Accounting and taxation of long-term construction and repairment projects with an example

ABSTRACT Master Thesis Accounting and Taxation of Long-Term Construction and Repairment Projects with an Example Zekerya SINAN Hasan Kalyoncu University Institute of Social Sciences Department of Business At the first article of Income Tax Law income defined as net amount of profits and revenues of a natural person derived in a calendar year. It is understood from that the identification of income is predicated on calendar year. Although principally determination of income is based on calendar year there are exceptions of this rule like long-term construction and repair projects. Because of the difficulties in detecting income and expenses of long-term construction and repair projects and the completion date of project is spread of more than a year, Turkish tax legislation made a provision in article 42 of of Income Tax Law No.193 saying that the profit or loss of long-term construction and repair projects is determined at the year of project completed and shown at the tax return of the year of completion. To evaluate a project within the context of article 42, the project has to be in construction and repairment scope and committed to someone else's account and also spread more than one year. At article 44 of Income Tax Law entitled "Completion at Construction and Repairing Projects" it has been taken under the provision that completion date means confirmation date of the official statement of provisional acceptance for projects subjected to provisional and final acceptance and the date of actual completion of the project or the date project has actually released for others, expenses incurred and revenue under any name after completion will be taken into account in determining the profit or loss of that year expenses incurred or revenue gained. It has been taken under the provision of the first paraghraph of article 15 of Corporate Tax Law No.5520 that payments including cash advances and on account made by those who have to withold tax have to be deducted. These arrengements in the legislation eliminates the difficulty in detecting earnings, but on the other hand this has led to other uncertainties and debates. The purpose of this study is to question problems encountered during the tax implementation of long-term constructions and whether the solutions is in place supported with examples. For this purpose accounting and taxation of long-term construction and repair projects has been explained in accordance with the existing Uniform Accounting System with an example application. Key Words : 1) Long-Term Construction and Repairment. 2) Accounting, 3)Tax