This study evaluates the outcomes of partial and general inflation adjustment methods in the Turkish Tax System from the standpoint of taxpayers and in terms of tax administration

This study evaluates the adverse impacts of the partial, and notablygeneral inflation adjustment methods implementation methods againstinflation in the Turkish Tax System, and their outcomes.The first part of our study defines inflation and considers its effects onbusinesses in terms of both asset and resource items found in the balancesheet containing basic financial statements. Subsequently, the conception ofinflation adjustment, the reasons for inflation adjustment, and inflationadjustment methods has been considered, the method based on the generalprice level has been detailed, and the mixed method based on the currentvalue has been explained briefly. The first part also shortly describes inflationadjustment implementations in various countries.The second part of our study briefly mentions the partial inflationadjustments in the Turkish Tax System, and details the implementationguidelines, scope, conceptions and principles of the general inflationadjustment implementation. Then the process of inflation adjustment forsecurities, construction and renovation works according to years, tangiblefixed assets, intangible assets, accumulated depreciations, assets subject tospecial depletion and equity items has been explained in detail, and issuesthat are particular to inflation adjustment and the effects of inflationadjustment on tax base have been discussed.The third part of our study evaluates the outcomes of partial andgeneral inflation adjustment methods in the Turkish Tax System from thestandpoint of taxpayers and in terms of tax administration.The study concludes that the majority of the partial methods are beingimplemented by taxpayers in overcoming the adverse impacts of inflation, yetit remains insufficient due to its sparse structure and incompatibility withinternational standards. The General inflation adjustment method regulatedby law no 5024 issued by the Ministry of Finance ensures unity ofimplementation and conformity with international standards. The fact that theimplementation has been put into force quickly, however, had a negativeimpact on the understanding of conception deficiencies and on itsimplementation.Taking into consideration that the implementation might take place inthe upcoming years, it has been proposed that necessary regulations shallbe made to overcome prospective negativities resulting in getting rid of theregulations that will distort unity of implementation, making clear of theconceptions that are difficult to understand, and compensating the losses forthe past years.