GSL / Foreign Companies Audit / Audit Turkey

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

Turkey is a state at the junction of Europe and Asia, historically and geographically connecting international trade routes. Turkey’s economy is attractive to foreign investors in various sectors: industry, transport, agriculture, tourism. Companies are not required to file financial statements with the state authorities; there is an obligation to file tax returns. Auditing is mandatory only for companies that exceed certain criteria in terms of annual turnover, assets and average number of employees. It is possible to open a company in one of Turkey’s 20 Free Economic Zones.

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Service packages Legislation Tax System Audit Services
Keeping the company’s accounting records, preparing and auditing financial statements (if necessary)

(depending on the type of work and the qualifications of the person employed)

100-400 USD per hour
Preparation and submission of the company's tax returns

(depending on the type of work and the qualifications of the person employed)

100-400 USD per hour
Apostille of financial statements (if necessary)
from 970 USD
Tax advice on VAT-related and other matters
from 400 USD per hour
Any additional services at the client’s request
200 USD per hour

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General requirements - which companies should submit financial statements and reports

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.

Free economic zones of Turkey

Free zone
Type of activity
AGEAN FREE ZONE
Technological production
ANTALYA FREE ZONE
Yacht production, trade
EUROPEAN FREE ZONE
Textile industry
ISTANBUL FREE ZONE TUZLA
Manufacture of leather goods and trade
İZMIR MENEMEN LEATHER
Manufacture of leather goods and trade
ISTANBUL TRAKYA FREE ZONE
Premises for rent, warehouses
IZMIR FREE ZONE
Manufacture of leather goods and trade
KAYSERI FREE ZONE
Industrial production
İSTANBUL ATATURK AIRPORT
Airway trade, Software development
MERSİN FREE ZONE
Trade
TRABZON FREE ZONE
Trade, premises for rent, warehouses
ADANA-YUMURTALIK FREE ZONE
Heavy industrial production, petrochemicals, iron and steel industry, shipyard
TUBITAK MAM FREE ZONE
Research and development
DENIZLI FREE ZONE
Industry
SAMSUN FREE ZONE
Premises for rent, warehouses
RIZE FREE ZONE
Premises for rent, warehouses
EAST ANATOLIAN FREE ZONE
Trade
MARDIN FREE ZONE
Trade, manufacture
GAZIANTEP FREE ZONE
Premises and land for rent
BURSA FREE ZONE
Industry, manufacture

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

Audit of financial statements

If a company or a group of companies meets two out of the three stated below conditions then it is a subject to a mandatory audit

  1. Total assets at least 35 000 000 TRY;
  2. Annual net sales volume not less than 70 000 000 TRY;
  3. Number of employees not less than 175 people.

In case two of these three aforesaid criteria are consecutively overstepped during two fiscal periods, the company is a subject to mandatory audit starting from the next fiscal year.

The following companies are subject to mandatory audit as well:

Companies under the control of the Capital Markets Board of Turkey;

  • companies under the control of the Banking Regulation and Supervision Agency;
  • insurance, reinsurance and pension companies;
  • institutions authorized by the Istanbul Gold Exchange, precious metal intermediaries;
  • joint stock companies engaged in the production or trading of precious metals;
  • companies licensed to store agricultural products, established as a joint stock company under the legislation on licensed storage of agricultural products;
  • companies established as joint stock companies under the provisions of the Community Shopping Centers Act;
  • media companies that are owners of national broadcast, satellite and cable television.

Terms of preparations and submission of financial statements and tax returns

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).

Liability for the delay

If tax return was filed after the expiration of the terms sated above but before the tax audit, then the penalty is 50% of the amount of the lost tax. If tax return is filed later, then the penalty increases.

Consolidated financial statements

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.

Frequency Asked Questions

What accounting standards are used in Turkey?
Turkey has adopted the Turkish Financial Reporting Standards (TFRS) for financial reporting purposes. TFRS is largely based on the International Financial Reporting Standards (IFRS) with certain modifications and additional requirements specific to Turkey.
What is TFRS in Turkey?
TFRS stands for "Turkish Financial Reporting Standards." These are accounting standards that are issued by the Turkish Accounting Standards Board (TASB) and are used for the preparation of financial statements in Turkey. TFRS are closely aligned with IFRS but include some country-specific differences to address local business practices and legal requirements. The use of TFRS is mandatory for all Turkish companies that are listed on the Istanbul Stock Exchange and is also recommended for other companies that want to adopt international accounting standards.
What is the difference between IFRS and Turkish GAAP?
The main difference between IFRS and Turkish GAAP is that IFRS is a globally recognized set of accounting standards, whereas Turkish GAAP is a set of accounting principles and standards specific to Turkey. Turkish GAAP is based on the Turkish Commercial Code and other relevant regulations, and it is designed to meet the needs of Turkish businesses and the Turkish economy. In contrast, IFRS is designed to provide a globally consistent framework for financial reporting, and it is used by companies in many different countries around the world. Another key difference is that IFRS places a greater emphasis on fair value measurement and disclosure, whereas Turkish GAAP tends to focus more on historical cost accounting.
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