1-WHAT IS NOTICE PAY?
Notice pay is a kind of compensation paid to the counter party when the employment is terminated by the employer or the employee without a legal notice that must be made in a given time in line with the Labor Law.

2-WHAT IS THE LEGAL BASIS OF NOTICE PAY?
Notice pay is prepared in Article 17 entitled ‘’periodic termination’’ of the Labor Law no. 4857

3-WHEN SHOULD THE NOTICE BE SENT TO THE COUNTER PARTY?
The notice about the termination of the labor contract (the notice for the leave of employment given to the employee by the employer, the notice for the ending date of employment conveyed to the employer by the employee) should be sent to the counter party according to the seniority term stated below.

Before the termination of the employment contract of indefinite duration, the counter party must be informed about the termination.

The statutory notice periods are;
a)2 weeks’ notice if employed for less than 6 months
b)4 weeks’ notice if employed between 6 months and one year and a half
c)6 weeks’ notice if employed between one year and a half and 3 years
d)8 weeks’ notice if employed for 3 years or more

Please go through your contract. Because the employer may give the employee more than the statutory minimum; however, he/she may not give you less.

*If one of the counter parties does not comply with notification condition, he/she is supposed to pay in lieu of notice in accordance with notification period.

*Notice pay is different from seniority indemnity, because notice pay is applied to both employer and the employee. That means if the employee leaves the work without complying with notice periods, he/she has to pay in lieu of notice.

The employer may offer the employee payment in lieu of notice instead of giving a notice, on condition that the payment should be made in advance.

4-WHAT IS THE AMOUNT OF NOTICE PAY?
An example of notice pay calculation table is indicated below. The table belongs to an employee who gets minimum wage without extras.

The amount of notice pay varies between 2 weeks and 8 weeks.

5-WHAT IS THE AMOUNT OF NOTICE PAY?
Whoever does the notice, the employer is entitled to 2-hour permit for job search during notice period.

If the counter parties come to an agreement, that period can be also used collectively.

6-IS THERE A DEDUCTION FROM NOTICE PAY?
Income tax and stamp tax are deducted from notice pay.
SSI and unemployment insurance are not deducted from notice pay.

7-IS THERE AN EXTRA PAYMENT IN LIEU OF NOTICE, IF THE EMPLOYER WORKS DURING THE NOTICE PERIOD?
No.
If the notice period is taken into consideration according to the Labor Law and the termination of labor contract is submitted to the counter party, the payment should be made in line with the term of employment.

Source: Labor Law

About recording the exchange difference of advance payment of import as income.

We made a payment in June to bring machine from abroad.
Bill of entry date of the machine is September 4.
There is a serious exchange difference of 500.000 as of the entry date of the machine.
The firm hasn’t started full capacity output.
Is there any option other than recording this exchange difference as income?

ANSWER

It should be recorded as income.

Is It Compulsory For Board of Directors To Keep Minute Book In Limited Companies?

In Limited Companies, it is not compulsory for Board of Directors to keep Minute Book. On the other hand, those who wouldn’t like to keep this book are compulsory to write the decisions taken in Limited Companies in general meeting and negotiation book. The decisions taken by the Directors or the Board of Directors with regard to corporate management can be written in general meeting and negotiation book as well as in minute book of Board of Directors.

In the event of keeping Minute Book of Board of Directors, the judgements concerning to the minute book of Board of Directors including approval of opening and closing should be applied. In case of writing the decisions in general meeting and negotiation book, it is compulsory to write the issues stated in the second clause of article 10 of Account Books Communique. In process of keeping a separate minute book of Board of Directors, the decision of the Director or the Board of Directors will not be written in general meeting and negotiation book.

Source: Turkish Trade Law
Date: 1 March 2017

Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither Karen Audit nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.

1- WHAT IS THE MEANING OF LEGALLY OBLIGATED?
Companies whose registered office [1] or business center [2] is in Turkey will be subjected to tax through their incomes that they gain both in Turkey and abroad.

If registered office or business center of institutions listed below is in Turkey, they will be subjected to tax as legally obligated.
     1.1- Company with share capital,
     1.2- Cooperatives,
     1.3- State-owned economic enterprise,
     1.4- Commercial enterprise belonging to associations or foundations,
     1.5- Joint ventures,

Sample-1: Fontaine citizen of France,
– He was employed on 20 March 2010 in Turkey and then he went on leave on 15 May 2016. (6 years 1 month 26 days).
– He came back to Turkey on 20 October 2016 and he kept at his job until 31 December 2016. (2 months 2 days).
Liabilities of Fontaine for 2016 are explained below.
Explanation-1:
Fontaine is legally obligated.
Even though he stayed in Turkey less than 6 months separately, the duration of his staying for a calendar year is more than 6 months.
Legal Basis-1:
Article related to “Legally Obligated” of the Income Tax Law is stated below;
Persons listed below are regarded as domiciled in Turkey and they are considered as legally obligated:
1- Person whose residence is in Turkey. (Residence is a place stated in article 19 and its consecutive articles of the Civil Law.)
2- Person who persistently resides in Turkey more than 6 months in a calendar year. (Provisional leaving does not affect time of settlement in Turkey.)

2- WHAT IS THE MEANING OF LIMITED TAXPAYER?
Companies whose registered office and business center are not in Turkey will be subjected to tax through their incomes that they gain only in Turkey.

If registered office and business center of institutions listed below are not in Turkey, they will be subjected to tax as limited taxpayer.
     2.1- Company with share capital,
     2.2- Cooperatives,
     2.3- State-owned economic enterprise,
     2.4- Commercial enterprise belonging to associations or foundations,
     2.5- Joint ventures,

3- CORPORATE INCOME CONSISTS OF INCOMES AND REVENUES STATED BELOW IN LIMITED LIABILITY TO TAX;
   3.1- Commercial incomes gained through businesses made with foreign institutions whose registered office or business center in Turkey or through these kinds of institutions.
(Even though they carry abovementioned conditions, if they gain incomes through goods purchased in Turkey for export and they send them to abroad without selling them in Turkey, their incomes will not be regarded as obtained in Turkey. Selling in Turkey means that either customer or supplier or both of them should be in Turkey or sales agreement should be made in Turkey.)
(In line with Tax Procedure Law provisions numbered 04.01.1961 – 213)
     3.2- Incomes gained in Turkey from agricultural enterprise,
     3.3- Self-employment earnings gained in Turkey ,
     3.4- Revenues gained by renting estate and assets and rights in Turkey,
     3.5- Income from moveable capitals gained in Turkey
     3.6- Other incomes and revenues gained in Turkey.

Sample 2: Mr. John citizen of USA,
– He was in Turkey between the dates of 01.10.2015-10.12.2016 and he gained commercial income from commercial activities that he carried out in Turkey and America in that period. (1 year 2 months 10 days)
– By 2015, he gained 100.000 TL in Turkey and 200.000 TL in USA   
– By 2016, he gained 300.000 TL in Turkey and 500.000 TL in USA.
The income being subjected to tax is explained below.
Explanation -2:
Mr. John resided in Turkey less than 6 months in calendar year 2015, he was regarded as limited taxpayer.
During that period of time, his income gained in Turkey and valuing at 100.000 TL would be subjected to tax in Turkey.
However, by 2016 he resided in Turkey more than 6 months, so he will be regarded as legally obligated.
Total amount of income is 800.000 TL (300.000+500.000), which he gained both in USA and in Turkey, and income tax would be calculated through that amount.
If a taxpayer is subjected to tax in the ratio of income that he gained in America, it can be deducted from the tax calculated in Turkey.
Legal Basis-2:
Article related to “Legally Obligated” of the Income Tax Law is stated below;
Persons listed below are regarded as domiciled in Turkey and they are considered as legally obligated:
1- Person whose residence is in Turkey. (Residence is a place stated in article 19 and its consecutive articles of the Civil Law.)
2- Person who persistently resides in Turkey more than 6 months in a calendar year. (Provisional leaving does not affect time of settlement in Turkey.)

 [1] Registered Office: It is an office stated in law of establishment, regulations, main status or agreements of institutions being subjected to tax.
[2] Business Center: It is a center where all businesses are gathered virtually and managed.

Source: Corporate Tax Law Numbered 5520 (Article 3)

Is It Compulsory For Board of Directors To Keep Minute Book In Limited Companies?

In Limited Companies, it is not compulsory for Board of Directors to keep Minute Book. On the other hand, those who wouldn’t like to keep this book are compulsory to write the decisions taken in Limited Companies in general meeting and negotiation book. The decisions taken by the Directors or the Board of Directors with regard to corporate management can be written in general meeting and negotiation book as well as in minute book of Board of Directors.

In the event of keeping Minute Book of Board of Directors, the judgements concerning to the minute book of Board of Directors including approval of opening and closing should be applied. In case of writing the decisions in general meeting and negotiation book, it is compulsory to write the issues stated in the second clause of article 10 of Account Books Communique. In process of keeping a separate minute book of Board of Directors, the decision of the Director or the Board of Directors will not be written in general meeting and negotiation book.

Source: Turkish Trade Law
Date: 1 March 2017

Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither Karen Audit nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.

How General Meeting Invitation is done in Limited Companies?

1- General Assembly is invited to the meeting by administers.  General meeting in Limited companies is done within three months after the end of financial year. General meeting is done according to the company’s agreement and if it is necessary.

2- General Assembly is invited to the meeting at least fifteen days before. Duration can be more or less according to the peculiar company agreement.

3- Invitation to meeting, minority’s right to have invitation and suggestion, agenda, general assembly without invitation, provisions on meeting of corporates without invitation are applied by comparison. Each shareholder has the right to make he/she represent.

4- Decisions of general assembly can be given by having every members written consent to one of the member’s suggestion. It is a must that same decision as to be presented to the consent of every member.

In the detection of profit of the companies which have limited liability to tax, provisions which are valid for the legally obligated companies, will be imposed.

1- Which Discounts cannot be made in the detection of profit of company of limited liability to tax?

In the detection of profit of company of limited liability to tax, making of above mentioned discounts cannot be accepted.

Interests given to the headquarters or to the branches except for locating in Turkey, for the sales and purchases for these institutions.

Except for the shares decided according to the allocation keys, which are decided according to the suitability principle of the detection of the profit in an institution located in Turkey, the shares separated for joining in the general administration expenses or loss of the branches located out of Tukey.

***Capital or Elective franchise is not necessary for the debts of the companies which have a limited tax liability.

2-How participation stocks are registered in transfer of the company?

Participation stocks given by the companies which carry out company transferring, is registered to the account of the branch located in Turkey.

***About the business or agriculture income of the companies except for the profits of the companies which have limited liability, provisions of corporate tax law will be implemented. However, if these profits and other incomes and earnings are attained in the scope of the trade operated in Tukey, company profit will be decided according to the tax law article number 1.

HOW VOTING POWER IS CALCULATED IN LIMITED COMPANIES?

1- HOW VOTING POWER IS CALCULATED IN LIMITED COMPANIES?
1.1- Voting power of limited companies is calculated according to join stock’s nominal par.
1.2- If higher amounts were not decided on corporate charters, each 25 Turkish lira gives righting vote.
1.3- However, corporate charters can restrict shareholders having more than one voting right.
1.4- Shareholder has at least one voting right.
1.5- If it is decided on corporate charter, written vote can be given.
1.6- Corporate charter can also issue voting right as voting right to each shareholder without depending on nominal par. In that case Shareholder’s minimum voting right cannot be less than the total voting right of the other shareholders.

2- IN WHICH CASES COMPANY’S PROVISIONS ARE NOT IMPLEMETED?
Company contract provisions are not implemented on the below mentioned conditions;
2.1- Auditors’ elections
2.2- Special Auditor elections for company’s management or auditing some departments of the company.
2.3- Making decision regarding opening a case

1- WHO CAN ESTABLISH A LIMITED COMPANY?
Limited Companies are established by one or more than one real person or legal entity under a commercial name. The original capital should be determined and that capital consists of total amount of capital stocks. Shareholders are not responsible for company debts. They are responsible for paying capital stocks that they undertake and fulfilling additional payments and subsidiary liabilities that are provided in the articles of incorporation. A limited company can be established for every kinds of economical purpose and subject that are not forbidden by law.

2- HOW MANY SHAREHOLDERS CAN ESTABLISH A LIMITED COMPANY?
It can be a one-man company; however, the number of shareholders should be maximum 50. The company can turn into one-man company afterwards. In this case, this fact should be notified to directors within 7 days. After this notification, directors are supposed to enroll and declare that company has been turned into one-man company. Company cannot acquire its own share in order to be the sole shareholder.

3- WHAT SHOULD BE THE AMOUNT OF CAPITAL OF A CO. LTD?
Minimum amount of capital in limited companies should be at least 10.000 TL and a a share should be at least 25 TL and the multiples of it.

Source: Turkish Code of Commerce

SUBJECT

 About Incorporated Company transfer of Shares.

QUESTION

We have 10 companies in total that are tied to our incorporated company shareholdings.

There haven’t been any certificates for these companies.

In accordance with Income Tax Law, providing that there is a certificate, it is subject to income tax if it is sold within 2 years

There aren’t any certificates for our companies.

If we sell our companies in the current situation, for example in the case of us selling our company of 50.000 TL capital to 100.000 TL, do we have to state a profit of 50.000 TL in our corporate tax return?

Or is there any exceptions?

(15.11.2018 09:02)

ANSWER

The company can not be sold. The partners of the company sell their ‘shares’. The profit of partners from the selling of the shares are declared as earnings and revenue to the Other. It is not possible to declare profit with corporate tax return.

Source: Ismmo
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither Karen Audit nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.