Inflation Accounting Transition Service

International Accounting Standard (IAS) 29 covers "Financial Reporting in Hyperinflationary Economies". The purpose of inflation accounting is to set standards for reporting the financial statements of entities operating in hyperinflationary economies so that the financial information presented is meaningful.

International Accounting Standards describe the indicators of hyperinflation as follows: cumulative inflation over three years of 100% or more; the general population preferring to keep its savings in non-monetary assets or in a relatively stable foreign currency; monetary amounts being expressed in a stable foreign currency rather than the local currency; prices for credit sales and purchases, even for short credit periods, being set to compensate for the expected loss of purchasing power; and interest rates, wages and prices being linked to a price index.

Conditions for applying inflation adjustment (under the Tax Procedure Law)

• The total inflation rate for the last three accounting periods exceeds 100%.

• The inflation rate for the current accounting period exceeds 10%.

The Council of Ministers (now the President) has the power to reduce the 100% rate to as low as 35% or raise it back to its statutory level, and to raise the 10% rate to as high as 25% or reduce it back to its statutory level.

Whether the adjustment is to be applied is announced periodically by the Ministry of Finance.

Inflation accounting transition service

Inflation accounting has significant effects on companies' financial statements. To measure these effects, we offer companies an Inflation Accounting Transition Service.

To request a quote, you can contact us at [email protected].