the tax books (unadjusted under the 2025–2027 suspension) and IAS 29 figures measure different things, but nobody had built a bridge, and HQ lost confidence in local management.
Structure adopted: a monthly reconciliation from tax books to IAS 29 group figures, with the main drivers (fixed-asset restatement, monetary loss) explained in English.
What happens if…
What happens if my Turkish company applies inflation adjustment in 2026 tax books?
Under Law No. 7571, adjustment is suspended for 2025–2027; applying it would produce incorrect tax returns unless the company falls under the narrow exception.
What happens if Turkey stops being hyperinflationary under IFRS?
IAS 29 restatement would stop from that point; the carrying amounts at that date become the new basis.
What happens if the suspension is extended?
The President may extend it for up to three further periods; tax books would continue without adjustment.
What happens if HQ and local numbers do not reconcile?
Auditors raise findings and HQ loses trust in local reporting. A documented monthly bridge prevents this.
Turkey vs other hyperinflation and high-inflation reporting regimes
| Country | Tax inflation adjustment | IAS 29 for group reporting |
|---|---|---|
| Turkey | Suspended 2025–2027 | Applies (hyperinflationary) |
| Argentina | Tax inflation adjustment rules apply under conditions | Applies |
| Poland | No general tax inflation adjustment | Not hyperinflationary |
| Germany | No tax inflation adjustment | Not hyperinflationary |
Frequently asked questions
Is inflation accounting suspended in Turkey?
Yes, for tax purposes: Law No. 7571 suspends it for the 2025, 2026 and 2027 periods, including provisional periods, with a narrow exception.
Does IAS 29 apply to Turkish subsidiaries in 2026?
Yes, for IFRS group reporting while Turkey is classified as hyperinflationary.
Why are my Turkish tax profit and IFRS profit different?
Tax books are unadjusted during the suspension, while IFRS figures are restated under IAS 29 — the two measure different things and need a reconciliation.
Who prepares IAS 29 figures for a Turkish subsidiary?
Usually group finance, using local data from the Turkish accountant; a CPA can deliver an IAS 29-ready monthly bridge.
Evren Özmen’s view from practice
The question I hear most from foreign CFOs is “which number is right?” All of them are — for different purposes. What goes wrong is the lack of a bridge. Once HQ gets a monthly reconciliation in English, the inflation debate stops being a trust problem and becomes a routine line item.
Primary sources
- Tax Procedure Law No. 213 (Repeated Art. 298/A; Provisional Arts. 33, 37) — mevzuat.gov.tr
- Official Gazette — Law No. 7571 (25 Dec 2025) — resmigazete.gov.tr
- Revenue Administration (GİB) — gib.gov.tr
- Public Oversight Authority (KGK) — TFRS and BOBİ FRS
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Related: Monthly management reporting for a Turkish subsidiary · Do I need a statutory audit in Turkey?
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