North Cyprus has opened a three-month window for balance sheet regularisation. Decree Law 92/2026, published in the Official Gazette on 14 August 2026 and in force the same day, lets businesses bring onto their books inventory and fixed assets that were unrecorded, understated or overstated as at 31 December 2025. Assets are declared at market value and the tax is paid in full at filing. The rates are 3% on inventory increases, 1% on fixed asset increases and 3% VAT on inventory write-downs. Applications close on 14 November 2026. This is not a tax amnesty — it is a time-limited, low-rate voluntary correction.
What Does the Decree Allow?
Decree Law 92/2026 covers two asset categories. The first is commercial inventory left off the books, recorded below its real value, or recorded above its real value. The second is what the decree calls "economic assets" — items used in business operations with a useful life exceeding one year. Both are declared at rayiç bedel, defined in Article 2 as the normal purchase-and-sale value on the valuation date, in Turkish Lira. Declared items enter the statutory books as at the declaration date under Tax Procedure Law 27/1977 (Article 5). The scheme operates within the framework of Income Tax Law 24/1982, Corporate Tax Law 41/1976, VAT Law 47/1992 and Tax Procedure Law 27/1977 (Article 4). Payment is up front at the filing date, with no instalment option (Article 7(2)).
The economic assets covered are enumerated in Article 2:
- Land and building plots
- Underground and surface installations
- Buildings
- Plant, machinery and equipment
- Vehicles
- Fixtures and fittings
- Investments in progress
What Are the Rates?
| Type of correction | Tax | Rate | Basis |
|---|---|---|---|
| Inventory increase (unrecorded or understated stock) | Income Tax / Corporate Tax | 3% | Article 6(1) |
| Fixed asset increase (unrecorded or understated economic assets) | Income Tax / Corporate Tax | 1% | Article 6(2) |
| Inventory decrease (stock not physically present or recorded above cost) | VAT | 3% | Article 6(3) |
Who Qualifies?
Income tax and corporate tax payers qualify, whether they report as at 31 December 2025 or, where a special accounting period applies, as at the date their period closed during 2025 (Article 5). Taxpayers keeping books on a balance sheet basis must also credit the newly recorded values to a special fund account opened on the liabilities side. Those keeping a professional earnings ledger or operating on a business account basis instead show the inventory and economic asset transactions separately in their own books (Article 5(4)). Balance sheet taxpayers attach corrected balance sheets and breakdown schedules to their declarations, while business account taxpayers attach inventory lists (Article 5(5)). A declaration of economic assets requires a valuation report from a valuer registered with the Cyprus Turkish Association of Valuation Experts (Article 2); where such a report cannot be produced, the declaration may proceed provided supporting evidence is attached (Article 5(1)(B)).
What This Means in Practice
The largest benefit sits on the write-down side: stock that does not physically exist, or was recorded above cost, would ordinarily leave the books at the prevailing VAT rate, but Article 6(3) charges 3% VAT instead.
The second consequence runs the other way. Article 5(6) provides that no depreciation may be taken on the values arising under this decree in respect of depreciable fixed assets declared under it. In practice, recording a fixed asset here buys no future tax shield: the benefit is registration of the asset and stronger equity, not deductible expense.
- For wholesale and retail businesses: unrecorded stock enters at 3% and inflated stock leaves at 3% VAT — the strongest two-sided case.
- For manufacturers: plant, machinery, equipment and investments in progress come on at 1%, but with no depreciation the decision rests on balance sheet strength, not tax saving.
- For construction and property developers: land, plots and buildings are covered, and the valuation timetable must fit inside the three-month window.
- For transport and logistics operators: vehicles fall within the economic asset definition and are taxed at 1%.
The Special Fund and the Six-Month Capital Condition
The correction is collected in a special fund account on the liabilities side. Article 5(3) governs the balance:
- A credit balance must be added to capital within six months of the declaration date.
- A debit balance is debited to accumulated financial profit and loss.
- Amounts not added to capital within the six months are recorded as income.
- Where the fund is booked as income rather than added to capital, the tax assessed and paid under Article 6 is credited against tax payable in the Corporate Tax and/or Income Tax accounts filed for 2027.
In practice the application decision and a capital increase resolution belong together: missing the six months turns the fund into income taxed at ordinary rates.
What to Watch
Article 7(3) sets out four grounds on which the benefit is forfeited:
- Failing to apply in time or failing to pay the taxes assessed;
- Preventing assessment and accrual procedures from being carried out properly;
- Not acting within the application, declaration or notification periods set by the decree;
- Refusing to accept the Office's procedures under the decree and creating a dispute.
- Taxpayers who forfeit receive no refund of taxes collected under the decree and no offset against other taxes or other years; amounts collected are set off only against the principal of the same liability.
Offsets are closed elsewhere too:
- Withholding tax previously paid cannot be offset or refunded against tax calculated under the decree (Article 8(1)).
- Input VAT previously deducted cannot be offset or refunded against VAT calculated under the decree (Article 8(2)).
- Taxes payable cannot be deducted as an expense in any tax period or offset against other taxes payable, and taxes already paid cannot be reclaimed (Article 9(1)).
- A VAT credit brought forward cannot be deducted from the VAT calculated under the decree (Article 9(2)).
The decree carries no assurance against examination. Article 10 preserves the Revenue and Tax Office's power to make the necessary assessments and accruals under this decree and the other tax laws where it finds that taxes or duties were not properly paid.
One timing point is open. The three-month period expires on 14 November 2026, a Saturday, and the decree has no rule for a deadline landing on a non-working day. Since declaration and payment fall on the same day, filing by the last working day before that date is the safe course.
Please don't hesitate to contact N.Akman & Co. to discuss how this applies to your balance sheet.
This article is for information purposes only and does not replace official guidance; please consult us before applying.
