It Is Possible to Benefit from the Tax Advantage 165 Days Earlier
Did You Know That by Carrying Out Your Disposal Processes in September, You Can Benefit from the Tax Advantage 165 Days Earlier?
In this article, we address the legislative changes introduced by Law No. 7338, which was published in the Official Gazette on October 26, 2021. This law removed the requirement for a fourth provisional tax return for provisional tax payers and redefined provisional tax periods as three-month intervals.
These changes took effect starting from the 2022 tax year. Accordingly, taxpayers will submit three provisional tax returns for the first nine months of the year; no fourth return is required. While this adjustment offers some advantages, it also presents certain disadvantages for businesses.
One such disadvantage, which is the focus of this article, is that companies conducting disposal processes in September can benefit from tax advantages only 45 days later, on November 17, 2023, whereas those that perform disposals in October can benefit 165 days later, on April 30, 2024.
To clarify the issue, let’s explore an example using identical financial data to compare the outcomes of disposals done in September versus October.
Financial Figures
Disposal in September
Disposal in October
Pre-Disposal Profit
8,000,000.00 TRY
8,000,000.00 TRY
Calculated Provisional Tax (25%)
2,000,000.00 TRY
2,000,000.00 TRY
Disposal-Related Cost
6,000,000.00 TRY
6,000,000.00 TRY
Net Profit After Disposal
2,000,000.00 TRY
2,000,000.00 TRY
Provisional Tax After Disposal (25%)
500,000.00 TRY
500,000.00 TRY
Tax Advantage from Disposal
1,500,000.00 TRY
1,500,000.00 TRY
Date Tax Advantage Becomes Usable
17/11/2023
30/04/2024
As shown above, companies that complete disposals in September benefit from a TRY 1,500,000 tax advantage 165 days earlier. This early benefit can significantly contribute to the company’s cash flow and annual budget planning.
Considering the growing difficulty of accessing financing sources, this early-access advantage could be leveraged to fund other obligations or to generate additional income from a 165-day term deposit, offering a notable financial benefit to the business.
In Conclusion:
Conducting disposal processes in September is highly significant for the efficient use of financial resources.
It is also critical to determine:
When to remove previously deducted VAT on disposed products from input VAT accounts
When to declare it in the VAT return
In which period the cost of the disposed products should be expensed
If the disposal process is not executed by a professional team in compliance with legal regulations, companies may fail to fully benefit from the tax advantages—or do so too late. Mistiming or incorrect execution of such processes can result in tax loss penalties, procedural fines, and interest for delay.
