What is Rent A Car Accounting?
Like every taxpayer, rental car companies have responsibilities defined by tax procedures and laws. While accounting for rental cars, various industry-specific regulations are taken into account, as well as standard practices. The size of the operation each accounting department must manage varies depending on the number of vehicles and customer portfolio. Therefore, when managing accounting operations, updated and changing legal regulations must be taken into account, and established standards must be accurately reflected in the process.
Are all vehicles subject to VAT reduction?
The common and misconception that car rental companies can benefit from VAT deductions for all types of vehicles registered in their assets is incorrect. According to Article 30/b of the VAT Law, it is not possible to benefit from VAT deductions for vehicles purchased for non-commercial purposes. When accounting for a car rental , VAT deductions can be applied to vehicles purchased for commercial purposes.
What are the payment type limitations in rent a car companies?
Another important issue in rental car accounting management is payment methods. A regulation, generally enacted for public safety and intelligence purposes, mandated that rental payments be made through financial institutions without any amount limitations after July 1, 2017. In this case, cash payments are prohibited. The Antalya Tax Office Directorate's special notice dated August 10, 2017, numbered 77058783-105[VUK.ÖZ.17.28] – 117763, clarified that depositing rental payments to a bank in the customer's name also violates the aforementioned circular. Failure to comply with this regulation will result in penalties under Article 355 of Tax Procedure Law No. 213. While this situation certainly presents a challenge for rental car companies, no concrete steps have been taken to amend the relevant regulation.
What are the regulations coming in 2020?
As is known, Law No. 7194 was enacted upon publication in the Official Gazette No. 30971 dated December 7, 2019. Articles 40 and 68 of the Income Tax Law introduced various restrictions on passenger vehicle expenses in the taxation of commercial and self-employment income. This regulation has made accounting records for companies renting from car rental companies more complex. Accordingly, regardless of the monthly rental expense, the upper limit for expenses incurred by the car rental company is 5,500 TL. Any expenses exceeding this limit are considered non-deductible expenses (KKEG). In other words, a company paying a monthly car rental fee of 10,000 TL will not be able to claim the 4,500 TL above this limit as expenses.
The same law also stipulates that fuel expenses for passenger cars (whether leased or registered as assets) must be shown as expenses, but the portion of fuel expenses that can be shown as expenses covers 70% of the total amount. Accordingly, if a fuel expense of 500 TL is spent, the amount that can be shown as expenses is 350 TL.
What tools can be used for rent a car accounting?
Rent-a-car companies can acquire software that allows them to manage their operations and receive support in fulfilling their legal responsibilities, such as accounting. Titarus is a software that allows you to manage functions such as fleet management, portfolio management, and customer relations. Titarus also offers numerous services for rent-a-car accounting, equipped with the tools to provide all the support you need in this area. With the software, which updates itself according to constantly changing legal regulations, you won't experience any difficulties with rent-a-car accounting. With cloud technology support, you can monitor rent-a-car accounting processes in real time, edit your records, and generate reports even when you're away from the office.
