According to the existing regulations of the Ministry of Finance to date, the Valuation Commission Officers assigned upon the taxpayer’s application to the tax office would identify the products to be destroyed, and after the completion of the destruction process, issue a destruction decision and notify the taxpayer, thereby concluding the destruction process. In the new practice, however, for taxpayers who regularly carry out destruction processes and opt for the destruction rate practice, the destruction process will be completed without the need for a Valuation Commission.

This article was published in Medikal News Magazine.

In this article, we will outline the roadmap of the “Destruction Rate Practice” published by the Ministry of Finance through Communiqué No. 496 to facilitate the destruction processes of taxpayers who regularly perform such activities. According to the Ministry’s existing regulations, Valuation Commission Officers assigned upon the taxpayer’s application to the tax office would identify the products to be destroyed, and after completing the destruction process, issue a decision and notify the taxpayer. In the new practice, however, for taxpayers opting for the destruction rate practice, the destruction process will be completed without the involvement of the Valuation Commission.

Who Can Apply for the Destruction Rate Practice?

• Taxpayers who keep books based on the balance sheet method,
• Taxpayers whose net sales and asset size arithmetic average in the balance sheet of the last accounting period exceeds 10,000,000 TL or whose equity size exceeds 5,000,000 TL,
• Income and corporate taxpayers whose destruction processes are of a continuous nature.

Which Sectors Can Benefit from the Destruction Rate Practice?

The following can benefit, provided the products are sold domestically but are returned due to short shelf life, spoilage, expiration, or for being harmful to human and environmental health, necessitating their destruction:

• All kinds of meat and meat products (e.g., minced meat, pastrami, sausage, salami, hot dogs),
• All kinds of milk and dairy products (e.g., cheese, yogurt, ayran, cream, butter),
• Eggs,
• Fresh vegetables and fruits,
• All kinds of bakery products such as cakes, pastries, börek, bread,
• All kinds of medicines and similar goods licensed by the relevant Ministry or permitted for import, used for human and animal health.

Application for the Destruction Rate Practice and Required Information/Documents

Along with the destruction rate application form submitted to the Revenue Administration, applicants must include:

• Companies operating in sectors outside those listed above may apply to the administration to determine whether the products they wish to destroy fall within the scope. Products exported abroad will not be evaluated under this practice, as their destruction will occur outside the country.
• Product groups intended to benefit from the practice and detailed lists of these products,
• Domestic sales and return data (by quantity and product) for the last five accounting periods,
• A table showing the quantity and type of goods destroyed in the last five accounting periods,
• Documents related to the destruction processes,
• For taxpayers with internal destruction/waste disposal facilities licensed under relevant legislation, a notarized copy of their authorization/license document.

Following the application, the Tax Inspection Board will evaluate:

• The taxpayer’s past years’ transactions,
• Actual production stages, sales, returns, and destruction processes,
• The status of other taxpayers in the same sector, as well as views of relevant authorities, chambers, and organizations.
• The findings and evaluations will be compiled into a report and submitted to the administration.
• The commission reviewing the report will present the determined destruction rate for each product to the taxpayer for approval. Once accepted in writing, the destruction rates will be valid starting from the date of acceptance and will apply for the current accounting period and the subsequent five years.
• Requests for renewal of the destruction rate must be submitted to the administration with supporting documents no later than 9 months before the current rate expires.

Important Notes for Taxpayers Benefiting from the Destruction Rate Practice

Taxpayers who accept the destruction rate practice must value destroyed goods at a zero reference price per product. If destruction is conducted at the taxpayer’s own waste processing facility, at least two copies of a destruction report must be prepared and signed by the authorized personnel. The report must include:

• Date,
• Taxpayer’s full name/trade name,
• Tax office,
• Tax ID number,
• Location of destruction,
• A statement that the destruction was supervised by the named and signed authorities.

Annexes must include a summary of the return invoices related to the destroyed goods (including name/trade name of the issuing taxpayer, invoice number and date, type and quantity of returned goods). If the resulting waste is sent to another facility, a copy of the destruction report and summary must be attached to the delivery note. If the destruction is conducted by an authorized external waste processing facility, three copies of the destruction report and summary must be prepared, and one must be attached to the delivery note during dispatch.

What if the Cost Value of Destroyed Products Exceeds the Approved Destruction Rate?

If the cost of destroyed products exceeds the approved destruction rate, taxpayers must apply to the tax office. The Valuation Commission Officers will then identify the excess products to be destroyed, and upon completion, issue a destruction decision and notify the taxpayer, finalizing the process.

Reporting Deadlines for Destruction Processes

Companies benefiting from the destruction rate must submit an annual destruction rate monitoring report for each product, attached to a petition, within the filing period for the income or corporate tax return of the relevant year.

Cancellation of the Destruction Rate

The destruction rate practice will be canceled in the following cases:

• Failure to comply with documentation procedures,
• Submission of incomplete, incorrect, or misleading information/documents during application or in follow-up stages (including the annual monitoring report),
• Failure to submit the annual monitoring report on time,
• Rejection of the administration’s request to revise the destruction rate.

Evaluation and Conclusion

Although the aim of the destruction rate practice is to facilitate destruction processes for taxpayers, it may prove to be difficult and impractical for them.

To summarize the reasons:

• The destruction rate may differ by product type,
• The rate is valid for five years,
• Tax office procedures will still be required for products exceeding the approved destruction rate.

For more detailed information, you can access the related communiqué and forms via “www.scrap.com.tr/imha-mevzuatlari”.