Overview of Accounting Regulations in Turkey Turkey's accounting regulations are structured around compliance with both national standards and intern
Overview of Accounting Regulations in Turkey
Turkey’s accounting regulations are structured around compliance with both national standards and international frameworks. The country’s alignment with global economic practices has shaped its accounting and financial reporting systems. This article provides an overview of the key elements of accounting regulations in Turkey.
Key Legislation
Turkish Commercial Code (TCC)
The Turkish Commercial Code (Law No. 6102), effective since July 1, 2012, is the cornerstone of Turkey’s accounting framework. It mandates that companies maintain transparent and reliable accounting records in accordance with predefined principles. The TCC emphasizes:
- Uniformity in financial reporting
- Compliance with International Financial Reporting Standards (IFRS)
- Transparency and accountability for stakeholders
Tax Procedural Law (TPL)
The Tax Procedural Law governs the tax-related accounting practices of entities in Turkey. It outlines the documentation requirements, record-keeping procedures, and tax declaration obligations. Companies must:
- Prepare financial statements adhering to tax regulations
- Maintain records for a minimum of five years
Adoption of IFRS
Turkey has adopted IFRS for publicly traded companies, financial institutions, and large enterprises. The Public Oversight, Accounting, and Auditing Standards Authority (KGK) oversees the implementation of IFRS and ensures conformity with international practices.
Key Points on IFRS Adoption
- Listed companies on Borsa Istanbul are required to prepare financial statements in line with IFRS.
- Small and medium-sized enterprises (SMEs) are allowed to use simplified standards, known as the Financial Reporting Standard for Large and Medium-Sized Enterprises (BOBI FRS).
Accounting for SMEs
For SMEs, compliance with the BOBI FRS is mandatory unless they voluntarily opt for full IFRS. The BOBI FRS provides:
- Simplified financial reporting requirements
- A structured yet less complex framework compared to full IFRS
Role of the Public Oversight Authority
The KGK plays a pivotal role in standardizing accounting practices in Turkey. Its responsibilities include:
- Issuing and enforcing accounting and auditing standards
- Monitoring compliance with IFRS and local standards
- Licensing and oversight of auditors
Challenges in Implementation
Despite significant strides in aligning with international standards, Turkey faces challenges in implementing accounting regulations, such as:
- Ensuring consistency in application across all sectors
- Training professionals in IFRS and local standards
- Addressing discrepancies between tax regulations and financial reporting standards
Conclusion
Turkey’s accounting regulations are a blend of local requirements and international standards, ensuring transparency and reliability in financial reporting. As the country continues to integrate into the global economy, efforts to enhance compliance and address implementation challenges remain critical.