Turkish company audit, financial statements, accounting, consulting in the Turkey

Accounting records in Turkey are regulated by the New Commercial Code. Resident companies and Turkish branches of foreign companies are obliged to keep accounting records and financial statements or consolidated financial statements in accordance with Turkish Financial Reporting Standards (TFRS).

Turkish Financial Reporting Standards (TFRS) fully comply with International Financial Reporting Standards (IFRS).

Financial statements should include general reports:

• Director’s report;
• Balance sheet;
• Profit and loss statement;
• Statement of cash flow;
• Statement of changes in equity;
• Notes to the financial statements.

Accounting records in official books should be kept in Turkish language.

Turkish lira (TRY) is used as a currency in official books. The records might be kept in a foreign currency, but should also contain equivalent numbers in TRY.

According to the tax procedural legislation of Turkey accounting records – Trade ledger, Inventory ledger and General Ledger – should be kept for five years starting from the last accounting period. According to the New Commercial Code and social security system requirements they should be kept for ten years.

Besides Turkey has 20 Free economic zones (FEZ). Company’s activity in FEZ is regulated by the Law on Free Economic Zones 3218.

If investor wishes to stat a company in FEZ he should choose a type of activity from the list of available ones.

There is a certain list of allowed types of activities for each free zone: trade, production, textile industry, software development, food industry, leather goods, pharmaceuticals and others.

As usual Free Economic Zones are located in port areas with access to the main trade routes. The advantages of doing business in free economic zone can be the following:

• no corporate income tax
• no value added tax VAT
• no customs duties
• other exemptions in relation to the law of a particular free zone

Turkish companies are obliged to prepare financial statements and present them annually on annual meetings of shareholders during 3 months from the end of the fiscal year. There is no need to submit financial statements to state authorities. Only tax reruns should be submitted.

Public companies are obliged to submit financial statements. All public companies must prepare and submit financial statements 4 times a year.

Corporate income tax declarations must be submitted to the tax office quarterly - not later than the 17th day of the second month following the expired reporting period (first quarter, half-year, nine months). The annual tax return must be filed before the 30th day of the fourth month after the end of the tax period (as a general rule, the tax period is a calendar year, so most often the annual tax return must be filed before April 30 inclusive).

The Mother company is obliged to submit consolidated financial statements.

There is no need to prepare consolidated financial statements if the mother company is a branch of another Mother company.

Each company in the group should submit its own corporate tax return.