Inflation accounting in Türkiye: tax books frozen until 2027, IFRS still restates
Tax inflation adjustment is suspended for 2025 to 2027, while IAS 29 still applies for IFRS. What the two tracks mean for deferred tax, dividends and budgets.
Inflation accounting in Türkiye now runs on two tracks. For tax, inflation adjustment is switched off until at least the end of 2027. For IFRS reporting, Türkiye is still treated as a hyperinflationary economy, so groups keep restating. Mixing the two up is one of the most common sources of confusion in group reporting packs.
Track 1: tax books, no adjustment for 2025 to 2027
Law No. 7571, published in the Official Gazette on 25 December 2025, added provisional article 37 to the Tax Procedure Law. Under it:
- Financial statements are not inflation-adjusted for tax purposes for 2025, 2026 and 2027, including the provisional tax periods, even where the conditions in article 298 are met.
- The President may extend this by up to three further fiscal periods.
- Companies with special fiscal years are covered for the periods ending in 2026, 2027 and 2028.
- The last tax inflation adjustment that companies actually booked was for 2024.
What it means: tax depreciation is based on unadjusted historical cost again, and equity is no longer restated in the tax books. With annual inflation still around 30%, the real value of the depreciation tax shield shrinks, so the effective tax burden on asset-heavy businesses rises. Revisit capital expenditure business cases that assumed indexed tax depreciation.
Track 2: IFRS (TFRS) reporting, IAS 29 continues
Türkiye has been classified as hyperinflationary under IAS 29 (TMS 29 in Türkiye) for reporting periods ending on or after 30 June 2022. Groups with Turkish subsidiaries, and Turkish companies reporting under TFRS, restate non-monetary items and the income statement into the measuring unit current at the reporting date, and report a net monetary gain or loss. Large multinationals' 2025 annual reports still apply IAS 29 to their Turkish operations.
Whether an economy stays hyperinflationary is a judgement made at each reporting date, usually starting from cumulative three-year inflation of around 100%. Your auditors will expect the assessment to be documented every period.
Why the two tracks matter together
- Deferred tax: IFRS carrying amounts are restated while tax bases are frozen, so temporary differences grow every period. Expect larger deferred tax liabilities on fixed assets and inventory.
- Dividends: distributable profit is determined from the statutory (Turkish GAAP and tax) books, not from the IFRS pack. Agree with your advisor which base the board uses before proposing a dividend.
- Budgeting and KPIs: management reporting in TRY nominal, IFRS restated and EUR translated figures can tell different stories. Pick one basis for targets and state it clearly.
- Indices: IFRS restatement uses the consumer price index published by TurkStat (TÜİK). Use our adjustment factor calculator with the official index values.
Checklist
- Confirm that no tax inflation adjustment entries are booked for 2025 to 2027.
- Document the IAS 29 assessment for each reporting date.
- Reconcile IFRS and tax bases for fixed assets and inventory and update deferred tax.
- Watch for a Presidential Decision extending the tax suspension beyond 2027.
Sources: Law No. 7571 and Tax Procedure Law provisional art. 37 (KPMG Türkiye bulletin); PwC Germany, Türkei neue Hochinflationsländer im Sinne des IAS 29; Epiroc Annual Report 2025, note 8. General information, not tax or accounting advice. Last checked 4 November 2026.
For information only; not tax, legal or investment advice. Rules change, so check the official source before acting.