Annual Destruction Rate Tracking Form

The Annual Destruction Rate Tracking Report is EK 2 of the Tax Procedure Law General Communiqué (Series No: 496) under Law No. 213, published in the Official Gazette dated 25 May 2018, No. 30431. Taxpayers who benefit from a set destruction rate use this report each year to tell the Revenue Administration how the rate was actually applied. The report keeps the destruction rate system under Article 278/A of the Tax Procedure Law open to verification.

Who files the report and when?

The report is an obligation of taxpayers who benefit from a destruction rate. It is prepared separately for each product and submitted to the Administration with a petition within the filing period of the income or corporate tax return for the year concerned (Article 16). The Communiqué states that the form is a sample and gives the Administration authority to change it (Article 21), so the current template should be checked with the Revenue Administration.

What information does the report contain?

The form is titled “… Accounting Period Destruction Rate Annual Tracking Report” and has two parts. The part on general information about the taxpayer contains its name or title, tax office and tax identification number, address, telephone number, main field of activity and sector, and the destruction rate set. The part on how the destruction rate was applied contains these quantities:

• Total domestic sales (quantity).
• Returns taken from domestic sales to be destroyed (quantity).
• Goods destroyed (quantity).
• The destruction rate actually achieved (percent).
• A free field for other matters; the form is completed with the date and the signature or stamp of the taxpayer or its authorised representative.

The Communiqué defines the destruction rate as the ratio of the quantities returned for destruction, because of spoilage, rotting or expiry, from goods sold domestically to the total domestic sales quantity for the year concerned (Article 3). The report shows the rate achieved on that definition, product by product.

How does the report relate to the destruction rate?

The destruction rate set between the Administration and the taxpayer is a ceiling for each product. Goods destroyed above the set rate are valued under Article 278 of the Tax Procedure Law, that is, the general pricing commission rules apply again (Article 20). The annual report shows the Administration where the actual rate stands against the set rate.

What does it mean for destruction and recycling?

The destroyed quantities shown in the report must match the destruction reports and the summary of return invoices. The reports are drawn up depending on whether destruction takes place at the taxpayer’s own waste treatment facility or at an authorised facility, and are kept by those concerned (Articles 15 and 19). If waste resulting from destruction is sent to another waste treatment facility, a copy of the report and summary is attached to the delivery note (Article 15(2)).

What should be checked in practice?

Failure to file the annual tracking report on time is a clear ground for the Administration to cancel the destruction rate unilaterally (Article 18(1)(c)). Information and documents submitted, including the report, that are incomplete, wrong or misleading are also grounds for cancellation (Article 18(1)(b)). From the date of the cancellation decision the set rates lose validity and the taxpayer can no longer value goods under Article 278/A (Article 18(2)).

Because the report is prepared product by product, keeping product groups and units of measure consistent with those used in the application makes the follow-up process easier.