The term “depreciation” refers to the wear and tear or aging of assets. Conditions for setting aside depreciation include:

– A ixed asset is usable in the business for more than one year

– It is subjected to wear and tear or depreciation

– On the valuation date, it is included in the inventory and is ready for use

– VAT excluded from the value of the economic asset exceeds TRY 1.500 (for the year 2021

The period of depreciation starts from the year when the securities are included in assets.

Depreciation of each year may be made subjected to deduction being taken into account only for that year, the amount of depreciation which has not been made subjected to deduction is not possible to be written as deductible expenses in the subsequent years. The periods of depreciation may not be extended due to the fact that depreciation has not been set aside in any year or it is set aside with the rates lower than the depreciation rates speciied in the Tax Procedure General Communiqués.

In case of renewal of the economic assets sold is deemed mandatory due to the nature of the works or those who administer the business take a decision or make an attempt in this respect, the proit produced from sales may be held in a provisional liability account for a period of a maximum three years in order to cover the renewal expenses. Proits not used in this period for any reason whatsoever are included into the tax base of the third year. In the case that the work is abandoned or transferred, or the business is liquidated, these proits are included into the tax base for that year.


In accordance with Article 315 of the Tax Procedure Law, taxpayers calculate depreciation at the rates determined for the economic assets subjected to depreciation, and announced by the Ministry of Treasury and Finance taking into consideration the useful lives of the economic assets.


The methods the most frequently used for setting aside depreciation are the usual depreciation method, the reducing balance method, and the pro rata depreciation method.

a. Usual Depreciation Method

In this method, the amount of depreciation to be set aside is found by dividing the cost of the ixed asset by the estimated economic life of the fixed asset in question. In usual depreciation method, the amount of depreciation to be set aside is equal every year.

For example, for a ixture with a value of TRY 10,000.00 acquired in 2021 with an economic life of ive years, the calculation of the amount of depreciation necessary to be set aside on annual basis is shown on the following table:

Depreciation rate: 1 / Economic Life 1 / 5 = 0.20 i.e. 20%.

10,000 x 20% = TRY 2,000 the annual depreciation amount

b. Reducing Balance Method

In the reducing balance method, the value on which the depreciation will be calculated every year is determined by reducing from the total the depreciations which have previously been set aside. The

rate to be applied is taken to be two times that of usual depreciation, but this rate may not exceed 50%. In the last year, the whole amount is written as depreciation.

In the case that the aforementioned ixture is amortized through the reducing balance method, the amounts necessary to be set aside on annual basis will be as follows:

Depreciation rate: 1 / Economic Life 1 / 5 = 0.20 i.e. 20%

Since it is the reducing balance method, two times the rate of usual depreciation shall be taken into consideration.

0.20 x 2 = 0.40 i.e. 40%.

Every year, 40% of the diference between the cost price and accumulated depreciation amount shall be amortized.

c. Pro Rata Depreciation Method

In the irst accounting period when passenger cars are acquired, calculation of depreciation for the number of months remaining until the end of the period by taking as denominator the full number of months for the accounting period, is the pro rata depreciation method. For example, the rate of depreciation to be set aside by a company whose main ield of activity is an activity other than selling or renting passenger cars, for a car it has acquired in the 7th month of 2019, is not for one year, but it is for 5 months, which is the period elapsed from the month when the car was acquired until the end of year. In this case, the amount corresponding to the lacking months is included in the amount to be set aside in the last year.

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