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asset. Expenses incurred in order to extend the economic to keep the economic asset functioning and is not an element asset’s expected life during the initial acquisition on the other increasing the economic value compared to the value of the 15 hand are incurred to continuously increase the economic vehicle.” In another decision on the other hand it is ruled, asset and are therefore depreciated according to the rate and “the parts purchased for the construction machine used in the duration determined for the economic asset starting from the activity by a company engaged in excavation works aim to keep 10 year of capitalization. On the other hand, expenses incurred the machine functioning, therefore are not elements increasing to continue the normal function of the real estate within the the value of the economic asset compared to the value of 11 normal period of use are not included in the cost in principle. the machine.” Furthermore, in another decision of the State 16 Council , “expenses in the nature of road repair and decoupage As it can be understood from the aforementioned provisions, expenses in relation with an existing road and operation and expenses that increase the value of and expand the economic the accumulators purchased for the existing vehicles must be asset except normal maintenance, repair and cleaning depreciated by being directly included in expenses.” expenses, must be capitalized in the period they are available for use and booked as expense by being depreciated in As it can be observed in these judicial decisions, spare parts accordance with the principle of periodicity. On the other hand, are considered as expenses incurred to keep the economic normal maintenance, repair and cleaning expenses may be asset functioning, rather than expenses incurred in order to booked directly as expense in the period they are incurred. contribute features not present during the initial acquisition of the economic asset or to enhance the features present V. Is it possible to consider spare parts as during the initial acquisition and in this respect, it is concluded depreciable economic assets? that they may be directly booked as expense in the year of acquisition. In the tax rulings issued by the Revenue The Turkish Language Institution defines spare part as “a new Administration on the other hand, spare parts are considered part to replace the failed part of a machine”. as depreciable assets, contrary to the judicial decisions. As a matter of fact, in the most recent tax ruling available to us, Within the framework of the legislative provisions provided spare parts are described as an expenditure increasing the life in previous parts of the article, it could be argued that spare of the economic asset and it is stated that these assets may be parts that are purchased for future use and not yet assembled depreciated according to the rate and time determined for the cannot be depreciated since they are not integral parts of economic asset, starting from the year of their capitalization. the economic asset and do not contribute to the enterprise’s income before assembly. However, according to the opinion of VI. Conclusion the Fiscal Authority in the following tax rulings, the availability of spare parts for being assembled to the asset in case of failure In our article, we have addressed the discussions about whether is deemed sufficient for setting aside depreciation. the spare parts that are purchased for future use in enterprises are in the nature of depreciable economic assets, which In a recent tax ruling dated 10.04.2014 issued by the have been continuing for a long while now, and have tried to 12 Large Taxpayers’ Office , it is observed that spare parts reinterpret the matter in the light of a recent tax ruling issued are described as life expanding expenditures and treated as by the Revenue Administration. depreciable assets. However, there is no explanation in the tax ruling regarding parts that will not be used after replacement According to the view of the Fiscal Authority regarding the of spare part. In this case, the part removed from the machine issue, spare parts are expenditures that extend the life of the might have to be removed from the enterprise’s assets after the economic asset and therefore must be booked as expense spare part replacement. though depreciation. In the judicial decisions we have mentioned on the other hand, these expenditures are treated as 13 In another tax ruling issued by the Revenue Administration , expenses incurred to keep the economic asset functioning. the Fiscal Authority provides an opinion parallel with the aforementioned recent opinion, stating that economic assets In this respect, the issue raises hesitations both at the level of available for use as spare parts in case of failure in tools, practitioners and taxpayers. equipment and machinery in future periods may be treated as depreciable economic assets as of the period of capitalization. th In the decision dated 22.11.2000 of the 9 Chamber of the 14 State Council , it is stated, “the complete motor renewal costs incurred by the company for the truck used in its activity aim 10 Özyer Mehmet Ali, Açıklama ve Örneklerle Vergi Usul Kanunu Uygulaması, Association of Fiscal Inspectors, March 2008 11 Yılmaz Özbalcı, Vergi Usul Kanunu Yorum ve Açıklamaları, December 2010, pg.747 12 Tax ruling no. 64597866-105(272-2014)-43 dated 10.04.2014 issued by Large Taxpayers Offce 13 Tax ruling dated 28.12.2006 no. B.07.1.GİB.0.03.29/2973-315-360 of the Revenue Administration 14 9th Chamber of the State Council, decision dated 22.11.2000, File No: 1998/4622, Decision No: 2000/3452 15 4th Chamber of the State Council, decision dated 13.11.1989, File No: 1989/761, Decision No: 1989/3895 16 4th Chamber of the State Council, decision dated 28.09.1989, File No: 1987/1493, Decision No: 1989/3351 Ekim 2014 Ekim 2014 13