Turkey: Scope Of Liability On Tax Penalties And Economic Crimes

As per the Article 331 of Law No. 213 on Tax Procedural Law (the "Law"), any person who violates a provision of the tax laws will be subject to tax penalties. Accordingly, except for the additional taxes that may accrue as a result of a violation of a tax provision, the Turkish legal system also set forth various penalties. These penalties may be in the form of monetary fines or imprisonment.

Under the systems of the Law, monetary fines can be classified into two types:

  • Fines imposed in the event of violation of a rule of procedure. As per Article 352 of the Law, such fines will be determined according to the level of the irregularity; and
  • Fines applied if a tax loss is incurred to the detriment of the state treasury. In such cases, these fines will be higher, and it is common that they are calculated pro rata to the loss of the taxes.

The tax provisions state that certain acts must be punished with more severe sanctions. For instance, Law No. 5607 on Fighting Against Smuggling set forth a prison sentence for violation of the customs provisions. In such cases, the liable person will be tried by a criminal court, and the relevant trial will be conducted according to Law No. 5271 of the Criminal Procedural Code1. As stated above, criminal sanctions and additional taxes can apply cumulatively.

Such legal remedies must be applied to the relevant taxpayer. When the taxpayer is a real person, both civil and criminal liability will be borne by such person. However, insofar as the legal entities are concerned, there is a difference between the two types of liability. While the liability for the additional taxes will obviously be on the shoulders of the legal entity, the representatives of such company will be liable for criminal acts associated therewith. Therefore, it is important to determine who will carry criminal liability in commercial entities. In this article, emphasis is given to joint stock companies and limited liability companies.

Legal representatives of a limited liability company are the company's managers. For joint stock companies, representatives are the members of the board of directors. Company managers can be appointed among third parties for both limited liability companies and joint stock companies. The law does not foresee any difference between the liability of a shareholding manager and a non-shareholding manager. As per Article 317 of the Turkish Commercial Code, a board member has the authority to represent and manage the company. In this respect, tax duties of these companies must be carried out by their legal representatives or managers.

According to the Turkish Commercial Code, the liability of the shareholders of limited liability companies and joint stock companies is limited to the capital they undertake to invest in the company. In other words, shareholders cannot be held liable for any amount except for the capital amount to be invested.

However, the liability of a shareholder of a joint stock company and a limited liability company regarding public receivables is different. If the public receivables cannot be collected from the assets of a limited liability company, or it becomes apparent that the assets cannot cover the debts, the treasury is entitled to commence proceedings against the shareholders of such company. This provision is stated in Article 35 of Law No. 6183 on Procedure of Collection of Public Receivables. It is clear that the tax receivables qualify as public receivables. Yet, the same Article clarifies that each shareholder will bear personal liability for such debt, pro rata to his/her share percentage. This provision does not cover the shareholders of a joint stock company.

Law No. 6183 further stipulates that taxes that cannot be collected from legal entities will be collected from the legal representatives or managers of the legal entities2. The decision of the Council of State dated 30 May 1967, numbered 124/1829, reads as follows: "(...) Legal representatives cannot be held liable unless collection of the debt is impossible. In such a case, the treasury may seek recourse from the legal representatives to collect its receivables."

The liability of the directors of joint stock companies or of managers of limited liability companies for the tax periods that cover their term in office does not end even if they have retired from the duty. In fact, many times, a tax investigation may take place after the relevant period. Yet, the liability is not for the period when the investigation takes place, but for the period when the relevant tax has arisen. Thus, the liability of the former legal representative will not end even if the tax loss is detected at a later stage. This is also confirmed by the decision of the 11th Chamber of the Council of State dated 26 November 1999 numbered 1997/2550 E. and 1999/224 K.

When it comes to criminal penalties, one must first consider the personality principle governing criminal law. As per the "personality principle," criminal liability shall be personal. No person shall be held liable for another person's actions. In this respect, with regard to unincorporated companies, each partner of such company will be held liable for his/her actions. An unincorporated company will not bear any liability since it is not a legal entity; whereas, companies that have been incorporated will be primarily liable for tax penalties. The legal representatives of a legal entity will bear the liability in terms of criminal law.

For instance, with respect to the criminal liability for smuggling, the subject of the liability is the legal representative of the legal entity. Yet, the liability will arise only for the representative who is aware of the details of the crime, and who was involved in the crime. As per the personality principle, the legal representative who has no information about the committed crime cannot be subject to any punishment. The prosecutor may include all representatives in the indictment; however, a representative who has no relation to an actual or moral element of the crime may not be punished by the criminal court. The decision of the 9th Criminal Chamber of the Court of Appeals numbered 1990/4303 E and 1991/238 K. reads as follows: "The causal link of a legal representative to the alleged crime must first be determined, and then the punishment will be decided, accordingly." Also, the 11th Criminal Chamber of the Court of Appeals, in its decision of 27 September 2001, and numbered 2001/5007 E. and 2001/8710 K has expressed the same principle. In light of these explanations, it must be noted that the task allocations among the legal representatives (sales, finance, customs clearances) must be determined. In such a case, if a criminal investigation takes place, a legal representative will be able to use the assignment of duty to prove that he/she has no relation to the alleged crime since the matter is beyond the scope of his/her responsibilities.

In addition, it should be noted that the sworn accountants are liable for tax losses and fines arising out of documents they have attested to, together with the taxpayers3. According to the internal circular of the Ministry of Finance4, for determination of the liability of accountants regarding the basis and taxes, the tax controllers must first send the tax and fine notice to the taxpayer. Once the tax accrual become definite, the controllers may initiate proceedings against these accountants, as well.

A person who is responsible for the taxes has the right to apply for legal remedies with respect to administrative decisions regarding tax fines. Administrative decisions may be subjected to judicial review through two types of legal action: An action for annulment, and an action for damages. An action for annulment enables an unlawful administrative act to be annulled by the court. An action for damages is brought by persons seeking recompense for violation of their subjective rights caused by an administrative act or decision, and the resulting loss. The period in which to bring such legal action is 30 days in the case of tax courts, unless a different period is stipulated in special laws, such as the 7 day period that is allowed with respect to cautionary attachments. The period in which to bring a legal action starts to run from the date upon which the taxpayer is notified of the administrative act.

Because of the increase in criminal proceedings against taxpayers in recent years, company representatives are advised to maintain commercial ledgers and records under the supervision of an expert financial adviser, and to retain a lawyer who is an expert in the field of tax litigation to handle any tax disputes. In of the event of any doubt, taxpayers are strongly recommended to request a special communique (özelge) from the tax authority in order to clarify a given tax issue, which would eliminate the risk of penalties.


1 Tax Procedural Code, Article 359.

2 Tax Procedural Code, Article 10.

3 Law on Independent Accountants and Financial Advisory, Article 12.

4 Internal circular No. 1996/1 related to Law No. 3568.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions