Turkey: An Overview Of Legal Reforms In Turkey To Further Enhance Economic Development

Last Updated: 28 March 2018
Article by Pelin Baysal and Cansu Akbiyikli

Abstract

Pelin Baysal, Partner and Cansu Akbiyikli, Senior Associate at Gun + Partners provide an overview of legal reforms in Turkey aimed at enhancing the country's economic development.

Analysis

In recent years, the Turkish Government has been taking significant steps to continue enhancing the region's economic environment including implementing a number of legislative developments.

The Law Amending Certain Laws for Improvement of the Investment Environment, 6728 was published in Official Gazette 29796 on 9 August 2016 (the Amendment Law). The Amendment Law introduced a number of improvements to various laws including but not limited to the Companies, Stamp Tax and other tax laws.

The Turkish Government also published the Law on Amendment of Certain Laws and Executive Orders for the Development of Industry and Subsidisation of Production in the Official Gazette on 1 July 2017 (Law No 7033) and introduced legislative provisions for technology development zones.

Amendments relating to Tax Laws and Act of Fees

Amendments relating to the Stamp Tax Law: Stamp tax is regulated by the Stamp Tax Law No 488 (the STL) and applies to a wide range of papers such as agreements, security documents, settlement letters or bills of lading. Stamp tax in Turkey only applies to transactions which take place or benefit those in Turkey.

In large-scale transactions, stamp tax has proven to be a real hindrance because of the high costs involved. However, new exemptions have been introduced to decrease transaction costs on investments.

Under the Amendment Law:

  • Stamp tax used to be collected from each copy of a paper subject to proportional stamp tax. Repetitive stamp tax has been abolished following the Amendment Law coming into force. Stamp tax is now calculated for one copy of those papers.
  • If there is more than one guarantee or ordinary surety regulated on the same agreement, stamp tax is now only applied to one of the guarantees or one of the ordinary sureties. Previously, guarantees and ordinary sureties used to be separately subject to stamp tax regardless of the number of the guarantors or sureties.
  • Unless the commitments, which are regulated as a sanction of an agreement such as down payment, forfeit, penalty clause, are directly subject to the agreement, stamp tax will not be calculated based on the amounts of these commitments. If there had been commitments in the same document attached to the principal transaction, stamp tax arose on either the penal commitment or the principal transaction depending on which one results in the higher stamp tax payment.
  • Where there is an amendment to an agreement subject to the highest stamp tax value determined by law, no stamp tax will be applied if the only amendment is to the value of the agreement provided the other provisions remain unchanged. Previously, if an amount in the agreement had been increased after the agreement had been executed, stamp tax was calculated on the increased amount regardless of whether the agreement was initially subject to stamp tax over the highest value determined by law.
  • The Amendment Law also introduced new stamp tax and fees exemptions. These are the ones which are considered material in terms of commercial transactions:
    • Insurance undertakings;
    • Individual retirement agreements;
    • Papers for share transfers of joint stock companies and limited liability companies;
    • Documents regarding the transfer of loans provided by banks, foreign credit institutions and international authorities and the transfer of receivables arising from the same. Agreements and letters of undertakings in relation to the allocation of the lands located in the organised industrial sites, free zones, industrial regions, technology development zones and industrial areas are also exempted from the stamp tax in line with Article 7 of Law No 7033.

Amendments relating to the Corporate Tax Law: Under Law No 7033, gains derived by taxpayers operating in technology development zones exclusively from software, research and development and design activities are excluded from income and corporate tax until 31 December 2023. The Council of Ministers is authorised to determine the conditions of corporate tax exemptions relating to gains from the sale, purchase and transfer of intellectual property.

Amendments relating to the Act of Fees: Transactions exempted from fees are regulated by Article 59 of the Act of Fees 492. Following the amendment to Article 59/1(n) by Law No 7033, no fee will be applied to the transactions requiring annotation due to the allocation of lands which belongs to enterprises and which are located in the organised industrial sites, free zones, industrial regions, technology development zones and industrial sites. The transfer and registration of those lands and the buildings on them and the land use conversion transactions regarding the buildings constructed on those lands are also covered under the scope of this fee exemption.

Amendments relating to Real Estate Tax Law: Following the entry into force of the Law No 7033, buildings located at the organised industrial sites, free zones, industrial regions, technology development zones and industrial sites are no longer subject to real estate tax.

Amendments relating to Companies Law

Companies law is regulated under the Turkish Commercial Code 6102 (the TCC). The Amendment Law made certain improvements to the Code to facilitate bureaucratic transactions in company establishments and decrease establishment costs.

Valuable Paper Cost: Following revisions made to the various articles of the TCC by the Amendment Law, during the establishment process, valuable paper costs will no longer be charged on papers constituting articles of association of joint stock companies, limited liability companies, limited partnerships divided into shares and companies with unlimited liability.

Founders' Declaration: Founders' declarations are no longer required for company incorporations since the benefit expected from the document is already met by execution of the articles of association by the founders.

Certification by a Notary Public: The obligation of notarisation of the signature declarations and articles of association during the incorporation process has been abolished. Real person merchants or authorised signatories of legal entity merchants may give their signature declarations and/or execute articles of association before trade registry directorates without the need for certification by a notary public. In other words, the formal certification requirement still exists. However, this certification may be performed either before the notary public or the trade registry directorate. This way, merchants may avoid additional notarisation costs during the incorporation process.

Conversion of Company Type: The decision to execute the articles of association of the new type formerly required the signature of all shareholders (as a new establishment) which complicated the process in case there are shareholders who cannot be reached or who did not cast affirmative vote for conversion of type. Following the Amendment Law, provisions regarding incorporation will no longer be applied in terms of execution of the articles of association of the new type so the signature of all shareholders will no longer be required.

Distribution at the End of Liquidation: Article 543 of the TCC regulates the distribution at the end of liquidation. Previously, the remaining assets could not be distributed to the shareholders until expiry of the one year term following the third invitation to the creditors. This term has been reduced to six months and the liquidation process has been reduced in line with the Amendment Law.

Amendments relating to Cheque Law

The most significant improvement to the Cheque Law 5941 (the Cheque Law) under the Amendment Law is the introduction of criminal liability for the drawers of dishonored cheques. This improvement aims to enhance the trust in cheques considering there has been a decline in this payment method in recent years.

Under the amendments to Article 5 of the Cheque Law, those who cause a cheque to be dishonoured will be subject to a judicial fine of up to 1,500 days for each cheque following a bearer's complaint. The judicial fine cannot be less than the cheque's amount. In addition to the judicial fine, the court will also prohibit the drawing of cheques and the opening of cheque accounts. Provisions regarding the prepayment, settlement or stay of judgment will not apply to those who cause the issuing of dishonoured cheques and in cases of non-payment the fines will be directly converted into imprisonment with no provision for community service.

Article 6 of the Amendment Law sets out that if the amount of the dishonoured cheque and the accrued interest are paid, the lawsuit will be dropped during the proceedings or the judgment will be removed together with any associated consequences after finalisation of the imprisonment judgment. The same will apply if the bearer withdraws a complaint.

Serial numbers given by the bank and barcode are now included in the mandatory components of cheques to provide transparency. With the barcode, various data regarding the cheque account holder (e.g. identity information, number of banks in which they have a cheque account, number and amounts of cheques which were or were not honoured, whether the cheque account owner is prohibited from opening a cheque account, etc) will be made available to third parties without the permission of the cheque account holder or the endorser being obtained first.

Barcode scanning and information sharing system will be formed by the Banks Association of Turkey's Risk Center. Principles and procedures of these new regulations will be determined by a communiqué to be published by the Customs and Trade Ministry and the Undersecretariat of the Treasury.

First published by LexisNexis, in 12.02.2018

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.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Aykan Acar Ergonen
 
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”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Aykan Acar Ergonen
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

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