Doubtful Receivables under the Tax Procedure Law

Tax Procedure Law Doubtful Receivables | Tax Lawyer | İzmir Lawyer | Izmir Law Firm

Tax Procedure Law Article 323 states that;
“"Provided that they are related to the earning and maintenance of commercial and agricultural income, the following are considered doubtful receivables: 1- Receivables that are in the litigation or enforcement phase; 2- Small receivables that are not worth pursuing through litigation or enforcement, despite being protested or requested in writing more than once. A provision can be set aside in the liabilities section for the doubtful receivables listed above, based on their recoverable value on the valuation date. The receivables to which this provision relates are shown in the provision account. In the case of secured receivables, this provision is limited to the amount remaining after deducting the collateral. Amounts subsequently collected from doubtful receivables are transferred to the profit and loss account in the period in which they are collected."”

In the explanation given by the Istanbul Tax Office Directorate with its special circular dated 3.10.2013 and numbered 11395140-105[323-2012/VUK-1- . . .]-1631 regarding the issue; “In order to determine the cost of litigation for debts that are too small to warrant legal action or enforcement proceedings, an estimated cost will be calculated by considering the total of attorney fees, court fees, notary payments, and postal expenses for the debt to be sued. This estimated cost will then be compared to the debt. If the estimated cost of litigation is greater than the debt, the debtor must be protested through a notary, or the debt must be demanded in writing (in a way that provides convincing documentation to prove the debt to third parties), and the protest or written demand must reach the recipient.“ These statements have been included.

As can be understood from Article 323 of the Tax Procedure Law given above, small receivables that are not worth pursuing through litigation or enforcement proceedings;

• The fact that the letter reached its recipient more than once on different days,
• The document must have been served on the debtor or on persons legally authorized to receive it.,
• Documents proving to whom and on what date the notification was served must be kept for the duration of the statute of limitations.,
• This is specific to the application of Article 323 of the Tax Procedure Law.,
• Sending the documents via a private courier company does not constitute a violation of postal regulations.,

Under certain conditions, it is possible to set aside a provision for doubtful receivables for small receivables that would not warrant legal action or enforcement proceedings if they cannot be collected.

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