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6.2. Depreciation and Amortization

When calculating Turkish taxable income, assets owned by an enterprise may be depreciated over their normal useful life as prescribed by the Ministry of Finance using either the straight-line or declining-balance method. A taxpayer may switch from the declining-balance method to the straight-line method at any time during the useful life of the asset, but not vice versa.

The standard useful life of various assets as prescribed by the Ministry of Finance are as follows:

Buildings  10 to 50 years
Machinery and equipment  2 to 15 years
Automobiles  5 years
Office equipment and furniture  5 years
Computers  4 years

Annual depreciation is mandatory and begins the year the asset is capitalized and ready for use. Any unused depreciation may not be carried forward.

The effective rate for the declining-balance method is generally double the effective rate using the straight-line method, but may not exceed 50%. Assets acquired prior to 1 January 2004, are depreciated based on the previous rules where companies could generally determine their own rates up to 20% using the straight-line method and up to 40% using the declining-balance method.

Assets with an acquisition cost of TRY 800 or less may be written off in full in the year of acquisition.

Intangible Assets

Intangible assets, including copyrights, patents and trademarks, are depreciated according over 15 years using the straight-line or declining-balance method.

Goodwill is depreciated over 5 years using the straight-line method.