ADR’nin son duyurularına göre, ADR Center (Italya) önderliği ile Istanbul Bilgi Universitesi (Turkey); CEDR (UK); IBF International Consulting (Belgium); PwC Danışmanlık Hizmetleri Ltd. Şti (Turkey) ortaklığı tarafından “Technical Assistance for Better Access to Justice” Avrupa fonlu Projesi çerçevesinde, 25-27 Ekim 2008 tarihlerde Ankara’da gerçekleştirilen “Avukatlar için Arabuluculuk Eğitimi”, bu sefer eğitimcilerince Ankara'da eğitimin sonunda söz verildiği gibi, benzer şekilde bir eğitim, 19-22 Aralık 2008 tarihlerde Mersin’de düzenlenecektir.
Katılımcıların kontenjanı 200’dür ve avukat olması koşulu söz konusudur.
Eğitim Katılım şartları ile ilgili daha fazla bilgi için:
http://www.adrcenter.com/international/basic-mediation-skills-training-19-21-dicember-2008,-mersin.html
16 Aralık 2008 Salı
22 Mayıs 2008 Perşembe
Free Trade Between Turkey And Albania
The agreement which establishes a free trade zone between Turkey and Albania, will come into force on May 1st.
Free Trade Between Turkey And Albania
ANKARA — The agreement which establishes a free trade zone between Turkey and Albania, will come into force on May 1st.
Turkey’s Foreign Trade Undersecretariat said in a statement on Tuesday that the agreement will provide Turkish exporters with the equal opportunity of competition with EU exporters in Albanian market.
The agreement is expected to boost economic and commercial relations between the two countries. It will also encourage Turkish and Albanian businessmen to increase their joint investments.
Turkey-Albania trade volume increased 41 percent to 318 million USD in 2007 according to the Foreign Trade Undersecretariat figures. Exports by Turkey to Albania rose 38 percent to 294 million USD while imports from Albania climbed 90 percent to 24 million USD in the same year.
(UK-AÖ)
Source: Turkish Press - 4/29/2008
6 Şubat 2008 Çarşamba
Highlights on Execution and Enforcement Draft of New Turkish Trade Law
By Majlinda BEU
These days Turkish Parliament Justice Commission has handled the draft of Turkish Trade Law referring the execution and enforcement bases of this draft.
This draft arranging the execution and enforcement of New Turkish Law consisted of 1535 articles which is going to revoke Turkish Trade Law of year 1957, settles the circumstances of effective and new law applications.
With regard to this draft, if New Trade Law brings out any profit for the first time or different than the old law, new clauses will be applied for any case or legal accuse arisen even during time of the law in force. New Trade Law will be applied for those cases eventuated during law in force but their rights have yet not been effectual on the dates of coming into force of New Trade Law.
Regarding the Sea Trade and Insurances legal cases, they will be transferred to Trade Courts of First Instance within one month pursuant to enforcement of New Turkish Trade Law.
Bank Loan Contracts are changing
Current account contracts which predict the enforcement of compound interest by enclosure of interest to principal capital, will be changed within 3 months pursuant to enforcement of New Turkish Trade Law.
By some amendments on Current account contracts, bank loan contracts and other contracts which combine current account terms, provisions effective on compound interest and related clauses will be taken out.
Turkish Accounting Standards
In accordance with the new law draft, all the foreign companies that need to affiliate in Turkey and also all Turkish companies that need to be transferred to another country, should execute Turkish Accounting Standards for financial tables arrangements starting from 1 January 2009 or for the pursuant account periods, accordingly.
Hundreds of companies will be liquidated
With the enforcement of New Turkish Trade Law, hundreds of unactive joint-stock and limited companies will be ended to liquidation.
All the joint-stock and limited companies that are abrogated with the reason of non increase of capital to minimum amount during statutory period or that are terminated for any reason but their liquidation is not completed or stopped and the ones that do not show any activity, will be liquidated and erased from Turkish Trade Companies Registration. The procedures and methods of the abovementioned companies’ determination will be arranged with a declaration of Trade and Industry Ministry.
After liquidation completion and cancellation from Turkish Trade Companies Registration, all joint-stock and limited companies’ assets will be transferred to Treasure automatically.
Related Acts and Regulations within 1 Year
Public Acts and Regulations that will be amended regarding New Turkish Trade Law clauses, will be published at Turkish official gazette within 1 year.
These days Turkish Parliament Justice Commission has handled the draft of Turkish Trade Law referring the execution and enforcement bases of this draft.
This draft arranging the execution and enforcement of New Turkish Law consisted of 1535 articles which is going to revoke Turkish Trade Law of year 1957, settles the circumstances of effective and new law applications.
With regard to this draft, if New Trade Law brings out any profit for the first time or different than the old law, new clauses will be applied for any case or legal accuse arisen even during time of the law in force. New Trade Law will be applied for those cases eventuated during law in force but their rights have yet not been effectual on the dates of coming into force of New Trade Law.
Regarding the Sea Trade and Insurances legal cases, they will be transferred to Trade Courts of First Instance within one month pursuant to enforcement of New Turkish Trade Law.
Bank Loan Contracts are changing
Current account contracts which predict the enforcement of compound interest by enclosure of interest to principal capital, will be changed within 3 months pursuant to enforcement of New Turkish Trade Law.
By some amendments on Current account contracts, bank loan contracts and other contracts which combine current account terms, provisions effective on compound interest and related clauses will be taken out.
Turkish Accounting Standards
In accordance with the new law draft, all the foreign companies that need to affiliate in Turkey and also all Turkish companies that need to be transferred to another country, should execute Turkish Accounting Standards for financial tables arrangements starting from 1 January 2009 or for the pursuant account periods, accordingly.
Hundreds of companies will be liquidated
With the enforcement of New Turkish Trade Law, hundreds of unactive joint-stock and limited companies will be ended to liquidation.
All the joint-stock and limited companies that are abrogated with the reason of non increase of capital to minimum amount during statutory period or that are terminated for any reason but their liquidation is not completed or stopped and the ones that do not show any activity, will be liquidated and erased from Turkish Trade Companies Registration. The procedures and methods of the abovementioned companies’ determination will be arranged with a declaration of Trade and Industry Ministry.
After liquidation completion and cancellation from Turkish Trade Companies Registration, all joint-stock and limited companies’ assets will be transferred to Treasure automatically.
Related Acts and Regulations within 1 Year
Public Acts and Regulations that will be amended regarding New Turkish Trade Law clauses, will be published at Turkish official gazette within 1 year.
ACT ON THE PROTECTION OF COMPETITION IN TURKEY
THE ACT ON THE PROTECTION OF COMPETITION
Act No : 4054
Date of Adoption : 7/12/1994
Official Gazette of Its Publication Date : 13/12/1994
Number : 22140
Code of Its Publication Series : 5
Volume : 34
Page :
SECTION I
Purpose, Scope, Definitions
Article 1- The purpose of this Act is to prevent agreements, decisions and practices preventing, distorting or restricting competition in markets for goods and services, and the abuse of dominance by the undertakings dominant in the market, and to ensure the protection of competition by performing the necessary regulations and supervisions to this end.
Scope
Article 2- Agreements, decisions and practices which prevent, distort or restrict competition between any undertakings operating in or affecting markets for goods and services within the boundaries of the Republic of Turkey, and the abuse of dominance by the undertakings dominant in the market, and any kind of legal transactions and behaviour having the nature of mergers and acquisitions which shall decrease competition to a significant extent, and transactions related to the measures, establishments, regulations and supervisions aimed at the protection of competition fall under this Act.
Definitions
Article 3- In implementation of this Act, the terms express the following:
Ministry: The Ministry of Industry and Trade,
Competition: The contest between undertakings in markets for goods and services, which enables them to take economic decisions freely,
Dominant Position: The power of one or more undertakings in a particular market to determine economic parameters such as price, supply, the amount of production and distribution, by acting independently of their competitors and customers,
Undertaking: Natural and legal persons who produce, market and sell goods or services in the market, and units which can decide independently and do constitute an economic whole,
Association of Undertakings: Any kind of associations with or without a legal personality, which are formed by undertakings to accomplish particular goals,
Goods: Any kind of movable or immovable property which is the subject of trade,
Services: Physical, intellectual or combined activities carried out in return for a cost or interest,
Authority: Competition Authority,
Board: Competition Board.
SECTION II
CHAPTER ONE
Prohibited Activities
Agreements, Concerted Practices and Decisions Limiting Competition
Article 4- Agreements and concerted practices between undertakings, and decisions and practices of associations of undertakings which have as their object or effect or likely effect the prevention, distortion or restriction of competition directly or indirectly in a particular market for goods or services are illegal and prohibited.
Such cases are, in particular, as follows:
a) Fixing the purchase or sale price of goods or services, elements such as cost and profit which form the price, and any terms of purchase or sale,
b) Partitioning markets for goods or services, and sharing or controlling all kinds of market resources or elements,
c) Controlling the amount of supply or demand in relation to goods or services, or determining them outside the market,
d) Complicating and restricting the activities of competing undertakings, or excluding firms operating in the market by boycotts or other behaviour, or preventing potential new entrants to the market,
e) Except exclusive dealing, applying different terms to persons with equal status for equal rights, obligations and acts,
f) Contrary to the nature of the agreement or commercial usages, obliging to purchase other goods or services together with a good or service, or tying a good or service demanded by purchasers acting as intermediary undertakings to the condition of displaying another good or service by the purchaser, or putting forward terms as to the resupply of a good or service supplied.
In cases where the existence of an agreement cannot be proved, that the price changes in the market, or the balance of demand and supply, or the operational areas of undertakings are similar to those markets where competition is prevented, distorted or restricted, constitutes a presumption that the undertakings are engaged in concerted practice.
Each of the parties may relieve itself of the responsibility by proving not to engage in concerted practice, provided that it is based on economic and rational facts.
Exemption
Article 5- The Board, in case all the terms listed below exist, may decide (Annulled: 02.07.2005-Article 5388/1) (…) to exempt agreements, concerted practices between undertakings, and decisions of associations of undertakings from the application of the provisions of article 4:
a) Ensuring new developments and improvements, or economic or technical development in the production or distribution of goods and in the provision of services,
b) Benefitting the consumer from the above-mentioned,
c) Not eliminating competition in a significant part of the relevant market,
d) Not limiting competition more than what is compulsory for achieving the goals set out in sub-paragraphs (a) and (b).
(Amended: 02.07.2005-Article 5388/1) Exemption may be granted for a definite period, just as the granting of exemption may be subjected to the fulfillment of particular terms and/or particular obligations. Exemption decisions are valid as of the date of concluding an agreement or committing a concerted practice or taking a decision of an association of undertakings, or fulfilling a condition if it has been tied to a condition.
In case the terms mentioned in the first paragraph are fulfilled, the Board may issue communiqués which ensure block exemptions for the types of agreements in specific subject-matters and which indicate their terms.
Abuse of Dominant Position
Article 6- The abuse, by one or more undertakings, of their dominant position in a market for goods or services within the whole or a part of the country on their own or through agreements with others or through concerted practices, is illegal and prohibited.
Abusive cases are, in particular, as follows:
a) Preventing, directly or indirectly, another undertaking from entering into the area of commercial activity, or actions aimed at complicating the activities of competitors in the market,
b) Making direct or indirect discrimination by offering different terms to purchasers with equal status for the same and equal rights, obligations and acts,
c) Purchasing another good or service together with a good or service, or tying a good or service demanded by purchasers acting as intermediary undertakings to the condition of displaying another good or service by the purchaser, or imposing limitations with regard to the terms of purchase and sale in case of resale, such as not selling a purchased good below a particular price,
d) Actions which aim at distorting competitive conditions in another market for goods or services by means of exploiting financial, technological and commercial advantages created by dominance in a particular market,
e) Restricting production, marketing or technical development to the prejudice of consumers.
Mergers or Acquisitions
Article 7- Merger of two or more undertakings, aimed at creating a dominant position or strengthening their dominant position, as a result of which, competition is significantly decreased in any market for goods or services within the whole or a part of the country, or acquisition, except acquisition by way of inheritance, by any undertaking or person, of another undertaking, either by acquisition of its assets or all or a part of its partnership shares, or of other means which confer it/him the power to hold a managerial right, is illegal and prohibited.
The Board shall declare, via communiqués to be issued by it, the types of mergers and acquisitions which have to be notified to the Board and for which permission has to be obtained, in order them to become legally valid.
CHAPTER TWO
Powers of the Board
Negative Clearance
Article 8- Upon the application by the undertaking or associations of undertakings concerned, the Board may, on the basis of information in hand, grant a negative clearance certificate indicating that an agreement, decision, practice or merger and acquisition are not contrary to articles 4, 6 and 7 of this Act.
The Board may, after issuing such a certificate, revoke its opinion at any time, under the conditions set out in article 13. However, in this case, criminal sanction is not applied to the parties for the period until the change of opinion by the Board.
Termination of Infringement
Article 9- If the Board, upon informing, complaint or the request of the Ministry or on its own initiative, establishes that articles 4, 6 and 7 of this Act are infringed, it notifies the undertaking or associations of undertakings concerned of the decision encompassing those behaviour to be fulfilled or avoided so as to establish competition and maintain the situation before infringement, in accordance with the provisions mentioned in section Four of this Act.
Natural and legal persons who have a legitimate interest are entitled to file a complaint.
The Board, prior to taking a decision pursuant to the first paragraph, shall inform in writing the undertaking or associations of undertakings concerned of its opinions concerning how to terminate the infringement.
Where the occurrence of serious and irreparable damages is likely until the final decision, the Board may take interim measures which have a nature of maintaining the situation before the infringement and which shall not exceed the scope of the final decision.
(…) Notification of Mergers and Acquisitions to the Board
Article 10- (Annulled paragraph one: 02.07.2005-5388/Article 2)
As of the date the Board is notified of merger or acquisition agreements falling under article 7, the Board is, as a result of the preliminary examination to be performed by it within fifteen days, obliged to permit the merger or acquisition transaction, or if it decides to deal with this transaction under final examination, it is obliged to duly notify, with its preliminary objection letter, those concerned of the fact that the merger or acquisition transaction is suspended and cannot be put into practice until the final decision, together with other measures deemed necessary by it. In this case, the provisions of articles 40-59 of this Act shall be applicable.
Where the Board does not respond to or take any action for the application as to a merger or acquisition within due time, merger or acquisition agreements shall take effect and become legally valid after 30 days as of the date of the notification.
Failure to Notify Mergers and Acquisitions to the Board
Article 11- Where a merger and acquisition transaction whose notification to the Board is compulsory is not notified to the Board, the Board shall deal with the merger or acquisition under examination on its own initiative, when it is informed about the transaction anyway. As a result of the examination;
a) it allows the merger or acquisition in case it decides that the merger or acquisition does not fall under the first paragraph of article 7, but imposes fines on those concerned due to their failure to notify.
b) in case it decides that the merger or acquisition falls under the first paragraph of article 7, it decides that the merger or acquisition transaction be terminated, together with fines; all de facto situations committed contrary to the law be eliminated; any shares or assets seized be returned, if possible, to their former owners, whose terms and duration shall be determined by the Board, or if not possible, these be assigned and transferred to third parties; the acquiring persons may by no means participate in the management of undertakings acquired during the period until these are assigned to their former owners or third parties, and that other measures deemed necessary by it be taken.
Notification
Article 12- Notification fully and completely includes information required by the Notification Forms to be prepared by the Board. Either of the parties may submit the notification. The notifying party is obliged to inform the other party concerned of the situation. Relevant documents are enclosed with the notification, and the notification shall be considered to have been submitted on the date it is entered in the records of the Board.
Revocation of Exemption and Negative Clearance Decisions
Article 13- Exemption and negative clearance decisions may be revoked, or particular behaviour of the parties may be prohibited in the following cases:
a) Change in any event constituting the basis of the decision,
b) Failure to fulfil the terms or obligations resolved,
c) Having taken the decision on the basis of incorrect or incomplete information concerning the agreement in question.
Revocation decision shall be effective as of the date of the change in sub-paragraph (a), and the date of taking the exemption or negative clearance decision in other cases.
In case incorrectness and incompleteness mentioned in sub-paragraph (c) take place by the fraud or intent of the undertaking concerned, the decision shall be deemed not to have been taken at all.
Request for Information
Article 14- In carrying out the duties assigned to it by this Act, the Board may request any information it deems necessary from all public institutions and organizations, undertakings and associations of undertakings.
Officials of these authorities, undertakings and associations of undertakings are obliged to provide the requested information within the period to be determined by the Board.
On-the-Spot Inspection
Article 15- In carrying out the duties assigned to it by this Act, the Board may perform examinations at undertakings and associations of undertakings in cases it deems necessary. To this end, it is entitled to:
a) Examine the books, any paperwork and documents of undertakings and associations of undertakings, and take their copies if needed,
b) Request written or oral statement on particular issues,
c) Perform examinations on the spot with regard to any assets of undertakings.
Examination is performed by experts employed at the disposal of the Board. While going for an examination, experts carry with them an authorization certificate showing the subject-matter and purpose of the examination, and that an administrative fine shall be imposed should incorrect information be provided.
(Supplementary paragraph: 01.08.2003-4971/Article 25): Those concerned are obliged with providing the copies of information, documents, books and other instruments requested. In case an on-the-spot inspection is hindered or likely to be hindered, the on-the-spot inspection is performed with the decision of a criminal magistrate.
CHAPTER THREE
Administrative Fines
Fines
Article 16- The Board may impose on natural and legal persons having the nature of undertakings and on associations of undertakings and/or the members of such associations the following fines;
a) hundred million liras in case misleading or incorrect information is provided in applications for exemption, negative clearance and permission as to mergers or acquisitions, and in notifications and applications in relation to agreements concluded before the entry into force of this Act,
b) hundred million liras in case (Supplementary phrase: 02.07.2005- 5388/Article 2) no information is provided at all, incomplete, incorrect or misleading information is provided where there is a request for information by the decision of the Board, or an on-the-spot inspection,
c) fifty million liras in case (Amended phrase: 02.07.2005-5388/ Article 2) merger or acquisition transactions subject to authorization are committed without the authorization of the Competition Board,
d) sixty million liras in case the obligations in exemption decisions taken by the Board in accordance with article 5 paragraph three of this Act are not fulfilled.
Provided that it is not less than two hundred million liras for those proven, by the Board decision, to have committed behaviour prohibited in articles 4 and 6 of this Act, and for those who commit behaviour written in article 11 sub-paragraph (b) of this Act, fine is imposed up to ten percent of the annual gross revenue of natural and legal persons having the nature of punishable undertakings, and of associations of undertakings and/or the members of such associations, which generated by the end of the preceding financial year and which shall be determined by the Board.
In case undertakings and associations of undertakings having legal personality are subjected to fines mentioned in paragraph one, natural persons employed in managerial bodies of this legal personality are also fined personally up to ten percent of the fine imposed.
When deciding on fines, the Board shall take into account factors such as the existence of intent, the severity of fault, the market power of the undertaking or undertakings upon which a penalty is imposed, and the severity of potential damage.
Fines are not applicable to agreements and decisions notified within due time, for the period until the final decision by the Board, in case they do not expressly violate the provisions of this Act.
Periodic Fines
Article 17- The Board may impose on undertakings and associations of undertakings the following periodic fines per day, which shall commence from the date to be mentioned in the decision;
a) fifty million liras for failure to comply with the decision taken pursuant to article 9, concerning the termination of infringement, and other measures,
b) twenty-five million liras for failure to fulfil the decisions and measures of the Board provided for in article 11 sub-paragraph (b),
c) twenty-five million liras for performance of the behaviour prohibited pursuant to article 13 paragraph one,
d) twenty million liras for prevention of on-the-spot inspection by experts of the Board in accordance with article 15.
Nature and Application of Fines Imposed Pursuant to This Act
Article 18- Any fines provided in this Act are of an administrative nature. Fines or periodic fines are separately applied to each party acting contrary to this Act.
In case a decision as to imposing a periodic fine is appealed, the periodic fine is not applicable as of the date of the appeal if a decision for the suspension of execution is issued about the periodic fine.
Prescription in Fines and Periodic Fines
Article 19- The power of the Board to impose fines and periodic fines is subject to the following periods of prescription:
a) three years for the infringement of provisions related to the application or notification of undertakings or associations of undertakings, provision of information, or on-the-spot inspection,
b) five years in other cases.
The period commences to run from the day of occurrence of the infringement. If continuous or repeated infringements are in question, it commences from the day the infringement ends or is repeated last.
Any action to be taken by the Board with regard to this infringement for purposes of examination or inquiry interrupts the prescription as of the notification of this action to one of the parties concerned.
That an appeal has been made against the decision interrupts the period of prescription.
SECTION THREE
Organization
Competition Authority
Article 20- The Competition Authority having a public legal personality, and an administrative and financial autonomy is established in order to ensure the formation and development of markets for goods and services in a free and sound competitive environment, to observe the implementation of this Act, and to fulfil the duties assigned to it by the Act.
The Ministry to which the Authority relates is the Ministry of Industry and Trade.
The Authority is independent in fulfilling its duties. No organ, authority and person may give commands and orders to influence the final decision of the Authority.
The central office of the Authority is based in Ankara.
Organization of the Competition Authority
Article 21- The organization of the Authority consists of the
a) Competition Board,
b) Presidency,
c) Service Units.
CHAPTER ONE
Competition Board
Organization of the Board
Article 22- (Amended Article: 02.07.2005-5388/Article 3) The Competition Board is composed of a total of 7 members, one being the Chairman and the other being the Deputy Chairman.
The Council of Ministers elects and appoints the members from among the two candidates apiece, to be nominated from inside or outside the following institutions for each vacant membership: two members from the Competition Board, one member from the Ministry of Industry and Trade, one member from the Ministry of State with which the Undersecretariat of State Planning Organization is affiliated, and one member apiece from the Supreme Court of Appeal, Council of State, and Turkish Union of Chambers and Commodity Exchanges.
The Council of Ministers shall commission one of the three candidates to be nominated by the Board as the President/Chairman. The Deputy President/Chairman is elected by the members of the Board.
Qualifications for Appointment
Article 23- The Chairman and members of the Board shall be appointed from among those who had a four-year higher education in law, economics, engineering, management or finance, either at home or abroad, possess a sufficient degree of professional knowledge and experience, and have worked in the public or private sector for at least 10 years, in line with their professions. Furthermore, it is compulsory that the members bear the qualifications mentioned in article 48 paragraph (A) sub-paragraphs 1, 4, 5, 6 and 7 of the Civil Servants Act No. 657.
Term of Office
Article 24- The term of office of the Chairman, Deputy Chairman and members of the Board is six years. The member whose term has expired is eligible for re-election. One third of the members of the Board is renewed every two years. During renewal, numbers and ratios in the provisions concerning the organization of the Board are taken into account. Should the Chairmanship and memberships are vacated before the expiration of the term of office, due to any reason other than renewal, election and appointment are carried out within one month for the vacated seats. The one appointed in such a case completes the term of the person he replaces.
The offices of the Chairman and members of the Board cannot be terminated due to any reason prior to the completion of their term. However, what terminate are the offices of the Chairman and members of the Board who are realized to have lost the qualifications required for their appointment or whose position is realized to be contrary to article 25 of this Act, by the decision of the Board, or whose offence with regard to the duty assigned by the Act is proven by a court decision.
Prohibitions
Article 25- The Chairman and members of the Board may not undertake any official or private mission, engage in commerce, be shareholders in partnerships, unless it is based on a special Act.
The Chairman and members of the Board are, prior to assuming office, obliged to dispose of all kinds of securities in their possession within the meaning of the capital market legislation, apart from securities issued by the Treasury in connection with borrowing, by means of selling or transferring them to persons other than their kin by blood up to the third degree and their kin by marriage up to the second degree. Those members who do not act in conformity with this provision within 30 days shall be deemed to have resigned from membership.
Positions in associations and foundations which aim at social assistance and education, and partnership in non-profit cooperatives fall outside this provision.
The members and staff of the Board may not disclose and use in their own or others' interests the confidential information as to the Authority, and trade secrets of undertakings and associations of undertakings that they learned during the implementation of this Act, even if they have left their office.
Oath
Article 26- Before the First Presidential Court of the Supreme Court of Appeal, the members of the Board take an oath that during their term of office, they shall carry out the tasks of the Board with full attention and honesty, and they shall not act or allow others to act contrary to the provisions of the Act.
The application made for the oath is deemed to be among the urgent business by the Supreme Court of Appeal. The Chairman and members of the Board may not assume office before taking an oath.
Duties and Powers of the Board
Article 27- The duties and powers of the Board are as follows:
a) To carry out, upon application or on its own initiative, examination, inquiry and investigation about the activities and legal transactions prohibited in this Act; to take the necessary measures for terminating infringements upon establishing that the provisions provided in this Act are infringed, and to impose administrative fines on those responsible for them,
b) To evaluate the requests of those concerned for exemption and negative clearance, and to grant an exemption and negative clearance certificate to the appropriate agreements,
c) To constantly follow up the markets to which exemption decisions and negative clearance certificates are related, and to re-evaluate the applications of those concerned in case changes are established in these markets or in the positions of the parties,
d) To permit mergers and acquisitions,
e) To elect the Deputy Chairman of the Board,
f) To issue communiqués and make the necessary regulations as to the implementation of this Act,
g) To opine, directly or upon the request of the Ministry, concerning the amendments to be made to the legislation with regard to the competition law,
h) To monitor legislations, practices, policies and measures of the other countries, concerning agreements and decisions limiting competition,
i) To determine and observe the implementation of the personnel policies of the Authority, to perform the appointment transactions of the personnel, to approve the annual budget, final account of revenues and expenses, and annual work schedules of the Authority, which are prepared by the Presidency, and to decide for transfers among the accounts in the budget if needed,
j) To determine the candidates to be nominated by the Authority for the vacated Board memberships,
k) To issue an annual report on its works, and the situation and developments in its fields of duty,
l) To negotiate and resolve the suggestions about purchases such as the procurement of movable and real property and fixtures, and about sales and leasings, and to make the necessary regulations therein,
m) To decide on any kind of transactions about credits, rights and obligations of the Authority concerning third parties,
n) To fulfil the other duties assigned by the Act.
Functioning Principles of the Board
Article 28- The Board is chaired and represented by the Chairman, and by the Deputy Chairman in cases of leave, sickness, traveling and in other cases where the Chairman is not present.
Meeting is chaired by the Chairman of the Board, or by the Deputy Chairman in his absence, and prior to the meeting, he determines the agenda to be resolved, and advises it to the members of the Board.
The members of the Board may not take part in negotiations and votings in events concerning themselves, and their kin by blood up to the third degree and their kin by marriage up to the second degree.
CHAPTER TWO
Presidency
Article 29- The Presidency is composed of the Chairman of the Board, the Deputy Chairman and the Vice-Chairmen of the Board.
The Chairman of the Board is the highest ranking chief of the Authority, and is responsible for the overall management and representation of the Authority.
This responsibility encompasses the duties and powers as to the regulation, supervision, evaluation of the works of the Authority within a general framework, and their announcement to the public when necessary.
Duties and Powers of the Presidency
Article 30- The duties and powers of the Presidency are as follows:
a) To ensure the organization and coordination at the highest level that the Competition Board which is the decisive body of the Authority and the service units work in harmony, efficiently, in a disciplined and orderly manner, and to solve the problems likely to occur between the service units of the Authority with respect to duties and powers,
b) To determine the agenda, date and time of the Board meetings, and to run the meetings,
c) To ensure the fulfilment of what is required by the Board decisions, and to monitor the implementation of these decisions,
d) To finalize and submit to the Board suggestions received from the service units,
e) To prepare and submit to the Board the annual budget, final account of revenues and expenses, and annual work reports of the Authority, and to ensure the implementation of the budget of the Authority, the collection of revenues and the carrying out of expenses,
f) To opine about decisions to be taken as to the competition policy, and the relevant legislation,
g) To arrange for and conduct the relations of the Authority with the Ministry and other organizations,
h) To represent the Authority in the presence of official and private organizations,
i) To ensure that final decisions of the Board, and communiqués and Regulations to be prepared by the Authority are published,
j) To determine the scope of duty and power of the personnel authorized to sign on behalf of the Chairman of the Board.
Vice-Presidents (Vice-Chairmen)
Article 31- Two Vice-Presidents may be commissioned for purposes of assisting the President in conducting the Presidential services. Vice-Presidents are obliged to fulfil duties and carry out instructions given by the President, and to ensure harmony and cooperation between the levels of the organization and the service units concerned.
Service Units
Article 32- The service units of the Competition Authority are composed of the main service units organized as Department Head Offices, advisory units and auxiliary service units.
Supervision
Article 33- Accounts of the Authority are subject to the supervision of the State Audit Court.
CHAPTER THREE
Status of the Personnel of the Authority
Article 34- The essential and permanent duties required by the services of the Authority are conducted via the personnel employed on a contractual basis with an administrative service contract. Adequate number of expert professional staff and specialized non-career personnel may be employed at the disposal of the Authority.
The personnel of the Authority is subject to the Civil Servants Act No. 657, apart from the salary and financial rights. The Board is free in arranging the statuses of establishment and staff in compliance with the needs. The cancellation and creation of posts are carried out by the Board.
Those services calling for temporariness or a particular expertise are determined by the Presidency. Proxy or job contract provisions are applicable to personnel to be employed in such tasks. For those to be employed pursuant to this paragraph, salaries they receive from social security organizations shall not be cut off.
Foreign experts may also be employed pursuant to the principles of the Regulations which shall be prepared by the Presidency and which shall take effect upon the approval of the Board.
Appointment as Assistant Experts on Competition
Article 35- The following qualifications are sought for enabling appointment as assistant experts on competition:
a) (Amended sub-paragraph: 02.07.2005-5388/Article 4) To be a graduate of at least four-year higher education from faculties of law, economics, political sciences, management, economic and administrative sciences, or from management engineering or industrial engineering departments, or of higher education institutions abroad which are deemed equivalent to them,
b) (Amended sub-paragraph: 02.07.2005-5388/Article 4) To succeed in the examination to be held jointly or separately for the branches listed in the sub-paragraph above,
c) To succeed in the foreign language examination to be held in one of the English, French and German languages,
d) Not to be over thirty years of age as of the first day of January of the examination year.
Other necessary requirements are determined in the examination Regulations to be issued by the Board.
Experts on Competition
Article 36- Those appointed as assistant experts on competition pursuant to article 35 are awarded the title of "Expert on Competition" in case their expertise thesis which they shall prepare or have already prepared concerning their topics is approved by the Board, provided that they have worked for at least three years and received a positive record.
Experts and assistant experts on competition bear the title and possess the power of professional staff.
Salary and Other Financial Rights
Article 37- Monthly salaries of the Chairman and members of the Board are determined by the Council of Ministers upon the proposal of the Ministry of Industry and Trade, provided that they do not exceed twice the salary of the highest ranking civil servant, including all payments. Those which are not subject to the income tax among the payments made to the highest ranking civil servant shall also not be subject to the income tax pursuant to this Act.
Salaries and other financial rights of the Authority personnel are determined by the Board upon the proposal of the Presidency, under the principles in the first paragraph with regard to salaries and making changes thereto.
Considering the Retirement and Service Periods
Article 38- The Chairman and members of the Board, and the other personnel are subject to the Pensioner's Fund Act. From among the persons who are subject to the Civil Servants Act No. 657, those appointed to the Chairmanship or memberships of the Board, and those employed in the Authority return to the position as a civil servant, and are appointed to an office compatible with their status, in case their term of office expires. In such a case, the periods they served in the Authority are considered in their services pursuant to the provisions of the Act they are subject to.
These provisions are also applicable to the Chairman and members, experts or the other personnel who come from universities, with reserving the necessary requirements for receiving academic titles.
With regard to retirement, the Chairman of the Board, the members of the Board and the Heads of Departments are considered to be at the same level with the Undersecretary of the Ministry, the Deputy Undersecretaries of the Ministry, and the General Managers of the Ministry respectively. The status of the other personnel as to retirement shall be indicated in the Regulations which shall be prepared by the Presidency and which shall be put into force upon the approval of the Board.
Revenues of the Authority
Article 39- Revenues of the Authority set up the budget of the Authority, and they are made up of the following items of revenues:
a) The subsidy to be allocated in the budget of the Ministry,
b) (Annulled: 01.08.2003-4971/Article 25-B)
c) (Supplement: 17/9/2004-5234/Article 29) Payments to be made by four per ten thousand of the capitals of all partnerships to be newly established with the status of an incorporated and limited company, and that of the remaining portion in case of capital increase,
d) Publication and other revenues.
Revenues belonging to the Authority are collected in an account to be opened in the Central Bank of the Republic of Turkey or a state bank. (Annulled last sentence: 01.08.2003-4971/Article 25-B)
SECTION FOUR
Procedure in Examinations and Inquiries of the Board
Preliminary Inquiry
Article 40- On its own initiative or upon the applications filed with it, the Board decides to open a direct investigation, or to conduct a preliminary inquiry for determining whether or not it is necessary to open an investigation.
Should it be decided to conduct a preliminary inquiry, the Chairman of the Board assigns one or more of the experts among the professional staff as reporters.
The reporter who is entrusted with the task of conducting a preliminary inquiry notifies the Board in writing within 30 days of the information and any evidence obtained by him, and his comments about the issue.
Conclusion of Preliminary Inquiry
Article 41- Within 10 days following the submission of the preliminary inquiry report to the Board, the Board convenes in order to evaluate the information obtained and make a decision, and decides on whether or not to open an investigation.
Notification of Applicants
Article 42- In case the Board deems the claims put forward in applications for informing or complaint serious and sufficient, informers or complainants are notified in writing that the claims put forward have been deemed serious and that an inquiry has been initiated.
In cases where the Board either expressly rejects applications, or is deemed to have rejected them by means of failure to notify within due period, anyone who documents to have a direct or indirect interest may resort to jurisdiction against the rejection decision of the Board.
Commencement of Investigation by the Board
Article 43- (Amended first sentence: 02.07.2005-5388/Article 5) If it is decided to perform an investigation, the Board designates the reporter or reporters who shall conduct the investigation under the supervision of the department head concerned. The investigation is concluded within 6 months at the latest. In cases where it is deemed necessary, the Board may grant an additional period of 6 months only once.
The Board notifies the parties concerned of investigations initiated by it, within 15 days of issuing the decision for the initiation of investigation, and requests that the parties submit their first written pleas within 30 days. In order to enable the commencement of the first written reply period granted to the parties, it is required that the Board forwards to the parties concerned this notification letter, accompanied by adequate information as to the type and nature of the claims.
The decision of the Board to initiate an investigation is final.
Collecting Evidence and Informing the Parties
Article 44- A delegation acting on behalf of the Board and composed of (Annulled phrase: 02.07.2005-5388/Article 5) (…) reporters designated and commissioned by the Board may, during the investigation stage, exercise the powers to request information and carry out an on-the-spot inspection as provided in articles 14 and 15 of this Act respectively. Within this period determined, it may request from the parties and the other places concerned the forwarding of paperwork and the provision of any information which are deemed necessary by it. During the investigation stage of the Board, the person or persons claimed to have infringed this Act may, at all times, submit to the Board any information and evidence likely to influence the decision.
Those parties which are notified of the initiation of an investigation against them may, until their request for enjoying the right to hearing, ask for a copy of any paperwork drawn up within the Authority in connection with themselves, and if possible, a copy of any evidence obtained.
The Board may not base its decisions on issues about which the parties have not been informed and granted the right to defense.
Notice and Reply
Article 45- The report prepared at the end of the investigation stage is notified to all members of the Board and the parties concerned.
Those determined to have infringed this Act are notified to submit their written pleas to the Board within 30 days. Those charged with conducting the investigation declare an additional written opinion within 15 days against the pleas to be submitted by the parties, and this is also notified to all members of the Board and the parties concerned. The parties may reply to such opinion within 30 days. In case the parties provide justifiable grounds, these periods may be extended only once and by one fold at the most.
The pleas of the parties not submitted within due period shall not be taken into account.
Hearing
Article 46- Hearing is held upon the parties' declaration of their will to enjoy the right to hearing in their petition of reply or defense. Furthermore, the Board may decide on its own initiative to hold a hearing.
Hearing is held within at least 30 days and at most 60 days from the end of the investigation stage. Invitations for the hearing are forwarded to the parties at least 30 days before the day of the hearing.
Principles Concerning the Hearing
Article 47- Hearings are held publicly. The Board may decide to hold the hearing in camera on grounds of protecting the general morals and trade secrets.
Hearings are chaired by the Chairman of the Board, or by the Deputy Chairman of the Board in his absence. The meeting is held with the participation of the Chairman of the Board or the Deputy Chairman, and at least (Amended phrase: 02.07.2005-5388/Article 5) four members of the Board.
Hearings are completed in no longer than 5 consecutive sessions, and various meetings held within the same day are deemed as one session.
The parties are obliged to notify, 7 days before the hearing at the latest, the Board of the means of proof they shall utilize in the hearing. The parties may not utilize the means of proof not notified within due period.
During the hearing, the parties concerned may utilize any evidence and means of proof provided in the Part Two Chapter Eight of the Code of Civil Procedure. The parties claimed to have infringed this Act, or their representatives, and those who prove to the Board prior to the session that they have direct or indirect interests, or their representatives may participate in sessions.
Final Decision
Article 48- The decision is made on the same day after the hearing, or if not possible, within 15 days, together with its grounds.
In cases where a hearing is not requested by the parties, and the Board does not decide to hold a hearing on its own initiative, the final decision is made within 30 days following the end of the investigation stage, pursuant to the examination to be performed on the file.
In case the parties concerned fail to attend the hearing despite the decision to hold a hearing, the decision is made within one week following the date of the meeting determined, pursuant to the examination to be performed on the file.
Confidentiality of Meetings
Article 49- Decisions of the Board are taken as a result of confidential meetings and are communicated publicly. No member of the Board may cast an abstention vote. Except for the ones having an excuse, members who have been present at the hearing are obliged to participate in meetings.
Procedure in the Meeting
Article 50- The meeting is chaired by the Chairman of the Board, or in his absence, by the Deputy Chairman, and he determines matters to be resolved. After such matters are discussed freely, the Chairman collects the votes and casts his own vote finally.
Meeting and Decision Quorum
Article 51- In its final decisions, the Board convenes with the participation of at least a total of (Amended phrase: 02.07.2005-5388/Article 5) five members including the Chairman or the Deputy Chairman, and it decides via the parallel votes of at least (Amended phrase: 02.07.2005-5388/Article 5) four members.
Where the necessary quorum for the decision cannot be attained in the first meeting, the Chairman ensures that all members participate in the second meeting. However, if not possible, the decision is made via the absolute majority of the participants in the meeting. In this case, the quorum for the meeting may also not be less than the one mentioned in the first paragraph. In case of a tie vote in the second meeting, the vote of the side of the Chairman is deemed preponderant.
For decisions except the final decision, and particularly for decisions and transactions having the nature of measures and recommendations, it is required that at least one third of the members of the Board convenes and that the absolute majority of the participants in the meeting makes a decision.
Points Required in Decisions
Article 52- Decisions involve the following points:
a) Names and surnames of the members of the Board who made the decision,
b) Names and surnames of those who carried out the examination and inquiry,
c) Names, titles, residences and distinguishing characteristics of the parties,
d) Summary of the claims of the parties,
e) Summary of the examination and of the economic and legal issues discussed,
f) Opinion of the reporter,
g) Evaluation of all evidences and pleas submitted,
h) Grounds, and the legal basis of the decision,
i) Conclusion,
j) If any, writings about the dissenting votes.
Duties imposed on and rights granted to the parties with the decision made have to be written explicitly such that they do not pave the way for doubts and hesitations.
Taking the Decisions to Writing
Article 53- The decision is written by the Chairman of the Board or a member to be commissioned by him. Decisions are signed by the members participating in the meeting. Those members against the decision may take to writing dissenting votes individually or jointly. The original of the decision is kept in the archives of the Board. A copy of it is submitted to the parties in return for signature. Another copy is forwarded to the Publication Department of the Competition Authority for publication purposes.
(Annulled phrase: 01.08.2003-4971/Article 25) (…) Decisions of the Board are published (Amended phrase: 17.09.2004-5234/Article 29) on the internet page of the Authority in such a way not to disclose the trade secrets of the parties.
Commencement Date of Periods
Article 54- In decisions of the Competition Board, periods commence as of the date the reasoned decision is communicated to the parties.
Appealing Against Decisions of the Board
Article 55- Appeal may be made to the Council of State within due period against the final decisions, measure decisions, fines and periodic fines of the Board, as of communicating the decision to the parties. (Amended sentence: 01.08.2003-4971/Article 25-D) Appealing against decisions of the Board does not cease the implementation of decisions, and the follow-up and collection of fines.
(Amended sentence: 01.08.2003-4971/Article 25-D) Fines are paid (Amended phrase: 17.09.2004-5234/Article 29-c) within three months as of the date of communicating the final decision of the Board to the one concerned. The enforcement of the decision of the Board imposing fines or periodic fines is subject to the provisions of the Act on the Procedure of Collection of Public Credits No. 6183.
SECTION FIVE
Private Law Consequences of Limiting Competition
Legal Nature of Agreements and Decisions Contrary to This Act
Article 56- Any agreements and decisions of associations of undertakings contrary to article 4 of this Act are invalid. The performance of acts arising out of such agreements and decisions may not be requested. In case a request is made for reclamation due to the invalidity of previous acts fulfilled, the return obligation of the parties is subject to articles 63 and 64 of the Code of Obligations.
The provision of article 65 of the Code of Obligations is not applicable to disputes arising out of this Act.
Right to Compensation
Article 57- Anyone who prevents, distorts or restricts competition via practices, decisions, contracts or agreements contrary to this Act, or abuses his dominant position in a particular market for goods or services, is obliged to compensate for any damages of the injured. If the damage has resulted from the behaviour of more than one people, they are responsible for the damage jointly.
Compensation for the Damage
Article 58- Those who suffer as a result of the prevention, distortion or restriction of competition, may claim as a damage the difference between the cost they paid and the cost they would have paid if competition had not been limited. Competing undertakings affected by the limitation of competition may request that all of their damages are compensated by the undertaking or undertakings which limited competition. In determining the damage, all profits expected to be gained by the injured undertakings are calculated by taking into account the balance sheets of the previous years as well.
If the resulting damage arises from an agreement or decision of the parties, or from cases involving gross negligence of them, the judge may, upon the request of the injured, award compensation by three fold of the material damage incurred or of the profits gained or likely to be gained by those who caused the damage.
Burden of Proof
Article 59- Should the injured submit to the jurisdictional bodies proofs such as, particularly, the actual partitioning of markets, stability observed in the market price for quite a long time, the price increase within close intervals by the undertakings operating in the market, which give the impression of the existence of an agreement, or the distortion of competition in the market, then the burden of proof is for the defendants that the undertakings are not engaged in concerted practice.
The existence of agreements, decisions and practices limiting competition may be proved by any kind of evidence.
SECTION SIX
Final Provisions
Offences Committed on the Funds, Paperwork and Properties of the Authority
Article 60- The funds, paperwork and any properties of the Authority have the force of State Property. The Chairman and members of the Board, and its personnel who commit offences about their offices are punished in the same way like Civil servants. Those offences committed against the members and the personnel of the Board are deemed to have been committed against a Civil servant.
Prosecutions in this respect are conducted pursuant to general provisions.
Notice
Article 61- Notifications to be made to the parties concerned in accordance with this Act are performed pursuant to the provisions of the Notice Act No. 7201.
Regulations
Article 62- Apart from those mentioned in this Act, principles on the exercise of the powers by the Authority, its management and working principles, procedures and principles to be applied in the collection of its revenues, carrying out of its expenses and supervision of these transactions, principles of changes to be made to monthly salaries, principles as to employing foreign experts, regulations concerning the purchase and tender procedure of the movables and immovables to be purchased by the Authority, and provisions with regard to the accounting system of the Authority are provided in the Regulations to be prepared by the Board and put into force via the resolution of the Council of Ministers.
Regulations to be issued pursuant to this Act shall be issued within one year from the date of publication of this Act.
Inapplicable Provisions
Article 63- The Authority is not subject to the General Accounting Act No. 1050, the State Tender Act No. 2886, the Allowances Act No. 6245, and to their annexes and amendments.
Revenues of the Authority are exempt from the Corporation Tax, and from the Inheritance and Transfer Tax due to donations and aids to be granted; interests to accrue in favor of the Authority due to any transactions to be performed are exempt from the Banking and Insurance Transactions Tax; revenues of the Authority and all transactions concerning these revenues are exempt from any kind of taxes, duties and charges in the purchase and sale of immovable goods; vehicles to be purchased for the Authority are exempt from the Vehicle Purchase Tax and Stamp Duty.
Temporary Article 1- The first appointment to the Competition Board is made pursuant to the principles of article 22. It is such that the provisions as to the candidates to be nominated by the Competition Board are not applicable.
In the first appointment, the Prime Minister and the Minister of Industry and Trade each nominate two candidates for membership, instead of the Board.
The members of the Board to be renewed by the end of the second and fourth years are determined by drawing names in the last meetings of the Board within such period. For the first term, the Chairman of the Board is appointed by the Council of Ministers from among the two candidates to be nominated by the Minister of Industry and Trade, and the Chairman and the Deputy Chairman of the Board complete their terms within six years without participating in the lot.
Temporary Article 2- The Competition Board to be appointed under the principles mentioned in the Temporary Article 1 announces that situation with a communiqué after the completion of the organization of the Competition Authority. Any agreements and decisions existing on the date of announcement are notified to the Board within 6 months from this date.
Temporary Article 3- Within one year from the date of entry into force of this Act, the Competition Board may appoint sufficient number of experts from public and private organizations to work in the Authority, without seeking the qualifications in articles 35 and 36 of the Act, provided that it is for once.
It is such that those to be appointed as experts are required to possess the qualifications listed in sub-paragraphs (a) and (c) of the first paragraph of article 35, have at least a five-year professional experience, and be under forty-one years of age. For those who shall be appointed as experts from public organizations, the requirement of having taken up their profession by a competitive and proficiency exam is sought as well.
Until the organization of the Competition Authority is completed, the personnel of the related Ministry may be temporarily commissioned in the fulfillment of the tasks of the Authority.
(Supplement: 02.07.2005-5388/Article 6) Temporary Article 4- Election and appointment shall not be made for the memberships vacated until the number of Board members is reduced to seven.
Entry Into Force
Article 64- Articles 16 and 17 of this Act concerning administrative fines shall enter into force one year after its publication, while the other articles on the date of its publication.
Execution
Article 65- The provisions of this Act shall be executed by the Council of Ministers.
Act No : 4054
Date of Adoption : 7/12/1994
Official Gazette of Its Publication Date : 13/12/1994
Number : 22140
Code of Its Publication Series : 5
Volume : 34
Page :
SECTION I
Purpose, Scope, Definitions
Article 1- The purpose of this Act is to prevent agreements, decisions and practices preventing, distorting or restricting competition in markets for goods and services, and the abuse of dominance by the undertakings dominant in the market, and to ensure the protection of competition by performing the necessary regulations and supervisions to this end.
Scope
Article 2- Agreements, decisions and practices which prevent, distort or restrict competition between any undertakings operating in or affecting markets for goods and services within the boundaries of the Republic of Turkey, and the abuse of dominance by the undertakings dominant in the market, and any kind of legal transactions and behaviour having the nature of mergers and acquisitions which shall decrease competition to a significant extent, and transactions related to the measures, establishments, regulations and supervisions aimed at the protection of competition fall under this Act.
Definitions
Article 3- In implementation of this Act, the terms express the following:
Ministry: The Ministry of Industry and Trade,
Competition: The contest between undertakings in markets for goods and services, which enables them to take economic decisions freely,
Dominant Position: The power of one or more undertakings in a particular market to determine economic parameters such as price, supply, the amount of production and distribution, by acting independently of their competitors and customers,
Undertaking: Natural and legal persons who produce, market and sell goods or services in the market, and units which can decide independently and do constitute an economic whole,
Association of Undertakings: Any kind of associations with or without a legal personality, which are formed by undertakings to accomplish particular goals,
Goods: Any kind of movable or immovable property which is the subject of trade,
Services: Physical, intellectual or combined activities carried out in return for a cost or interest,
Authority: Competition Authority,
Board: Competition Board.
SECTION II
CHAPTER ONE
Prohibited Activities
Agreements, Concerted Practices and Decisions Limiting Competition
Article 4- Agreements and concerted practices between undertakings, and decisions and practices of associations of undertakings which have as their object or effect or likely effect the prevention, distortion or restriction of competition directly or indirectly in a particular market for goods or services are illegal and prohibited.
Such cases are, in particular, as follows:
a) Fixing the purchase or sale price of goods or services, elements such as cost and profit which form the price, and any terms of purchase or sale,
b) Partitioning markets for goods or services, and sharing or controlling all kinds of market resources or elements,
c) Controlling the amount of supply or demand in relation to goods or services, or determining them outside the market,
d) Complicating and restricting the activities of competing undertakings, or excluding firms operating in the market by boycotts or other behaviour, or preventing potential new entrants to the market,
e) Except exclusive dealing, applying different terms to persons with equal status for equal rights, obligations and acts,
f) Contrary to the nature of the agreement or commercial usages, obliging to purchase other goods or services together with a good or service, or tying a good or service demanded by purchasers acting as intermediary undertakings to the condition of displaying another good or service by the purchaser, or putting forward terms as to the resupply of a good or service supplied.
In cases where the existence of an agreement cannot be proved, that the price changes in the market, or the balance of demand and supply, or the operational areas of undertakings are similar to those markets where competition is prevented, distorted or restricted, constitutes a presumption that the undertakings are engaged in concerted practice.
Each of the parties may relieve itself of the responsibility by proving not to engage in concerted practice, provided that it is based on economic and rational facts.
Exemption
Article 5- The Board, in case all the terms listed below exist, may decide (Annulled: 02.07.2005-Article 5388/1) (…) to exempt agreements, concerted practices between undertakings, and decisions of associations of undertakings from the application of the provisions of article 4:
a) Ensuring new developments and improvements, or economic or technical development in the production or distribution of goods and in the provision of services,
b) Benefitting the consumer from the above-mentioned,
c) Not eliminating competition in a significant part of the relevant market,
d) Not limiting competition more than what is compulsory for achieving the goals set out in sub-paragraphs (a) and (b).
(Amended: 02.07.2005-Article 5388/1) Exemption may be granted for a definite period, just as the granting of exemption may be subjected to the fulfillment of particular terms and/or particular obligations. Exemption decisions are valid as of the date of concluding an agreement or committing a concerted practice or taking a decision of an association of undertakings, or fulfilling a condition if it has been tied to a condition.
In case the terms mentioned in the first paragraph are fulfilled, the Board may issue communiqués which ensure block exemptions for the types of agreements in specific subject-matters and which indicate their terms.
Abuse of Dominant Position
Article 6- The abuse, by one or more undertakings, of their dominant position in a market for goods or services within the whole or a part of the country on their own or through agreements with others or through concerted practices, is illegal and prohibited.
Abusive cases are, in particular, as follows:
a) Preventing, directly or indirectly, another undertaking from entering into the area of commercial activity, or actions aimed at complicating the activities of competitors in the market,
b) Making direct or indirect discrimination by offering different terms to purchasers with equal status for the same and equal rights, obligations and acts,
c) Purchasing another good or service together with a good or service, or tying a good or service demanded by purchasers acting as intermediary undertakings to the condition of displaying another good or service by the purchaser, or imposing limitations with regard to the terms of purchase and sale in case of resale, such as not selling a purchased good below a particular price,
d) Actions which aim at distorting competitive conditions in another market for goods or services by means of exploiting financial, technological and commercial advantages created by dominance in a particular market,
e) Restricting production, marketing or technical development to the prejudice of consumers.
Mergers or Acquisitions
Article 7- Merger of two or more undertakings, aimed at creating a dominant position or strengthening their dominant position, as a result of which, competition is significantly decreased in any market for goods or services within the whole or a part of the country, or acquisition, except acquisition by way of inheritance, by any undertaking or person, of another undertaking, either by acquisition of its assets or all or a part of its partnership shares, or of other means which confer it/him the power to hold a managerial right, is illegal and prohibited.
The Board shall declare, via communiqués to be issued by it, the types of mergers and acquisitions which have to be notified to the Board and for which permission has to be obtained, in order them to become legally valid.
CHAPTER TWO
Powers of the Board
Negative Clearance
Article 8- Upon the application by the undertaking or associations of undertakings concerned, the Board may, on the basis of information in hand, grant a negative clearance certificate indicating that an agreement, decision, practice or merger and acquisition are not contrary to articles 4, 6 and 7 of this Act.
The Board may, after issuing such a certificate, revoke its opinion at any time, under the conditions set out in article 13. However, in this case, criminal sanction is not applied to the parties for the period until the change of opinion by the Board.
Termination of Infringement
Article 9- If the Board, upon informing, complaint or the request of the Ministry or on its own initiative, establishes that articles 4, 6 and 7 of this Act are infringed, it notifies the undertaking or associations of undertakings concerned of the decision encompassing those behaviour to be fulfilled or avoided so as to establish competition and maintain the situation before infringement, in accordance with the provisions mentioned in section Four of this Act.
Natural and legal persons who have a legitimate interest are entitled to file a complaint.
The Board, prior to taking a decision pursuant to the first paragraph, shall inform in writing the undertaking or associations of undertakings concerned of its opinions concerning how to terminate the infringement.
Where the occurrence of serious and irreparable damages is likely until the final decision, the Board may take interim measures which have a nature of maintaining the situation before the infringement and which shall not exceed the scope of the final decision.
(…) Notification of Mergers and Acquisitions to the Board
Article 10- (Annulled paragraph one: 02.07.2005-5388/Article 2)
As of the date the Board is notified of merger or acquisition agreements falling under article 7, the Board is, as a result of the preliminary examination to be performed by it within fifteen days, obliged to permit the merger or acquisition transaction, or if it decides to deal with this transaction under final examination, it is obliged to duly notify, with its preliminary objection letter, those concerned of the fact that the merger or acquisition transaction is suspended and cannot be put into practice until the final decision, together with other measures deemed necessary by it. In this case, the provisions of articles 40-59 of this Act shall be applicable.
Where the Board does not respond to or take any action for the application as to a merger or acquisition within due time, merger or acquisition agreements shall take effect and become legally valid after 30 days as of the date of the notification.
Failure to Notify Mergers and Acquisitions to the Board
Article 11- Where a merger and acquisition transaction whose notification to the Board is compulsory is not notified to the Board, the Board shall deal with the merger or acquisition under examination on its own initiative, when it is informed about the transaction anyway. As a result of the examination;
a) it allows the merger or acquisition in case it decides that the merger or acquisition does not fall under the first paragraph of article 7, but imposes fines on those concerned due to their failure to notify.
b) in case it decides that the merger or acquisition falls under the first paragraph of article 7, it decides that the merger or acquisition transaction be terminated, together with fines; all de facto situations committed contrary to the law be eliminated; any shares or assets seized be returned, if possible, to their former owners, whose terms and duration shall be determined by the Board, or if not possible, these be assigned and transferred to third parties; the acquiring persons may by no means participate in the management of undertakings acquired during the period until these are assigned to their former owners or third parties, and that other measures deemed necessary by it be taken.
Notification
Article 12- Notification fully and completely includes information required by the Notification Forms to be prepared by the Board. Either of the parties may submit the notification. The notifying party is obliged to inform the other party concerned of the situation. Relevant documents are enclosed with the notification, and the notification shall be considered to have been submitted on the date it is entered in the records of the Board.
Revocation of Exemption and Negative Clearance Decisions
Article 13- Exemption and negative clearance decisions may be revoked, or particular behaviour of the parties may be prohibited in the following cases:
a) Change in any event constituting the basis of the decision,
b) Failure to fulfil the terms or obligations resolved,
c) Having taken the decision on the basis of incorrect or incomplete information concerning the agreement in question.
Revocation decision shall be effective as of the date of the change in sub-paragraph (a), and the date of taking the exemption or negative clearance decision in other cases.
In case incorrectness and incompleteness mentioned in sub-paragraph (c) take place by the fraud or intent of the undertaking concerned, the decision shall be deemed not to have been taken at all.
Request for Information
Article 14- In carrying out the duties assigned to it by this Act, the Board may request any information it deems necessary from all public institutions and organizations, undertakings and associations of undertakings.
Officials of these authorities, undertakings and associations of undertakings are obliged to provide the requested information within the period to be determined by the Board.
On-the-Spot Inspection
Article 15- In carrying out the duties assigned to it by this Act, the Board may perform examinations at undertakings and associations of undertakings in cases it deems necessary. To this end, it is entitled to:
a) Examine the books, any paperwork and documents of undertakings and associations of undertakings, and take their copies if needed,
b) Request written or oral statement on particular issues,
c) Perform examinations on the spot with regard to any assets of undertakings.
Examination is performed by experts employed at the disposal of the Board. While going for an examination, experts carry with them an authorization certificate showing the subject-matter and purpose of the examination, and that an administrative fine shall be imposed should incorrect information be provided.
(Supplementary paragraph: 01.08.2003-4971/Article 25): Those concerned are obliged with providing the copies of information, documents, books and other instruments requested. In case an on-the-spot inspection is hindered or likely to be hindered, the on-the-spot inspection is performed with the decision of a criminal magistrate.
CHAPTER THREE
Administrative Fines
Fines
Article 16- The Board may impose on natural and legal persons having the nature of undertakings and on associations of undertakings and/or the members of such associations the following fines;
a) hundred million liras in case misleading or incorrect information is provided in applications for exemption, negative clearance and permission as to mergers or acquisitions, and in notifications and applications in relation to agreements concluded before the entry into force of this Act,
b) hundred million liras in case (Supplementary phrase: 02.07.2005- 5388/Article 2) no information is provided at all, incomplete, incorrect or misleading information is provided where there is a request for information by the decision of the Board, or an on-the-spot inspection,
c) fifty million liras in case (Amended phrase: 02.07.2005-5388/ Article 2) merger or acquisition transactions subject to authorization are committed without the authorization of the Competition Board,
d) sixty million liras in case the obligations in exemption decisions taken by the Board in accordance with article 5 paragraph three of this Act are not fulfilled.
Provided that it is not less than two hundred million liras for those proven, by the Board decision, to have committed behaviour prohibited in articles 4 and 6 of this Act, and for those who commit behaviour written in article 11 sub-paragraph (b) of this Act, fine is imposed up to ten percent of the annual gross revenue of natural and legal persons having the nature of punishable undertakings, and of associations of undertakings and/or the members of such associations, which generated by the end of the preceding financial year and which shall be determined by the Board.
In case undertakings and associations of undertakings having legal personality are subjected to fines mentioned in paragraph one, natural persons employed in managerial bodies of this legal personality are also fined personally up to ten percent of the fine imposed.
When deciding on fines, the Board shall take into account factors such as the existence of intent, the severity of fault, the market power of the undertaking or undertakings upon which a penalty is imposed, and the severity of potential damage.
Fines are not applicable to agreements and decisions notified within due time, for the period until the final decision by the Board, in case they do not expressly violate the provisions of this Act.
Periodic Fines
Article 17- The Board may impose on undertakings and associations of undertakings the following periodic fines per day, which shall commence from the date to be mentioned in the decision;
a) fifty million liras for failure to comply with the decision taken pursuant to article 9, concerning the termination of infringement, and other measures,
b) twenty-five million liras for failure to fulfil the decisions and measures of the Board provided for in article 11 sub-paragraph (b),
c) twenty-five million liras for performance of the behaviour prohibited pursuant to article 13 paragraph one,
d) twenty million liras for prevention of on-the-spot inspection by experts of the Board in accordance with article 15.
Nature and Application of Fines Imposed Pursuant to This Act
Article 18- Any fines provided in this Act are of an administrative nature. Fines or periodic fines are separately applied to each party acting contrary to this Act.
In case a decision as to imposing a periodic fine is appealed, the periodic fine is not applicable as of the date of the appeal if a decision for the suspension of execution is issued about the periodic fine.
Prescription in Fines and Periodic Fines
Article 19- The power of the Board to impose fines and periodic fines is subject to the following periods of prescription:
a) three years for the infringement of provisions related to the application or notification of undertakings or associations of undertakings, provision of information, or on-the-spot inspection,
b) five years in other cases.
The period commences to run from the day of occurrence of the infringement. If continuous or repeated infringements are in question, it commences from the day the infringement ends or is repeated last.
Any action to be taken by the Board with regard to this infringement for purposes of examination or inquiry interrupts the prescription as of the notification of this action to one of the parties concerned.
That an appeal has been made against the decision interrupts the period of prescription.
SECTION THREE
Organization
Competition Authority
Article 20- The Competition Authority having a public legal personality, and an administrative and financial autonomy is established in order to ensure the formation and development of markets for goods and services in a free and sound competitive environment, to observe the implementation of this Act, and to fulfil the duties assigned to it by the Act.
The Ministry to which the Authority relates is the Ministry of Industry and Trade.
The Authority is independent in fulfilling its duties. No organ, authority and person may give commands and orders to influence the final decision of the Authority.
The central office of the Authority is based in Ankara.
Organization of the Competition Authority
Article 21- The organization of the Authority consists of the
a) Competition Board,
b) Presidency,
c) Service Units.
CHAPTER ONE
Competition Board
Organization of the Board
Article 22- (Amended Article: 02.07.2005-5388/Article 3) The Competition Board is composed of a total of 7 members, one being the Chairman and the other being the Deputy Chairman.
The Council of Ministers elects and appoints the members from among the two candidates apiece, to be nominated from inside or outside the following institutions for each vacant membership: two members from the Competition Board, one member from the Ministry of Industry and Trade, one member from the Ministry of State with which the Undersecretariat of State Planning Organization is affiliated, and one member apiece from the Supreme Court of Appeal, Council of State, and Turkish Union of Chambers and Commodity Exchanges.
The Council of Ministers shall commission one of the three candidates to be nominated by the Board as the President/Chairman. The Deputy President/Chairman is elected by the members of the Board.
Qualifications for Appointment
Article 23- The Chairman and members of the Board shall be appointed from among those who had a four-year higher education in law, economics, engineering, management or finance, either at home or abroad, possess a sufficient degree of professional knowledge and experience, and have worked in the public or private sector for at least 10 years, in line with their professions. Furthermore, it is compulsory that the members bear the qualifications mentioned in article 48 paragraph (A) sub-paragraphs 1, 4, 5, 6 and 7 of the Civil Servants Act No. 657.
Term of Office
Article 24- The term of office of the Chairman, Deputy Chairman and members of the Board is six years. The member whose term has expired is eligible for re-election. One third of the members of the Board is renewed every two years. During renewal, numbers and ratios in the provisions concerning the organization of the Board are taken into account. Should the Chairmanship and memberships are vacated before the expiration of the term of office, due to any reason other than renewal, election and appointment are carried out within one month for the vacated seats. The one appointed in such a case completes the term of the person he replaces.
The offices of the Chairman and members of the Board cannot be terminated due to any reason prior to the completion of their term. However, what terminate are the offices of the Chairman and members of the Board who are realized to have lost the qualifications required for their appointment or whose position is realized to be contrary to article 25 of this Act, by the decision of the Board, or whose offence with regard to the duty assigned by the Act is proven by a court decision.
Prohibitions
Article 25- The Chairman and members of the Board may not undertake any official or private mission, engage in commerce, be shareholders in partnerships, unless it is based on a special Act.
The Chairman and members of the Board are, prior to assuming office, obliged to dispose of all kinds of securities in their possession within the meaning of the capital market legislation, apart from securities issued by the Treasury in connection with borrowing, by means of selling or transferring them to persons other than their kin by blood up to the third degree and their kin by marriage up to the second degree. Those members who do not act in conformity with this provision within 30 days shall be deemed to have resigned from membership.
Positions in associations and foundations which aim at social assistance and education, and partnership in non-profit cooperatives fall outside this provision.
The members and staff of the Board may not disclose and use in their own or others' interests the confidential information as to the Authority, and trade secrets of undertakings and associations of undertakings that they learned during the implementation of this Act, even if they have left their office.
Oath
Article 26- Before the First Presidential Court of the Supreme Court of Appeal, the members of the Board take an oath that during their term of office, they shall carry out the tasks of the Board with full attention and honesty, and they shall not act or allow others to act contrary to the provisions of the Act.
The application made for the oath is deemed to be among the urgent business by the Supreme Court of Appeal. The Chairman and members of the Board may not assume office before taking an oath.
Duties and Powers of the Board
Article 27- The duties and powers of the Board are as follows:
a) To carry out, upon application or on its own initiative, examination, inquiry and investigation about the activities and legal transactions prohibited in this Act; to take the necessary measures for terminating infringements upon establishing that the provisions provided in this Act are infringed, and to impose administrative fines on those responsible for them,
b) To evaluate the requests of those concerned for exemption and negative clearance, and to grant an exemption and negative clearance certificate to the appropriate agreements,
c) To constantly follow up the markets to which exemption decisions and negative clearance certificates are related, and to re-evaluate the applications of those concerned in case changes are established in these markets or in the positions of the parties,
d) To permit mergers and acquisitions,
e) To elect the Deputy Chairman of the Board,
f) To issue communiqués and make the necessary regulations as to the implementation of this Act,
g) To opine, directly or upon the request of the Ministry, concerning the amendments to be made to the legislation with regard to the competition law,
h) To monitor legislations, practices, policies and measures of the other countries, concerning agreements and decisions limiting competition,
i) To determine and observe the implementation of the personnel policies of the Authority, to perform the appointment transactions of the personnel, to approve the annual budget, final account of revenues and expenses, and annual work schedules of the Authority, which are prepared by the Presidency, and to decide for transfers among the accounts in the budget if needed,
j) To determine the candidates to be nominated by the Authority for the vacated Board memberships,
k) To issue an annual report on its works, and the situation and developments in its fields of duty,
l) To negotiate and resolve the suggestions about purchases such as the procurement of movable and real property and fixtures, and about sales and leasings, and to make the necessary regulations therein,
m) To decide on any kind of transactions about credits, rights and obligations of the Authority concerning third parties,
n) To fulfil the other duties assigned by the Act.
Functioning Principles of the Board
Article 28- The Board is chaired and represented by the Chairman, and by the Deputy Chairman in cases of leave, sickness, traveling and in other cases where the Chairman is not present.
Meeting is chaired by the Chairman of the Board, or by the Deputy Chairman in his absence, and prior to the meeting, he determines the agenda to be resolved, and advises it to the members of the Board.
The members of the Board may not take part in negotiations and votings in events concerning themselves, and their kin by blood up to the third degree and their kin by marriage up to the second degree.
CHAPTER TWO
Presidency
Article 29- The Presidency is composed of the Chairman of the Board, the Deputy Chairman and the Vice-Chairmen of the Board.
The Chairman of the Board is the highest ranking chief of the Authority, and is responsible for the overall management and representation of the Authority.
This responsibility encompasses the duties and powers as to the regulation, supervision, evaluation of the works of the Authority within a general framework, and their announcement to the public when necessary.
Duties and Powers of the Presidency
Article 30- The duties and powers of the Presidency are as follows:
a) To ensure the organization and coordination at the highest level that the Competition Board which is the decisive body of the Authority and the service units work in harmony, efficiently, in a disciplined and orderly manner, and to solve the problems likely to occur between the service units of the Authority with respect to duties and powers,
b) To determine the agenda, date and time of the Board meetings, and to run the meetings,
c) To ensure the fulfilment of what is required by the Board decisions, and to monitor the implementation of these decisions,
d) To finalize and submit to the Board suggestions received from the service units,
e) To prepare and submit to the Board the annual budget, final account of revenues and expenses, and annual work reports of the Authority, and to ensure the implementation of the budget of the Authority, the collection of revenues and the carrying out of expenses,
f) To opine about decisions to be taken as to the competition policy, and the relevant legislation,
g) To arrange for and conduct the relations of the Authority with the Ministry and other organizations,
h) To represent the Authority in the presence of official and private organizations,
i) To ensure that final decisions of the Board, and communiqués and Regulations to be prepared by the Authority are published,
j) To determine the scope of duty and power of the personnel authorized to sign on behalf of the Chairman of the Board.
Vice-Presidents (Vice-Chairmen)
Article 31- Two Vice-Presidents may be commissioned for purposes of assisting the President in conducting the Presidential services. Vice-Presidents are obliged to fulfil duties and carry out instructions given by the President, and to ensure harmony and cooperation between the levels of the organization and the service units concerned.
Service Units
Article 32- The service units of the Competition Authority are composed of the main service units organized as Department Head Offices, advisory units and auxiliary service units.
Supervision
Article 33- Accounts of the Authority are subject to the supervision of the State Audit Court.
CHAPTER THREE
Status of the Personnel of the Authority
Article 34- The essential and permanent duties required by the services of the Authority are conducted via the personnel employed on a contractual basis with an administrative service contract. Adequate number of expert professional staff and specialized non-career personnel may be employed at the disposal of the Authority.
The personnel of the Authority is subject to the Civil Servants Act No. 657, apart from the salary and financial rights. The Board is free in arranging the statuses of establishment and staff in compliance with the needs. The cancellation and creation of posts are carried out by the Board.
Those services calling for temporariness or a particular expertise are determined by the Presidency. Proxy or job contract provisions are applicable to personnel to be employed in such tasks. For those to be employed pursuant to this paragraph, salaries they receive from social security organizations shall not be cut off.
Foreign experts may also be employed pursuant to the principles of the Regulations which shall be prepared by the Presidency and which shall take effect upon the approval of the Board.
Appointment as Assistant Experts on Competition
Article 35- The following qualifications are sought for enabling appointment as assistant experts on competition:
a) (Amended sub-paragraph: 02.07.2005-5388/Article 4) To be a graduate of at least four-year higher education from faculties of law, economics, political sciences, management, economic and administrative sciences, or from management engineering or industrial engineering departments, or of higher education institutions abroad which are deemed equivalent to them,
b) (Amended sub-paragraph: 02.07.2005-5388/Article 4) To succeed in the examination to be held jointly or separately for the branches listed in the sub-paragraph above,
c) To succeed in the foreign language examination to be held in one of the English, French and German languages,
d) Not to be over thirty years of age as of the first day of January of the examination year.
Other necessary requirements are determined in the examination Regulations to be issued by the Board.
Experts on Competition
Article 36- Those appointed as assistant experts on competition pursuant to article 35 are awarded the title of "Expert on Competition" in case their expertise thesis which they shall prepare or have already prepared concerning their topics is approved by the Board, provided that they have worked for at least three years and received a positive record.
Experts and assistant experts on competition bear the title and possess the power of professional staff.
Salary and Other Financial Rights
Article 37- Monthly salaries of the Chairman and members of the Board are determined by the Council of Ministers upon the proposal of the Ministry of Industry and Trade, provided that they do not exceed twice the salary of the highest ranking civil servant, including all payments. Those which are not subject to the income tax among the payments made to the highest ranking civil servant shall also not be subject to the income tax pursuant to this Act.
Salaries and other financial rights of the Authority personnel are determined by the Board upon the proposal of the Presidency, under the principles in the first paragraph with regard to salaries and making changes thereto.
Considering the Retirement and Service Periods
Article 38- The Chairman and members of the Board, and the other personnel are subject to the Pensioner's Fund Act. From among the persons who are subject to the Civil Servants Act No. 657, those appointed to the Chairmanship or memberships of the Board, and those employed in the Authority return to the position as a civil servant, and are appointed to an office compatible with their status, in case their term of office expires. In such a case, the periods they served in the Authority are considered in their services pursuant to the provisions of the Act they are subject to.
These provisions are also applicable to the Chairman and members, experts or the other personnel who come from universities, with reserving the necessary requirements for receiving academic titles.
With regard to retirement, the Chairman of the Board, the members of the Board and the Heads of Departments are considered to be at the same level with the Undersecretary of the Ministry, the Deputy Undersecretaries of the Ministry, and the General Managers of the Ministry respectively. The status of the other personnel as to retirement shall be indicated in the Regulations which shall be prepared by the Presidency and which shall be put into force upon the approval of the Board.
Revenues of the Authority
Article 39- Revenues of the Authority set up the budget of the Authority, and they are made up of the following items of revenues:
a) The subsidy to be allocated in the budget of the Ministry,
b) (Annulled: 01.08.2003-4971/Article 25-B)
c) (Supplement: 17/9/2004-5234/Article 29) Payments to be made by four per ten thousand of the capitals of all partnerships to be newly established with the status of an incorporated and limited company, and that of the remaining portion in case of capital increase,
d) Publication and other revenues.
Revenues belonging to the Authority are collected in an account to be opened in the Central Bank of the Republic of Turkey or a state bank. (Annulled last sentence: 01.08.2003-4971/Article 25-B)
SECTION FOUR
Procedure in Examinations and Inquiries of the Board
Preliminary Inquiry
Article 40- On its own initiative or upon the applications filed with it, the Board decides to open a direct investigation, or to conduct a preliminary inquiry for determining whether or not it is necessary to open an investigation.
Should it be decided to conduct a preliminary inquiry, the Chairman of the Board assigns one or more of the experts among the professional staff as reporters.
The reporter who is entrusted with the task of conducting a preliminary inquiry notifies the Board in writing within 30 days of the information and any evidence obtained by him, and his comments about the issue.
Conclusion of Preliminary Inquiry
Article 41- Within 10 days following the submission of the preliminary inquiry report to the Board, the Board convenes in order to evaluate the information obtained and make a decision, and decides on whether or not to open an investigation.
Notification of Applicants
Article 42- In case the Board deems the claims put forward in applications for informing or complaint serious and sufficient, informers or complainants are notified in writing that the claims put forward have been deemed serious and that an inquiry has been initiated.
In cases where the Board either expressly rejects applications, or is deemed to have rejected them by means of failure to notify within due period, anyone who documents to have a direct or indirect interest may resort to jurisdiction against the rejection decision of the Board.
Commencement of Investigation by the Board
Article 43- (Amended first sentence: 02.07.2005-5388/Article 5) If it is decided to perform an investigation, the Board designates the reporter or reporters who shall conduct the investigation under the supervision of the department head concerned. The investigation is concluded within 6 months at the latest. In cases where it is deemed necessary, the Board may grant an additional period of 6 months only once.
The Board notifies the parties concerned of investigations initiated by it, within 15 days of issuing the decision for the initiation of investigation, and requests that the parties submit their first written pleas within 30 days. In order to enable the commencement of the first written reply period granted to the parties, it is required that the Board forwards to the parties concerned this notification letter, accompanied by adequate information as to the type and nature of the claims.
The decision of the Board to initiate an investigation is final.
Collecting Evidence and Informing the Parties
Article 44- A delegation acting on behalf of the Board and composed of (Annulled phrase: 02.07.2005-5388/Article 5) (…) reporters designated and commissioned by the Board may, during the investigation stage, exercise the powers to request information and carry out an on-the-spot inspection as provided in articles 14 and 15 of this Act respectively. Within this period determined, it may request from the parties and the other places concerned the forwarding of paperwork and the provision of any information which are deemed necessary by it. During the investigation stage of the Board, the person or persons claimed to have infringed this Act may, at all times, submit to the Board any information and evidence likely to influence the decision.
Those parties which are notified of the initiation of an investigation against them may, until their request for enjoying the right to hearing, ask for a copy of any paperwork drawn up within the Authority in connection with themselves, and if possible, a copy of any evidence obtained.
The Board may not base its decisions on issues about which the parties have not been informed and granted the right to defense.
Notice and Reply
Article 45- The report prepared at the end of the investigation stage is notified to all members of the Board and the parties concerned.
Those determined to have infringed this Act are notified to submit their written pleas to the Board within 30 days. Those charged with conducting the investigation declare an additional written opinion within 15 days against the pleas to be submitted by the parties, and this is also notified to all members of the Board and the parties concerned. The parties may reply to such opinion within 30 days. In case the parties provide justifiable grounds, these periods may be extended only once and by one fold at the most.
The pleas of the parties not submitted within due period shall not be taken into account.
Hearing
Article 46- Hearing is held upon the parties' declaration of their will to enjoy the right to hearing in their petition of reply or defense. Furthermore, the Board may decide on its own initiative to hold a hearing.
Hearing is held within at least 30 days and at most 60 days from the end of the investigation stage. Invitations for the hearing are forwarded to the parties at least 30 days before the day of the hearing.
Principles Concerning the Hearing
Article 47- Hearings are held publicly. The Board may decide to hold the hearing in camera on grounds of protecting the general morals and trade secrets.
Hearings are chaired by the Chairman of the Board, or by the Deputy Chairman of the Board in his absence. The meeting is held with the participation of the Chairman of the Board or the Deputy Chairman, and at least (Amended phrase: 02.07.2005-5388/Article 5) four members of the Board.
Hearings are completed in no longer than 5 consecutive sessions, and various meetings held within the same day are deemed as one session.
The parties are obliged to notify, 7 days before the hearing at the latest, the Board of the means of proof they shall utilize in the hearing. The parties may not utilize the means of proof not notified within due period.
During the hearing, the parties concerned may utilize any evidence and means of proof provided in the Part Two Chapter Eight of the Code of Civil Procedure. The parties claimed to have infringed this Act, or their representatives, and those who prove to the Board prior to the session that they have direct or indirect interests, or their representatives may participate in sessions.
Final Decision
Article 48- The decision is made on the same day after the hearing, or if not possible, within 15 days, together with its grounds.
In cases where a hearing is not requested by the parties, and the Board does not decide to hold a hearing on its own initiative, the final decision is made within 30 days following the end of the investigation stage, pursuant to the examination to be performed on the file.
In case the parties concerned fail to attend the hearing despite the decision to hold a hearing, the decision is made within one week following the date of the meeting determined, pursuant to the examination to be performed on the file.
Confidentiality of Meetings
Article 49- Decisions of the Board are taken as a result of confidential meetings and are communicated publicly. No member of the Board may cast an abstention vote. Except for the ones having an excuse, members who have been present at the hearing are obliged to participate in meetings.
Procedure in the Meeting
Article 50- The meeting is chaired by the Chairman of the Board, or in his absence, by the Deputy Chairman, and he determines matters to be resolved. After such matters are discussed freely, the Chairman collects the votes and casts his own vote finally.
Meeting and Decision Quorum
Article 51- In its final decisions, the Board convenes with the participation of at least a total of (Amended phrase: 02.07.2005-5388/Article 5) five members including the Chairman or the Deputy Chairman, and it decides via the parallel votes of at least (Amended phrase: 02.07.2005-5388/Article 5) four members.
Where the necessary quorum for the decision cannot be attained in the first meeting, the Chairman ensures that all members participate in the second meeting. However, if not possible, the decision is made via the absolute majority of the participants in the meeting. In this case, the quorum for the meeting may also not be less than the one mentioned in the first paragraph. In case of a tie vote in the second meeting, the vote of the side of the Chairman is deemed preponderant.
For decisions except the final decision, and particularly for decisions and transactions having the nature of measures and recommendations, it is required that at least one third of the members of the Board convenes and that the absolute majority of the participants in the meeting makes a decision.
Points Required in Decisions
Article 52- Decisions involve the following points:
a) Names and surnames of the members of the Board who made the decision,
b) Names and surnames of those who carried out the examination and inquiry,
c) Names, titles, residences and distinguishing characteristics of the parties,
d) Summary of the claims of the parties,
e) Summary of the examination and of the economic and legal issues discussed,
f) Opinion of the reporter,
g) Evaluation of all evidences and pleas submitted,
h) Grounds, and the legal basis of the decision,
i) Conclusion,
j) If any, writings about the dissenting votes.
Duties imposed on and rights granted to the parties with the decision made have to be written explicitly such that they do not pave the way for doubts and hesitations.
Taking the Decisions to Writing
Article 53- The decision is written by the Chairman of the Board or a member to be commissioned by him. Decisions are signed by the members participating in the meeting. Those members against the decision may take to writing dissenting votes individually or jointly. The original of the decision is kept in the archives of the Board. A copy of it is submitted to the parties in return for signature. Another copy is forwarded to the Publication Department of the Competition Authority for publication purposes.
(Annulled phrase: 01.08.2003-4971/Article 25) (…) Decisions of the Board are published (Amended phrase: 17.09.2004-5234/Article 29) on the internet page of the Authority in such a way not to disclose the trade secrets of the parties.
Commencement Date of Periods
Article 54- In decisions of the Competition Board, periods commence as of the date the reasoned decision is communicated to the parties.
Appealing Against Decisions of the Board
Article 55- Appeal may be made to the Council of State within due period against the final decisions, measure decisions, fines and periodic fines of the Board, as of communicating the decision to the parties. (Amended sentence: 01.08.2003-4971/Article 25-D) Appealing against decisions of the Board does not cease the implementation of decisions, and the follow-up and collection of fines.
(Amended sentence: 01.08.2003-4971/Article 25-D) Fines are paid (Amended phrase: 17.09.2004-5234/Article 29-c) within three months as of the date of communicating the final decision of the Board to the one concerned. The enforcement of the decision of the Board imposing fines or periodic fines is subject to the provisions of the Act on the Procedure of Collection of Public Credits No. 6183.
SECTION FIVE
Private Law Consequences of Limiting Competition
Legal Nature of Agreements and Decisions Contrary to This Act
Article 56- Any agreements and decisions of associations of undertakings contrary to article 4 of this Act are invalid. The performance of acts arising out of such agreements and decisions may not be requested. In case a request is made for reclamation due to the invalidity of previous acts fulfilled, the return obligation of the parties is subject to articles 63 and 64 of the Code of Obligations.
The provision of article 65 of the Code of Obligations is not applicable to disputes arising out of this Act.
Right to Compensation
Article 57- Anyone who prevents, distorts or restricts competition via practices, decisions, contracts or agreements contrary to this Act, or abuses his dominant position in a particular market for goods or services, is obliged to compensate for any damages of the injured. If the damage has resulted from the behaviour of more than one people, they are responsible for the damage jointly.
Compensation for the Damage
Article 58- Those who suffer as a result of the prevention, distortion or restriction of competition, may claim as a damage the difference between the cost they paid and the cost they would have paid if competition had not been limited. Competing undertakings affected by the limitation of competition may request that all of their damages are compensated by the undertaking or undertakings which limited competition. In determining the damage, all profits expected to be gained by the injured undertakings are calculated by taking into account the balance sheets of the previous years as well.
If the resulting damage arises from an agreement or decision of the parties, or from cases involving gross negligence of them, the judge may, upon the request of the injured, award compensation by three fold of the material damage incurred or of the profits gained or likely to be gained by those who caused the damage.
Burden of Proof
Article 59- Should the injured submit to the jurisdictional bodies proofs such as, particularly, the actual partitioning of markets, stability observed in the market price for quite a long time, the price increase within close intervals by the undertakings operating in the market, which give the impression of the existence of an agreement, or the distortion of competition in the market, then the burden of proof is for the defendants that the undertakings are not engaged in concerted practice.
The existence of agreements, decisions and practices limiting competition may be proved by any kind of evidence.
SECTION SIX
Final Provisions
Offences Committed on the Funds, Paperwork and Properties of the Authority
Article 60- The funds, paperwork and any properties of the Authority have the force of State Property. The Chairman and members of the Board, and its personnel who commit offences about their offices are punished in the same way like Civil servants. Those offences committed against the members and the personnel of the Board are deemed to have been committed against a Civil servant.
Prosecutions in this respect are conducted pursuant to general provisions.
Notice
Article 61- Notifications to be made to the parties concerned in accordance with this Act are performed pursuant to the provisions of the Notice Act No. 7201.
Regulations
Article 62- Apart from those mentioned in this Act, principles on the exercise of the powers by the Authority, its management and working principles, procedures and principles to be applied in the collection of its revenues, carrying out of its expenses and supervision of these transactions, principles of changes to be made to monthly salaries, principles as to employing foreign experts, regulations concerning the purchase and tender procedure of the movables and immovables to be purchased by the Authority, and provisions with regard to the accounting system of the Authority are provided in the Regulations to be prepared by the Board and put into force via the resolution of the Council of Ministers.
Regulations to be issued pursuant to this Act shall be issued within one year from the date of publication of this Act.
Inapplicable Provisions
Article 63- The Authority is not subject to the General Accounting Act No. 1050, the State Tender Act No. 2886, the Allowances Act No. 6245, and to their annexes and amendments.
Revenues of the Authority are exempt from the Corporation Tax, and from the Inheritance and Transfer Tax due to donations and aids to be granted; interests to accrue in favor of the Authority due to any transactions to be performed are exempt from the Banking and Insurance Transactions Tax; revenues of the Authority and all transactions concerning these revenues are exempt from any kind of taxes, duties and charges in the purchase and sale of immovable goods; vehicles to be purchased for the Authority are exempt from the Vehicle Purchase Tax and Stamp Duty.
Temporary Article 1- The first appointment to the Competition Board is made pursuant to the principles of article 22. It is such that the provisions as to the candidates to be nominated by the Competition Board are not applicable.
In the first appointment, the Prime Minister and the Minister of Industry and Trade each nominate two candidates for membership, instead of the Board.
The members of the Board to be renewed by the end of the second and fourth years are determined by drawing names in the last meetings of the Board within such period. For the first term, the Chairman of the Board is appointed by the Council of Ministers from among the two candidates to be nominated by the Minister of Industry and Trade, and the Chairman and the Deputy Chairman of the Board complete their terms within six years without participating in the lot.
Temporary Article 2- The Competition Board to be appointed under the principles mentioned in the Temporary Article 1 announces that situation with a communiqué after the completion of the organization of the Competition Authority. Any agreements and decisions existing on the date of announcement are notified to the Board within 6 months from this date.
Temporary Article 3- Within one year from the date of entry into force of this Act, the Competition Board may appoint sufficient number of experts from public and private organizations to work in the Authority, without seeking the qualifications in articles 35 and 36 of the Act, provided that it is for once.
It is such that those to be appointed as experts are required to possess the qualifications listed in sub-paragraphs (a) and (c) of the first paragraph of article 35, have at least a five-year professional experience, and be under forty-one years of age. For those who shall be appointed as experts from public organizations, the requirement of having taken up their profession by a competitive and proficiency exam is sought as well.
Until the organization of the Competition Authority is completed, the personnel of the related Ministry may be temporarily commissioned in the fulfillment of the tasks of the Authority.
(Supplement: 02.07.2005-5388/Article 6) Temporary Article 4- Election and appointment shall not be made for the memberships vacated until the number of Board members is reduced to seven.
Entry Into Force
Article 64- Articles 16 and 17 of this Act concerning administrative fines shall enter into force one year after its publication, while the other articles on the date of its publication.
Execution
Article 65- The provisions of this Act shall be executed by the Council of Ministers.
2 Şubat 2008 Cumartesi
TURKISH TAXATION SYSTEM
TURKISH TAXATION SYSTEM
TURKISH DIRECT TAXATION SYSTEM
April 2007
Turkish direct taxation system consists of two main taxes; income tax and corporate tax. An individual is subject to the income tax on his income and earnings, in contrast to a company which is subject to corporate tax on its income and earnings. The rules of taxation for individual income and earnings are provided in the Income Tax Law 1960 (ITL). Likewise, the rules concerning the taxation of corporations are contained in the Corporation Tax Law 1949 (CTL). Despite the fact that each is governed by a different legislation, many rules and provisions of the Income Tax Law also apply to corporations, especially, in terms of income elements and determination of net income.
INCOME TAX:
Taxable Income:
The income tax is levied on the income of individuals. The term individuals mean natural persons. In the application of income tax, partnerships are not deemed to be separate entities and each partner is taxed individually on their share of profit. An individual’s income may consist of one or more income elements listed below:
- Business profits,
- Agricultural profits,
- Salaries and wages,
- Income from independent personal services
- Income from immovable property and rights (rental income)
- Income from movable property (income from capital investment)
- Other income and earnings without considering the source of income
Tax Liability:
In general residency criterion is employed in determining tax liability for individuals. This criterion requires that an individual who has his place of residence in Turkey is liable to pay tax for his worldwide income (unlimited liability). Any person who remains in Turkey more than six months in a calendar year is assumed as a resident of Turkey. However, foreigners who stay in Turkey for six months or more for a specific job or business or particular purposes which are specified in the ITL are not treated as resident and therefore, unlimited tax liability does not apply to them.
In addition to residency criterion, within a limited scope, nationality criterion also applies regardless of their residency status, Turkish citizens who live abroad and work for government or a governmental institution or a company whose headquarter is in Turkey, are considered as unlimited liable taxpayers. Accordingly, they are subject to the income tax on their worldwide income.
Non-residents are only liable to pay tax on their income derived from the sources in Turkey (limited liability). For tax purposes, it is especially important to determine in what circumstances income is deemed to be derived in Turkey. The provisions of Article 7 of the Income Tax Law deal with this issue. In the following circumstances, the income is assumed to be derived in Turkey.
Business profit:
A person must have a permanent establishment or permanent representative in Turkey and income must result from business carried out in this permanent establishment or through such representatives.
Agricultural income:
Agricultural activities generating income must take place in Turkey. Wages and Salaries:
- Services must be rendered or accounted for in Turkey.
- Fees, allocations, dividends and the like paid to the chairmen, directors, auditors and liquidators of the establishment situated in Turkey must be accounted for in Turkey. Income from Independent Personal Services: Independent personal services must be performed or accounted for in Turkey.
Income from Immovable Property:
- Immovable must be in Turkey;
- Rights considered as immovable must be used or accounted for in Turkey.
Income from Movable Capital investment: Investment of the capital must be in Turkey.
Other Income and Earnings:
The activities or transactions generating for other income, specified in the Income Tax Act, must be performed or accounted for in Turkey. The term accounted for used above to clarify tax liability of the non-residents means that a payment is to be made in Turkey, or if the payment is made abroad, it is to be recorded in the books in Turkey.
Determination of Net Income:
Business Profit:
Business profit is defined as profit arising from commercial or industrial activities. Although this definition is very comprehensive and includes all types of commercial and industrial activities, the ITL excludes some activities from the contents of business profits. Generally, activities performed by tradesmen and artisans who do not have permanent establishments are not assumed as commercial and industrial activities and are exempt from income tax.
Furthermore, in order to tax income resulting from commercial and industrial activities there has to be continuity in performing these activities. In other words, incidental activities in that nature are not treated as commercial or industrial activities and therefore, the Income Tax Law deals with these activities as the other income and earnings. The ITL does not list each commercial and industrial activity and only refers to the Turkish Commercial Law for the scope of these terms. Yet several activities are listed namely for clarification in Article 37. These are as follows:
- The operation mines, stone and time quarries, extraction of sand and pebbles operations of brick and tile kilns;
- Stock brokerage;
- Operating of private schools, hospitals and similar places;
- Regular operations of sale purchase and construction of real estate;
- Purchase and sale of securities on someone's behalf and on a continued basis;
- Fully or partly sale of land which has been obtained by purchase or barter and subdivided within five years of its date of purchase and sold during this period or in subsequent years;
-Earnings from dental prosthesis.
Basically, the taxable income of a business enterprise is the difference between its net assets at the beginning and at the end of a calendar year. Two method are used to compute business profits: Lump-sum basis and actual basis in the former method, the Income Tax Law specifies estimated business profits for taxpayers who are qualified for such treatment according to the relevant provisions of the Law. The main assumption is that those taxpayers specified by the Law have difficulty to keep accounting books and to determine then income on the actual basis. Therefore, their income taxes are assessed on their estimated profits determined by the Law.
In the latter method business profits is determined on the actual basis: Taxpayers are required to keep accounting books to record their actual revenues and expenses which occur within the calendar year. In general, business related expenses paid or accrued related to business are deducted from revenues:
Expenses to be deducted:
In order to determine net amount of business profits on the actual basis, the following expenses may be deducted from revenues:
- general expenses made for earning and maintaining business profit;
- food and boarding expenses provided for employees at the place of business or in its annexes;
- expenses for medical treatment and medicine;
- insurance and pension premiums;
- clothing expenses paid for employees;
- losses, damages, and indemnities paid based upon written agreements, juridical decrees, or by order of law;
- expenses for travel and lodging relevant to the business;
- expenses for vehicles which are part of the enterprise and used in the business;
- taxes in kind such as building, and consumption, stamp and municipal taxes and fees and charges, related to the business;
- depreciations set aside according to the provisions of the Tax Procedure Law;
- payments to the unions;
Payments, which are not accepted as expenses:
Those payments listed below are not considered as deductible expenses;
- funds withdrawn from the enterprise by the owner or by his spouse or children, or other assets in kind taken by them;
- monthly salaries, wages, bonuses, commissions and compensation paid to the owner of the enterprise, to his spouse, or his minor children;
- interest on the capital invested by the owner of the enterprise;
- interest based on the current account of the owner of the enterprise, his spouse, his minor children including interests on all form of receivables;
- all fines and tax penalties as well as indemnities arising from unlawful actions. Indemnities incurred as penalty clauses of contracts shall not be considered indemnities of a punitive nature; - % 0 per cent of the advertising expenses for all kind of alcohol and alcoholic beverages, tobacco and tobacco products (current rate has been reduced to 0 percent by a Governmental Decree).
Agricultural lncome:
Income derived from agricultural activities is also subject to the income tax. The term agricultural activity means any activity performed in land, sea, lakes and rivers in forms of cultivating, planting, breeding, fishing, hunting and etc. For tax purposes, persons who engaged in such activities are referred to farmers. Small farmers are exempt from tax if a farmers gross revenue or operational size of his farming enterprise is less than the amount specified by the Income Tax Law, then he is accepted as a small farmer for the application of income tax and exempt from the income tax. The farmers who are not exempt from the tax fall into two categories in determining their agricultural income. The income of farmers, whose annual proceeds or yields are less than the amount specified by the Council of Ministers for each year, is determined on a lump-sum basis. In this method, only the gross revenues of farmers are calculated on the actual basis. While expenses are determined simply by applying an estimated expense rate to the gross revenues. On the actual basis, both revenues and expenses are computed in their real amounts. Therefore, farmers need to keep accounting books to record their revenues and expenses accrued in the relevant year.
Gross revenue arising from agricultural activities consists of the following elements:
- sales revenues earned from selling every kinds of agricultural products produced, purchased or obtained in other ways including the products remained from the previous years,
- proceeds received in return of using agricultural machinery and equipment in the agricultural works of other farmers.
- sales revenues derived from the selling of items expensed previously,
- insurance compensations received for the products damaged before or after they were produced.
- revenue arising from the selling of the fixed assets (except immovable used in agricultural activities). The Tax Procedure Law specifies the rates that will be applied to gross revenue in determining the amount of the estimated expenses on the lump-sum basis. Thus, 80 per-cent of gross revenue is accepted as the amount of expenses in determining net income resulted from the sales of animals, animals' products and fishing and hunting products. This rate has been laid down as 70 per-cent for other agricultural products.
On the actual basis, the following expenses are deducted from the gross revenue to reach taxable income for the year.
- expenditures made for obtaining seed, fertilizers, seedling plants, animal feeds and similar materials;
- expenditures made for purchasing animals, agricultural products and other materials which are acquired for the purpose of resale;
- salaries and wages paid to the employees;
- operation and maintenance expenses of agricultural machinery; equipment, and vehicles;
- depreciation expenses;
- rents and fees paid for machinery and equipment,
- interest injured for loans received and used for enterprise,
- general expenses made for earning and indemnities paid based upon written agreements, juridical decrees, or by order of law;
-losses injured in the selling of fixed assets (except immovable used in agricultural activities) which are part of the enterprise;
-full depreciation expenses and half of other expenses of the vehicles which are part of the enterprise and also used for personal and family needs.
Salaries and Wages :
Income derived from dependent personal services is subject to the income tax. This income comprises such income from all kinds of employment in both public and private sector as salaries and wages, as well as associated supplementary income such as allowances, bonuses, anniversary gifts, gratuities, commissions, premiums, compensations and other wage and salary related remunerations including benefits in kind at market value.
In determining taxable amount of salaries and wages the following expenditures are allowed to be deducted from gross amount:
- Legal deduction made according to various laws or regulations,
- Payments made for pensions,
- Payments made for various insurances,
- Payments made for labor union membership,
Income from Independent Professional Services :
The term independent professional services means any activity performed by a person who is self-employed, and based on professional and scientific expertise rather than capital, income from such activities is subject to the income tax.
The term includes services given by such independent professionals as lawyers, accountants, doctors, consultants and engineers. Revenues received from independent professional services within a year as well as expenses paid are recorded on a simple accounting book. In general, all expenses related to independent professional services can be deducted from revenues. But, the scope of those expenses are narrower than those specified for the commercial and business and business activities.
The following expenses are allowed to be deducted from the gross revenue in reaching the profit from independent professional services:
- rents paid for the leased premises in which the professional services are carried out.
- overhead expenses;
- expenses paid for illumination, heating, phone, wages and salaries of bureau employees, and other office overheads;
- vocational and advertisement taxes as well as taxes in kind, including excises and fees paid occupational purposes; - expenses for occupational books and periodicals;
- payments made for membership of occupational associations;
- traveling and lodging expenses regarding the profession carried on;
- expenses made for tools, equipment, and other materials necessary to perform the profession; - depreciation expenses for the fixed assets in performing the profession;
- retirement payments;
- losses, damages, and indemnities paid based upon written agreements, juridical decrees, or by order of law.
Income from Immovable Property :
Immovable property means real property which includes land buildings, and permanent leasehold rights. Ships, boats, aircraft and other types of transportation vehicles are also regarded as immovable property in the application of the Income Tax Law. Income from immovable property comprises:
- rental income arising from the lease land, buildings (furnished or unfurnished), and the rights to work mineral deposits, sources and other natural sources including mines, sand and gravel quarries, and property accessory to immovable property;
- rental income from fishing place of every kind;
- rental income from property to immovable property which may be subject to independent leasing;
- rental income from the right to use any copyright of literary, artistic or scientific work, any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience or for the use of or the right to use, industrial, commercial or scientific equipment;
- rental income from the lease of ships, boats, aircraft and other transportation vehicles.
In computing net income from immovable property, costs related to maintenance, management, renovation and running, and depreciation may be deducted from the gross income on the actual basis, it is also allowed to make a lump-sum deduction instead of actual costs, except for the income from the lease of the rights mentioned above. In such cases, lump-sum deduction is 25 per-cent of the rental income.
Income from Movable Property :
Income from movable property means any income such as interest, dividend, rent and the like derived from capital in cash or capital in kind. (Income from business activities, agricultural activities and independent personal services is not considered as income from movable property.) However, such capital income is not considered as income from movable property, should they are earned (gained) through business, agricultural or independent professional activities.
Regardless of their sources, the following earnings are deemed to be income from movable property:
- dividends from stocks of every kind including joussance shares, founder's shares and interests and other remunerations paid to the stockholders in the preparatory stage of the corporation and earning from the securities issued by investment funds and investment trusts;
- earnings from participation shares including the shares of limited companies, cooperatives and joint ventures;
- dividends paid to the chairmen and the members of the board of directors;
- after tax income of the corporations which are subject to annual declaration or special declaration; - interests of every kind from bonds, treasury bonds, and earning from the securities issued by the Mass Housing Administration (MHA) and the Public Participation Administration (PPA);
- interest from debt-claims of every kind particularly interest from banks and other financial institutions;
- profits from selling coupons of stocks and bonds before their maturity;
- income from selling of dividends not accrued yet to the owners of the shares;
- dividends paid to those who lend money without interest and dividends paid in return of profit-Ioss participation notes and profit-Ioss participation accounts;
- tax claims, calculated one third of dividends received by the stockholders;
- income from repurchasing agreement on bonds and securities issued by the MHA and the PPA.
In determining net income from movable property, costs related to and allowed to be deducted from gross income include insurance costs, collection costs, and taxes and other levies, excluding income tax, paid for securities.
The mentioned elements are included in business profit when they are connected to the business activity of the recipient. In such case, this income is treated as business profit and become subject to the rules described earlier related to the rules described earlier related to the business profit.
Other Income and Earning :
Capital gains non-recurring is dealt with by the Income Tax Law under the heading "Other Income and Earnings". Capital gains specified in the ITL are as follows:
- earning exceeding certain amount TL from the selling of securities before or within one year after acquisition, except those acquired free of charge;
- income exceeding certain amount TL from the selling of intellectual rights which are treated as immovable property for tax purposes;
- income from the selling of participation rights and shares;
- profits from the wholly or partly alienation of an enterprise which ceased its operations,
- profits derived from the alienation of land, buildings, the rights to operate mineral deposits, sources and other natural sources, fishing place of every kind, the rights registered as immovable property, and ships, boats, aircraft and other transportation vehicles, within four years after their acquisition.
Net amount of capital gains is determined by deducting acquisition costs and the costs incurred to the alienation of the capital assets from the proceeds received in return of the alienation.
Non-recurring income comprises:
- income derived from the business activities and independent professional services performed on occasion;
- proceeds received not to start or to stop a business activity, agricultural activity or independent professional service, or in return for not bidding for contracts;
- proceeds received to transfer leasehold rights or to evacuate leased immovable property;
- income derived by the taxpayers from their previous operations;
-income derived by the limited liable taxpayers from transportation activities performed on occasion.
CORPORATE TAX:
Taxable Income:
The corporate tax is levied on the income and earning derived by corporations and corporate bodies. The income elements by Corporate Tax Law are the same as those covered in the Income Tax Law. In other words, the Corporate Tax Law sets provisions and rules applicable to the income resulted from the activities of corporations and corporate bodies, whereas the income Tax Law deals with the income derived by individuals. Corporations and corporate bodies specified by the Law as taxpayers in respect to the corporate tax are as follows:
- Capital companies and similar foreign companies;
- Cooperatives;
- Public enterprises;
- Enterprises owned by foundations societies and associations;
- Joint ventures.
Tax Liabilities:
According to the Corporate Tax Law, those legal entities covered by the law, which their legal head office situated in Turkey, or the place of effective management in Turkey are taxed on their world-wide income (unlimited liability). By specifying two criteria the law intends to prevent any problem, which may arises in determining tax liability. The term legal head office, as used in the context of the Corporate Tax Law, means the office specified in the written agreements of the mentioned entities.
Therefore, it is not difficult to as certain where the legal head office of a company is located. However, the place of effective management, which is defined as the place in which the business activities are concentrated and supervised, is not easy to determine in some cases.
As may be expected, the Law defines the term limited tax liability quite parallel to term unlimited tax liability, as the liability requiring to tax only the income derived in Turkey, provided that both legal head office and the place of effective management are abroad.
Determination of Net Taxable Income:
In essence, the provisions of the income Tax Law concerning the determination of business profit also applies to the procedure required in determining corporate income. Basically, net corporate income is defined as the difference between the net worth of assets owned at the beginning and at the end of the fiscal year. In addition to the expenses mentioned in article 40 of Income Tax Code allowed to be deducted from revenues, the followings may also be deducted regarding to the determination of business profit, by corporations:
- expenses related to the issuance of stocks and shares;
- initial organization and establishment expenses;
- expenses incurred for general board meeting as well as expenses made for mergers dissolutions, and liquidations;
- in case of insurance companies, technical reserves required for the insurance contracts still valid at date of inventory;
- profits shares accrued to active partners of partnerships in commendams limited by shares;
- profit shares accrued to partners by participation banks for participation accounts;
- research and development deductions calculated as %40 of new technology and know-how research expenses realized within business.
In determining net corporate income, the following deductions are not allowed:
- interests paid or accrued on the basis of equity;
- interest, exchange difference and other costs paid or accrued on the basis of disguised capital;
- disguised earning distributed by transfer pricing;
- any kind of reserves;
- the corporate tax, fines, tax penalties and late payment penalties and interest.;
- leased or registered motor vehicles’ depreciation and other expenses not related with business activities;
Corporate Tax Return:
Like
income tax, the corporate tax is also assessed on the base declared through tax returns filled annually by taxpayers. Tax returns contain the results of related taxation period. In principle, every taxpayer is required to file only one single tax return, even if he has derived the income through different business places or branches and those places and branches have their own accounting and allocated capital.
The corporate tax return is filled until the 25th day evening of the fourth month of the year following the month in which the fiscal year ends and the assessed taxes are paid until the end of that month. However, if a limited liable taxpayer leaves the country for sure the corporate tax return has to be submitted to the authorized tax office in the 15 days preceding. In such case, taxes are paid in the same period of time as forth for the declaration.
If the income earned by the foreign companies which are subject to the limited liability in respect to the corporate tax, consists of capital gains and non-recurring income discussed in the preceding sections (except for income earned from sale and transfer of intangible rights like license, know-how, and royalty), then the income is declared to the authorized tax offices those taxpayers (or the persons acting on behalf of them) in the fifteen days after the income has been earned. This procedure is called "special declaration".
If there is no presence in Turkey, withholding tax will generally be charged on income earned; for example income earned from sale and transfer of intangible rights like license, know-how, and royalty, income from movable and immovable property and income from independent professional services provided in Turkey. However, if there is an avoidance of double taxation treaty, reduced rates of withholding tax may apply.
Tax Rates:
Corporate income tax is applied at 20 % rate on the corporate earnings.
Taxpayers (only for income from commercial activities and agriculture in limited tax liability cases) pay provisional tax at the rate of corporate tax, these payments are deducted from corporate tax of current period.
TURKISH INDIRECT TAXATION SYSTEM
In Turkey, there are several indirect taxes but most important indirect tax is V.A.T.The beginning of the studies on Value Added Tax (VAT) in Turkey goes back to 1970. In 1974, a draft VAT law, which was the result of studies of a technical group, was prepared. The subject (VAT)was discussed by different levels of public opinion and some project games were organized to test the drafts with the volunteer enterprises. After the appreciation of the results of these discussion and games, seven law drafts were prepared between 1974-1984. The 8th draft was enacted on November 2nd , 1984 and entered into force on January 1st , 1985. By the VAT Law, eight indirect taxes on consumption were abolished.
The Turkish Tax System levies value added tax on the supply and the importation of goods and services. The Turkish name for Value Added Tax is Katma Değer Vergisi, abbreviated to KDV.
Liability for VAT arises;
(a) when a person or entity performs commercial, industrial, agricultural or independent professional activities within Turkey,
(b) when goods or services are imported into Turkey.
VAT is levied at each stage of the production and the distribution process. Although liability for the tax falls on the person who supplies or imports goods or services, the real burden of VAT is borne by the final consumer. This result is achieved by a tax-credit method where the computation of the VAT liability is based on the difference between the VAT liability of a person on his sales (output VAT) and the amount of VAT he has already paid on his purchases (input VAT).
The Turkish VAT system employs multiple rates and the Council of Ministers is authorized to change the VAT rates within certain limits.
VAT TAXPAYERS
General
VAT taxpayers are defined in the VAT Law as those engaged in taxable transactions, irrespective of their legal status or nature and their position with regard to other taxes.
Taxpayers
The following people or entities are liable to VAT:
Those supplying goods and services,
Those importing goods or services,
Those required to complete customs formalities in case of transit of goods through Turkey,
General Directorates of the Authorized Public Lotteries, including Spor-Toto and National Lottery,
General Directorates of Postal Services (PT and Telecom) and radio and television corporations,
Organizers of horse races and other betting activities,
Organizers of shows, concerts and sporting events with the participation of professional artists and professional sportsmen,
Lessors of goods and rights stated in Article 70 of the Income Tax Law.
Goods and rights set out in Article 70 of the Income Tax Law including immovable property such as land, buildings, mines and rights which are in the nature of immovable property; and. other goods and rights.. such as all kinds of motor vehicles, machines and equipment, ships, literary, artistic and commercial copyrights, commercial or industrial know-how, patents, trademarks, licenses and similar intangible properties and rights.
VAT Responsibility and Reverse Charge VAT
In the event that the taxpayer is not resident or does not have a place of business in Turkey, a legal head office or place of management in Turkey, or in other cases deemed necessary, the Ministry of Finance is authorized to hold any one of the people involved in a taxable transaction responsible for the payment of tax.
According to the Turkish VAT law, there is a so-called reverse charge VAT mechanism, which requires the calculation of VAT by resident companies over payments to abroad. Under this mechanism, VAT is calculated and paid to the related tax office by the Turkish company or customers on behalf of the non-resident company (foreign company). On the other hand, the local company treats this VAT as input VAT and offsets it in the same month.
Toll-manufacturing and ready-made materials (textiles) are subject to partial withholding: Only 1/3 of the calculated VAT is paid to the seller by the purchaser. Therefore, the purchaser will be responsible for paying 2/3 of calculated VAT to the tax office directly.
Junk metal, waste paper, junk plastic material deliveries are exempted from VAT: In the case of the renouncement of the above mentioned exemption, the purchaser pays 10% of the calculated VAT to the seller. Therefore, the purchaser will be responsible for paying 90% of the calculated VAT to the tax office directly.
In the case of the deliveries of the petroleum products by the sellers, excluding importers, refineries, fuel oil distribution companies and fuel oil agents, only 1/10 (10%) of the Value Added Tax is paid to the seller by the purchaser. Therefore, the purchaser will be responsible for paying 9/10 (90%) of the VAT to the tax office directly.
Taxable Base
The taxable base of a transaction is generally the total value of the consideration received, not including the VAT itself. The VAT Law deals with the taxable base under four headings, namely the taxable base on deliveries and services, on importation, on international transportation, and special types of taxable base.
In case a consideration does not exist, is unknown or is in a form other than money, the taxable base is the market value. Market value is the average price payable in the market for similar goods and services and is determined with reference to the Tax Procedural Law.
Exclusions From the Taxable Base
The taxable base for goods delivered and services rendered does not include the VAT itself or any discounts, provided that they are at a reasonable rate with regard to commercial practice and are explicitly listed in all invoices or similar documents.
Tax Rates
Standard rate:
The standard rate of VAT on taxable transactions is set at 10% in the VAT Law, but this rate was increased to 18% as of 15 May 2001.
Special rates:
For the deliveries and services mentioned in List No. I ......1% (e.g. agricultural products such as raw cotton, dried hazelnuts, supply and leasing of goods within the scope of the Finance Leasing Law) For the deliveries and services mentioned in List No. II...........8% (e.g. basic food stuffs, books and similar publications)
The Credit Mechanism
VAT is collected at every stage of the production and distribution process from the initial sale by the producer to the final sale to the consumer. At each of these stages, the amount of tax payable is the difference between the total amount of tax charged on the invoices issued by the taxpayer and the total amount of tax charged on invoices issued to the taxpayer during the same period. Thus the VAT is initially computed by applying the appropriate rate of taxation to the taxable base for goods and services supplied by the taxpayer during a taxable period. This amount is then reduced by a credit for VAT previously paid on importation and on goods and services supplied to the taxpayer.
Non-deductible VAT (Cost or non-deductible item or capitalized)
In the following cases, VAT may not be credited from the VAT computed on taxable transactions.
(a) VAT on purchases of cars (which should be recorded as an expense or cost) (except for businesses related with lease or operation of cars)
(b) Missing and stolen stocks,
(c) VAT on expenses accepted as non-deductible in determining income according to Income Tax Law and Corporate Tax Law,
(d) Input VAT on exempt deliveries listed in Article 17 of the VAT Law.
VAT Refund
Value Added Tax (input VAT) shown on invoices and similar documents related to the transactions which are exempt from the tax, such as:
Exportation of goods and services,
Exemption for vehicles, petroleum exploration and investments made under an investment incentive certificate (IIC),
Transit transportation,
Diplomatic exemption ,
are deducted from the Value Added Tax (output VAT) to be calculated on the transactions of the taxpayer which are subject to VAT. In the absence of transactions subject to VAT, or if the output VAT is less than the input VAT, then the input VAT which cannot be deducted is refunded to those who perform such transactions, on the basis of principles to be determined by the Ministry of Finance.
OTHER INDIRECT TAXES:
Stamp tax:
Stamp Tax applies to a wide range of documents, including but not limited to, contracts, agreements, notes payable, letters of credit and letters of guarantee, financial statements and payrolls. Stamp duty is levied as a percentage of the value stated on the document at rates ranging from 0.15% to 0.75%. The Stamp Tax Law provides that each relevant party shall be responsible for payment of the total amount of stamp tax on the agreements. Each original document is separately subject to stamp tax.
Motor vehicle tax:
The subject of the tax is motor vehicle. Taxable event is registration of the motor vehicles in the traffic, municipality and docks.
Taxpayers are real and legal persons who have motor vehicles that are registered to their own names in the traffic, municipality and docks register and the civilian air-vehicle register maintained by the Ministry of Transportation.
Tax is assessed and accrued annually in the beginning of January. The motor vehicle taxes are paid in two equal installments, in January and July, every year.
Motor vehicles are classified into four categories in terms of motor vehicle tax:
- List 1 : cars, special utility vehicles and motorcycles,
- List 2: minibuses, panel vans, motorized caravans, busses, pickups, trucks etc.
- List 3 : yacht-cutter and all sorts of motor ships
- List 4 : planes and helicopters
The amount of Motor Vehicle Tax for land transportation vehicles is determined according to their weight, age, cylinder capacity and the fuel used and for 2006 it ranges from 36 YTL to 10.988 YTL for cars and 121 YTL to 1.647 YTL for buses, trucks and the like.
Banking and Insurance Transactions Tax (BITT):
The subject of the tax is transactions and services produced by banks, bankers and insurance companies.
Taxpayers are banks, insurance companies and bankers.
All transactions and services produced by banks and insurance companies. There will be the tax upon the money, which they collect under the name of interest, commission and expenditure because of the services they produced on behalf of them.
Bankers’ certain transactions and services produced and stated in Law are the subject of the tax. Other transactions of bankers are subject to VAT.
Banks and insurance companies are exempt from VAT, but are subject to BITT at a rate of 5%, which is due on the gains of such companies from their transactions. The purchase of goods and services by banks and insurance companies is subject to VAT but is considered as an expense or cost for recovery purposes. Foreign exchange transactions are subject to 0.1% BITT. Taxation period in BITT is each month of the calendar year.
Taxpayers declare their taxable transactions up to the evening of the 15th day of the following month.
Gambling Tax :
The subject of the tax is betting, lotteries and other forms of gambling. Taxpayers are composers of gambling activities and Gambling Tax is calculated by applying fixed or specific rate of tax.
Taxation period in Gambling Tax is each month of the calendar year. Taxpayers declare their taxable transactions and pay the accrued tax up to the evening of the 20th day of the following month.
Inheritance and Gift Tax:
Items acquired as gifts or through inheritance are subject to a progressive tax rate ranging from 10% to 30% and 1% to 10%, respectively, of the item's appraised value. Tax paid in a foreign country on inherited property is deducted from the taxable value of the asset. Inheritance and Gift Tax is payable in biannual installments over a period of 3 years.
Property Taxes:
Property taxes are paid each year on the tax values of land and buildings at rates varying from 0,1% to 0.3%. In the case of the sale of a property a 1% levy is paid on the sales value by both the buyer and the seller. Property tax returns are filed in every four years and annual taxes are paid in two equal installments, the first being in March, April or May and the second in November.
Communication Tax:
All types of installation, transfer and telecommunication services given by mobile phone operators are subject to 25% Special Communication Tax. The tax base for Special Communication Tax is the same as the Value Added Tax base. Mobile phone operators will declare the communication tax on the VAT returns and pay the accrued tax by the 15th day of the following month.
Education Contribution Fee:
Transactions and certain documents stated in the related law are subject to Education Contribution Fee in different amounts. Education Contribution Fee is taken as a fixed levy according to the document or the transaction. Education Contribution Fee is a temporary fee applicable until 31 December 2010.
Customs Duty :
Goods imported from abroad are the subject of the tax. Taxable events are free circulation of goods, registration of customs declaration, and temporary importation in case of partial exemption. Taxpayer is principally person who declare to the customs office. Customs duties are assessed on written declaration by the taxpayer and paid within 10 days dating from communication.
Fees:
There are different types of fees: Judgment Fees, Notary Fees, Tax Judgment Fees, Title Deed Fees, Consulate Fees, Ship and Harbor Fees, Permit of License and Certificate Fees, Traffic Fees, Passport, Visa and Ministry of Foreign Affairs. Certification Fees.
Special Consumption Tax:
Goods in the Lists attached to the Special Consumption Tax Law are the subject of the tax. For goods in the Lists, Special Consumption Tax is charged only once.
There are mainly 4 different product groups that are subject to special consumption tax at different tax rates
· List I is related to petroleum products, natural gas, lubricating oil, solvents and derivatives of solvents.
· List II is related to automobiles and other vehicles, motorcycles, planes, helicopters, yachts.
· List III is related to tobacco and tobacco products, alcoholic beverages and cola.
· List IV is related to luxury products.
The Taxpayers of the Special Consumption Tax
Taxpayers are different according to the lists. They are;
For List I; manufacturers and importers of the petroleum products,
For List II; merchants of motor vehicles, exporters for using or sellers through auction
For List III; manufacturers, exporters or sellers through auction of tobacco, alcoholic beverages and cola.
For List IV manufacturers, exporters or sellers through auction of luxury products.
This brochure provides a general overview of taxation in Turkey. No rights may be derived from it.
Revenue Administration
Department of Taxpayer Services
Ilk Adım Cad. 06450
Dikmen-ANKARA - TURKEY
Gelir Idaresi Baskanligi
Mukellef Hizmetleri Daire Baskanligi
Ilk Adım Cad. 06450
Dikmen - ANKARA - TURKEY
http://www.gib.gov.tr/April 2007
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TURKISH DIRECT TAXATION SYSTEM
April 2007
Turkish direct taxation system consists of two main taxes; income tax and corporate tax. An individual is subject to the income tax on his income and earnings, in contrast to a company which is subject to corporate tax on its income and earnings. The rules of taxation for individual income and earnings are provided in the Income Tax Law 1960 (ITL). Likewise, the rules concerning the taxation of corporations are contained in the Corporation Tax Law 1949 (CTL). Despite the fact that each is governed by a different legislation, many rules and provisions of the Income Tax Law also apply to corporations, especially, in terms of income elements and determination of net income.
INCOME TAX:
Taxable Income:
The income tax is levied on the income of individuals. The term individuals mean natural persons. In the application of income tax, partnerships are not deemed to be separate entities and each partner is taxed individually on their share of profit. An individual’s income may consist of one or more income elements listed below:
- Business profits,
- Agricultural profits,
- Salaries and wages,
- Income from independent personal services
- Income from immovable property and rights (rental income)
- Income from movable property (income from capital investment)
- Other income and earnings without considering the source of income
Tax Liability:
In general residency criterion is employed in determining tax liability for individuals. This criterion requires that an individual who has his place of residence in Turkey is liable to pay tax for his worldwide income (unlimited liability). Any person who remains in Turkey more than six months in a calendar year is assumed as a resident of Turkey. However, foreigners who stay in Turkey for six months or more for a specific job or business or particular purposes which are specified in the ITL are not treated as resident and therefore, unlimited tax liability does not apply to them.
In addition to residency criterion, within a limited scope, nationality criterion also applies regardless of their residency status, Turkish citizens who live abroad and work for government or a governmental institution or a company whose headquarter is in Turkey, are considered as unlimited liable taxpayers. Accordingly, they are subject to the income tax on their worldwide income.
Non-residents are only liable to pay tax on their income derived from the sources in Turkey (limited liability). For tax purposes, it is especially important to determine in what circumstances income is deemed to be derived in Turkey. The provisions of Article 7 of the Income Tax Law deal with this issue. In the following circumstances, the income is assumed to be derived in Turkey.
Business profit:
A person must have a permanent establishment or permanent representative in Turkey and income must result from business carried out in this permanent establishment or through such representatives.
Agricultural income:
Agricultural activities generating income must take place in Turkey. Wages and Salaries:
- Services must be rendered or accounted for in Turkey.
- Fees, allocations, dividends and the like paid to the chairmen, directors, auditors and liquidators of the establishment situated in Turkey must be accounted for in Turkey. Income from Independent Personal Services: Independent personal services must be performed or accounted for in Turkey.
Income from Immovable Property:
- Immovable must be in Turkey;
- Rights considered as immovable must be used or accounted for in Turkey.
Income from Movable Capital investment: Investment of the capital must be in Turkey.
Other Income and Earnings:
The activities or transactions generating for other income, specified in the Income Tax Act, must be performed or accounted for in Turkey. The term accounted for used above to clarify tax liability of the non-residents means that a payment is to be made in Turkey, or if the payment is made abroad, it is to be recorded in the books in Turkey.
Determination of Net Income:
Business Profit:
Business profit is defined as profit arising from commercial or industrial activities. Although this definition is very comprehensive and includes all types of commercial and industrial activities, the ITL excludes some activities from the contents of business profits. Generally, activities performed by tradesmen and artisans who do not have permanent establishments are not assumed as commercial and industrial activities and are exempt from income tax.
Furthermore, in order to tax income resulting from commercial and industrial activities there has to be continuity in performing these activities. In other words, incidental activities in that nature are not treated as commercial or industrial activities and therefore, the Income Tax Law deals with these activities as the other income and earnings. The ITL does not list each commercial and industrial activity and only refers to the Turkish Commercial Law for the scope of these terms. Yet several activities are listed namely for clarification in Article 37. These are as follows:
- The operation mines, stone and time quarries, extraction of sand and pebbles operations of brick and tile kilns;
- Stock brokerage;
- Operating of private schools, hospitals and similar places;
- Regular operations of sale purchase and construction of real estate;
- Purchase and sale of securities on someone's behalf and on a continued basis;
- Fully or partly sale of land which has been obtained by purchase or barter and subdivided within five years of its date of purchase and sold during this period or in subsequent years;
-Earnings from dental prosthesis.
Basically, the taxable income of a business enterprise is the difference between its net assets at the beginning and at the end of a calendar year. Two method are used to compute business profits: Lump-sum basis and actual basis in the former method, the Income Tax Law specifies estimated business profits for taxpayers who are qualified for such treatment according to the relevant provisions of the Law. The main assumption is that those taxpayers specified by the Law have difficulty to keep accounting books and to determine then income on the actual basis. Therefore, their income taxes are assessed on their estimated profits determined by the Law.
In the latter method business profits is determined on the actual basis: Taxpayers are required to keep accounting books to record their actual revenues and expenses which occur within the calendar year. In general, business related expenses paid or accrued related to business are deducted from revenues:
Expenses to be deducted:
In order to determine net amount of business profits on the actual basis, the following expenses may be deducted from revenues:
- general expenses made for earning and maintaining business profit;
- food and boarding expenses provided for employees at the place of business or in its annexes;
- expenses for medical treatment and medicine;
- insurance and pension premiums;
- clothing expenses paid for employees;
- losses, damages, and indemnities paid based upon written agreements, juridical decrees, or by order of law;
- expenses for travel and lodging relevant to the business;
- expenses for vehicles which are part of the enterprise and used in the business;
- taxes in kind such as building, and consumption, stamp and municipal taxes and fees and charges, related to the business;
- depreciations set aside according to the provisions of the Tax Procedure Law;
- payments to the unions;
Payments, which are not accepted as expenses:
Those payments listed below are not considered as deductible expenses;
- funds withdrawn from the enterprise by the owner or by his spouse or children, or other assets in kind taken by them;
- monthly salaries, wages, bonuses, commissions and compensation paid to the owner of the enterprise, to his spouse, or his minor children;
- interest on the capital invested by the owner of the enterprise;
- interest based on the current account of the owner of the enterprise, his spouse, his minor children including interests on all form of receivables;
- all fines and tax penalties as well as indemnities arising from unlawful actions. Indemnities incurred as penalty clauses of contracts shall not be considered indemnities of a punitive nature; - % 0 per cent of the advertising expenses for all kind of alcohol and alcoholic beverages, tobacco and tobacco products (current rate has been reduced to 0 percent by a Governmental Decree).
Agricultural lncome:
Income derived from agricultural activities is also subject to the income tax. The term agricultural activity means any activity performed in land, sea, lakes and rivers in forms of cultivating, planting, breeding, fishing, hunting and etc. For tax purposes, persons who engaged in such activities are referred to farmers. Small farmers are exempt from tax if a farmers gross revenue or operational size of his farming enterprise is less than the amount specified by the Income Tax Law, then he is accepted as a small farmer for the application of income tax and exempt from the income tax. The farmers who are not exempt from the tax fall into two categories in determining their agricultural income. The income of farmers, whose annual proceeds or yields are less than the amount specified by the Council of Ministers for each year, is determined on a lump-sum basis. In this method, only the gross revenues of farmers are calculated on the actual basis. While expenses are determined simply by applying an estimated expense rate to the gross revenues. On the actual basis, both revenues and expenses are computed in their real amounts. Therefore, farmers need to keep accounting books to record their revenues and expenses accrued in the relevant year.
Gross revenue arising from agricultural activities consists of the following elements:
- sales revenues earned from selling every kinds of agricultural products produced, purchased or obtained in other ways including the products remained from the previous years,
- proceeds received in return of using agricultural machinery and equipment in the agricultural works of other farmers.
- sales revenues derived from the selling of items expensed previously,
- insurance compensations received for the products damaged before or after they were produced.
- revenue arising from the selling of the fixed assets (except immovable used in agricultural activities). The Tax Procedure Law specifies the rates that will be applied to gross revenue in determining the amount of the estimated expenses on the lump-sum basis. Thus, 80 per-cent of gross revenue is accepted as the amount of expenses in determining net income resulted from the sales of animals, animals' products and fishing and hunting products. This rate has been laid down as 70 per-cent for other agricultural products.
On the actual basis, the following expenses are deducted from the gross revenue to reach taxable income for the year.
- expenditures made for obtaining seed, fertilizers, seedling plants, animal feeds and similar materials;
- expenditures made for purchasing animals, agricultural products and other materials which are acquired for the purpose of resale;
- salaries and wages paid to the employees;
- operation and maintenance expenses of agricultural machinery; equipment, and vehicles;
- depreciation expenses;
- rents and fees paid for machinery and equipment,
- interest injured for loans received and used for enterprise,
- general expenses made for earning and indemnities paid based upon written agreements, juridical decrees, or by order of law;
-losses injured in the selling of fixed assets (except immovable used in agricultural activities) which are part of the enterprise;
-full depreciation expenses and half of other expenses of the vehicles which are part of the enterprise and also used for personal and family needs.
Salaries and Wages :
Income derived from dependent personal services is subject to the income tax. This income comprises such income from all kinds of employment in both public and private sector as salaries and wages, as well as associated supplementary income such as allowances, bonuses, anniversary gifts, gratuities, commissions, premiums, compensations and other wage and salary related remunerations including benefits in kind at market value.
In determining taxable amount of salaries and wages the following expenditures are allowed to be deducted from gross amount:
- Legal deduction made according to various laws or regulations,
- Payments made for pensions,
- Payments made for various insurances,
- Payments made for labor union membership,
Income from Independent Professional Services :
The term independent professional services means any activity performed by a person who is self-employed, and based on professional and scientific expertise rather than capital, income from such activities is subject to the income tax.
The term includes services given by such independent professionals as lawyers, accountants, doctors, consultants and engineers. Revenues received from independent professional services within a year as well as expenses paid are recorded on a simple accounting book. In general, all expenses related to independent professional services can be deducted from revenues. But, the scope of those expenses are narrower than those specified for the commercial and business and business activities.
The following expenses are allowed to be deducted from the gross revenue in reaching the profit from independent professional services:
- rents paid for the leased premises in which the professional services are carried out.
- overhead expenses;
- expenses paid for illumination, heating, phone, wages and salaries of bureau employees, and other office overheads;
- vocational and advertisement taxes as well as taxes in kind, including excises and fees paid occupational purposes; - expenses for occupational books and periodicals;
- payments made for membership of occupational associations;
- traveling and lodging expenses regarding the profession carried on;
- expenses made for tools, equipment, and other materials necessary to perform the profession; - depreciation expenses for the fixed assets in performing the profession;
- retirement payments;
- losses, damages, and indemnities paid based upon written agreements, juridical decrees, or by order of law.
Income from Immovable Property :
Immovable property means real property which includes land buildings, and permanent leasehold rights. Ships, boats, aircraft and other types of transportation vehicles are also regarded as immovable property in the application of the Income Tax Law. Income from immovable property comprises:
- rental income arising from the lease land, buildings (furnished or unfurnished), and the rights to work mineral deposits, sources and other natural sources including mines, sand and gravel quarries, and property accessory to immovable property;
- rental income from fishing place of every kind;
- rental income from property to immovable property which may be subject to independent leasing;
- rental income from the right to use any copyright of literary, artistic or scientific work, any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience or for the use of or the right to use, industrial, commercial or scientific equipment;
- rental income from the lease of ships, boats, aircraft and other transportation vehicles.
In computing net income from immovable property, costs related to maintenance, management, renovation and running, and depreciation may be deducted from the gross income on the actual basis, it is also allowed to make a lump-sum deduction instead of actual costs, except for the income from the lease of the rights mentioned above. In such cases, lump-sum deduction is 25 per-cent of the rental income.
Income from Movable Property :
Income from movable property means any income such as interest, dividend, rent and the like derived from capital in cash or capital in kind. (Income from business activities, agricultural activities and independent personal services is not considered as income from movable property.) However, such capital income is not considered as income from movable property, should they are earned (gained) through business, agricultural or independent professional activities.
Regardless of their sources, the following earnings are deemed to be income from movable property:
- dividends from stocks of every kind including joussance shares, founder's shares and interests and other remunerations paid to the stockholders in the preparatory stage of the corporation and earning from the securities issued by investment funds and investment trusts;
- earnings from participation shares including the shares of limited companies, cooperatives and joint ventures;
- dividends paid to the chairmen and the members of the board of directors;
- after tax income of the corporations which are subject to annual declaration or special declaration; - interests of every kind from bonds, treasury bonds, and earning from the securities issued by the Mass Housing Administration (MHA) and the Public Participation Administration (PPA);
- interest from debt-claims of every kind particularly interest from banks and other financial institutions;
- profits from selling coupons of stocks and bonds before their maturity;
- income from selling of dividends not accrued yet to the owners of the shares;
- dividends paid to those who lend money without interest and dividends paid in return of profit-Ioss participation notes and profit-Ioss participation accounts;
- tax claims, calculated one third of dividends received by the stockholders;
- income from repurchasing agreement on bonds and securities issued by the MHA and the PPA.
In determining net income from movable property, costs related to and allowed to be deducted from gross income include insurance costs, collection costs, and taxes and other levies, excluding income tax, paid for securities.
The mentioned elements are included in business profit when they are connected to the business activity of the recipient. In such case, this income is treated as business profit and become subject to the rules described earlier related to the rules described earlier related to the business profit.
Other Income and Earning :
Capital gains non-recurring is dealt with by the Income Tax Law under the heading "Other Income and Earnings". Capital gains specified in the ITL are as follows:
- earning exceeding certain amount TL from the selling of securities before or within one year after acquisition, except those acquired free of charge;
- income exceeding certain amount TL from the selling of intellectual rights which are treated as immovable property for tax purposes;
- income from the selling of participation rights and shares;
- profits from the wholly or partly alienation of an enterprise which ceased its operations,
- profits derived from the alienation of land, buildings, the rights to operate mineral deposits, sources and other natural sources, fishing place of every kind, the rights registered as immovable property, and ships, boats, aircraft and other transportation vehicles, within four years after their acquisition.
Net amount of capital gains is determined by deducting acquisition costs and the costs incurred to the alienation of the capital assets from the proceeds received in return of the alienation.
Non-recurring income comprises:
- income derived from the business activities and independent professional services performed on occasion;
- proceeds received not to start or to stop a business activity, agricultural activity or independent professional service, or in return for not bidding for contracts;
- proceeds received to transfer leasehold rights or to evacuate leased immovable property;
- income derived by the taxpayers from their previous operations;
-income derived by the limited liable taxpayers from transportation activities performed on occasion.
CORPORATE TAX:
Taxable Income:
The corporate tax is levied on the income and earning derived by corporations and corporate bodies. The income elements by Corporate Tax Law are the same as those covered in the Income Tax Law. In other words, the Corporate Tax Law sets provisions and rules applicable to the income resulted from the activities of corporations and corporate bodies, whereas the income Tax Law deals with the income derived by individuals. Corporations and corporate bodies specified by the Law as taxpayers in respect to the corporate tax are as follows:
- Capital companies and similar foreign companies;
- Cooperatives;
- Public enterprises;
- Enterprises owned by foundations societies and associations;
- Joint ventures.
Tax Liabilities:
According to the Corporate Tax Law, those legal entities covered by the law, which their legal head office situated in Turkey, or the place of effective management in Turkey are taxed on their world-wide income (unlimited liability). By specifying two criteria the law intends to prevent any problem, which may arises in determining tax liability. The term legal head office, as used in the context of the Corporate Tax Law, means the office specified in the written agreements of the mentioned entities.
Therefore, it is not difficult to as certain where the legal head office of a company is located. However, the place of effective management, which is defined as the place in which the business activities are concentrated and supervised, is not easy to determine in some cases.
As may be expected, the Law defines the term limited tax liability quite parallel to term unlimited tax liability, as the liability requiring to tax only the income derived in Turkey, provided that both legal head office and the place of effective management are abroad.
Determination of Net Taxable Income:
In essence, the provisions of the income Tax Law concerning the determination of business profit also applies to the procedure required in determining corporate income. Basically, net corporate income is defined as the difference between the net worth of assets owned at the beginning and at the end of the fiscal year. In addition to the expenses mentioned in article 40 of Income Tax Code allowed to be deducted from revenues, the followings may also be deducted regarding to the determination of business profit, by corporations:
- expenses related to the issuance of stocks and shares;
- initial organization and establishment expenses;
- expenses incurred for general board meeting as well as expenses made for mergers dissolutions, and liquidations;
- in case of insurance companies, technical reserves required for the insurance contracts still valid at date of inventory;
- profits shares accrued to active partners of partnerships in commendams limited by shares;
- profit shares accrued to partners by participation banks for participation accounts;
- research and development deductions calculated as %40 of new technology and know-how research expenses realized within business.
In determining net corporate income, the following deductions are not allowed:
- interests paid or accrued on the basis of equity;
- interest, exchange difference and other costs paid or accrued on the basis of disguised capital;
- disguised earning distributed by transfer pricing;
- any kind of reserves;
- the corporate tax, fines, tax penalties and late payment penalties and interest.;
- leased or registered motor vehicles’ depreciation and other expenses not related with business activities;
Corporate Tax Return:
Like
income tax, the corporate tax is also assessed on the base declared through tax returns filled annually by taxpayers. Tax returns contain the results of related taxation period. In principle, every taxpayer is required to file only one single tax return, even if he has derived the income through different business places or branches and those places and branches have their own accounting and allocated capital.
The corporate tax return is filled until the 25th day evening of the fourth month of the year following the month in which the fiscal year ends and the assessed taxes are paid until the end of that month. However, if a limited liable taxpayer leaves the country for sure the corporate tax return has to be submitted to the authorized tax office in the 15 days preceding. In such case, taxes are paid in the same period of time as forth for the declaration.
If the income earned by the foreign companies which are subject to the limited liability in respect to the corporate tax, consists of capital gains and non-recurring income discussed in the preceding sections (except for income earned from sale and transfer of intangible rights like license, know-how, and royalty), then the income is declared to the authorized tax offices those taxpayers (or the persons acting on behalf of them) in the fifteen days after the income has been earned. This procedure is called "special declaration".
If there is no presence in Turkey, withholding tax will generally be charged on income earned; for example income earned from sale and transfer of intangible rights like license, know-how, and royalty, income from movable and immovable property and income from independent professional services provided in Turkey. However, if there is an avoidance of double taxation treaty, reduced rates of withholding tax may apply.
Tax Rates:
Corporate income tax is applied at 20 % rate on the corporate earnings.
Taxpayers (only for income from commercial activities and agriculture in limited tax liability cases) pay provisional tax at the rate of corporate tax, these payments are deducted from corporate tax of current period.
TURKISH INDIRECT TAXATION SYSTEM
In Turkey, there are several indirect taxes but most important indirect tax is V.A.T.The beginning of the studies on Value Added Tax (VAT) in Turkey goes back to 1970. In 1974, a draft VAT law, which was the result of studies of a technical group, was prepared. The subject (VAT)was discussed by different levels of public opinion and some project games were organized to test the drafts with the volunteer enterprises. After the appreciation of the results of these discussion and games, seven law drafts were prepared between 1974-1984. The 8th draft was enacted on November 2nd , 1984 and entered into force on January 1st , 1985. By the VAT Law, eight indirect taxes on consumption were abolished.
The Turkish Tax System levies value added tax on the supply and the importation of goods and services. The Turkish name for Value Added Tax is Katma Değer Vergisi, abbreviated to KDV.
Liability for VAT arises;
(a) when a person or entity performs commercial, industrial, agricultural or independent professional activities within Turkey,
(b) when goods or services are imported into Turkey.
VAT is levied at each stage of the production and the distribution process. Although liability for the tax falls on the person who supplies or imports goods or services, the real burden of VAT is borne by the final consumer. This result is achieved by a tax-credit method where the computation of the VAT liability is based on the difference between the VAT liability of a person on his sales (output VAT) and the amount of VAT he has already paid on his purchases (input VAT).
The Turkish VAT system employs multiple rates and the Council of Ministers is authorized to change the VAT rates within certain limits.
VAT TAXPAYERS
General
VAT taxpayers are defined in the VAT Law as those engaged in taxable transactions, irrespective of their legal status or nature and their position with regard to other taxes.
Taxpayers
The following people or entities are liable to VAT:
Those supplying goods and services,
Those importing goods or services,
Those required to complete customs formalities in case of transit of goods through Turkey,
General Directorates of the Authorized Public Lotteries, including Spor-Toto and National Lottery,
General Directorates of Postal Services (PT and Telecom) and radio and television corporations,
Organizers of horse races and other betting activities,
Organizers of shows, concerts and sporting events with the participation of professional artists and professional sportsmen,
Lessors of goods and rights stated in Article 70 of the Income Tax Law.
Goods and rights set out in Article 70 of the Income Tax Law including immovable property such as land, buildings, mines and rights which are in the nature of immovable property; and. other goods and rights.. such as all kinds of motor vehicles, machines and equipment, ships, literary, artistic and commercial copyrights, commercial or industrial know-how, patents, trademarks, licenses and similar intangible properties and rights.
VAT Responsibility and Reverse Charge VAT
In the event that the taxpayer is not resident or does not have a place of business in Turkey, a legal head office or place of management in Turkey, or in other cases deemed necessary, the Ministry of Finance is authorized to hold any one of the people involved in a taxable transaction responsible for the payment of tax.
According to the Turkish VAT law, there is a so-called reverse charge VAT mechanism, which requires the calculation of VAT by resident companies over payments to abroad. Under this mechanism, VAT is calculated and paid to the related tax office by the Turkish company or customers on behalf of the non-resident company (foreign company). On the other hand, the local company treats this VAT as input VAT and offsets it in the same month.
Toll-manufacturing and ready-made materials (textiles) are subject to partial withholding: Only 1/3 of the calculated VAT is paid to the seller by the purchaser. Therefore, the purchaser will be responsible for paying 2/3 of calculated VAT to the tax office directly.
Junk metal, waste paper, junk plastic material deliveries are exempted from VAT: In the case of the renouncement of the above mentioned exemption, the purchaser pays 10% of the calculated VAT to the seller. Therefore, the purchaser will be responsible for paying 90% of the calculated VAT to the tax office directly.
In the case of the deliveries of the petroleum products by the sellers, excluding importers, refineries, fuel oil distribution companies and fuel oil agents, only 1/10 (10%) of the Value Added Tax is paid to the seller by the purchaser. Therefore, the purchaser will be responsible for paying 9/10 (90%) of the VAT to the tax office directly.
Taxable Base
The taxable base of a transaction is generally the total value of the consideration received, not including the VAT itself. The VAT Law deals with the taxable base under four headings, namely the taxable base on deliveries and services, on importation, on international transportation, and special types of taxable base.
In case a consideration does not exist, is unknown or is in a form other than money, the taxable base is the market value. Market value is the average price payable in the market for similar goods and services and is determined with reference to the Tax Procedural Law.
Exclusions From the Taxable Base
The taxable base for goods delivered and services rendered does not include the VAT itself or any discounts, provided that they are at a reasonable rate with regard to commercial practice and are explicitly listed in all invoices or similar documents.
Tax Rates
Standard rate:
The standard rate of VAT on taxable transactions is set at 10% in the VAT Law, but this rate was increased to 18% as of 15 May 2001.
Special rates:
For the deliveries and services mentioned in List No. I ......1% (e.g. agricultural products such as raw cotton, dried hazelnuts, supply and leasing of goods within the scope of the Finance Leasing Law) For the deliveries and services mentioned in List No. II...........8% (e.g. basic food stuffs, books and similar publications)
The Credit Mechanism
VAT is collected at every stage of the production and distribution process from the initial sale by the producer to the final sale to the consumer. At each of these stages, the amount of tax payable is the difference between the total amount of tax charged on the invoices issued by the taxpayer and the total amount of tax charged on invoices issued to the taxpayer during the same period. Thus the VAT is initially computed by applying the appropriate rate of taxation to the taxable base for goods and services supplied by the taxpayer during a taxable period. This amount is then reduced by a credit for VAT previously paid on importation and on goods and services supplied to the taxpayer.
Non-deductible VAT (Cost or non-deductible item or capitalized)
In the following cases, VAT may not be credited from the VAT computed on taxable transactions.
(a) VAT on purchases of cars (which should be recorded as an expense or cost) (except for businesses related with lease or operation of cars)
(b) Missing and stolen stocks,
(c) VAT on expenses accepted as non-deductible in determining income according to Income Tax Law and Corporate Tax Law,
(d) Input VAT on exempt deliveries listed in Article 17 of the VAT Law.
VAT Refund
Value Added Tax (input VAT) shown on invoices and similar documents related to the transactions which are exempt from the tax, such as:
Exportation of goods and services,
Exemption for vehicles, petroleum exploration and investments made under an investment incentive certificate (IIC),
Transit transportation,
Diplomatic exemption ,
are deducted from the Value Added Tax (output VAT) to be calculated on the transactions of the taxpayer which are subject to VAT. In the absence of transactions subject to VAT, or if the output VAT is less than the input VAT, then the input VAT which cannot be deducted is refunded to those who perform such transactions, on the basis of principles to be determined by the Ministry of Finance.
OTHER INDIRECT TAXES:
Stamp tax:
Stamp Tax applies to a wide range of documents, including but not limited to, contracts, agreements, notes payable, letters of credit and letters of guarantee, financial statements and payrolls. Stamp duty is levied as a percentage of the value stated on the document at rates ranging from 0.15% to 0.75%. The Stamp Tax Law provides that each relevant party shall be responsible for payment of the total amount of stamp tax on the agreements. Each original document is separately subject to stamp tax.
Motor vehicle tax:
The subject of the tax is motor vehicle. Taxable event is registration of the motor vehicles in the traffic, municipality and docks.
Taxpayers are real and legal persons who have motor vehicles that are registered to their own names in the traffic, municipality and docks register and the civilian air-vehicle register maintained by the Ministry of Transportation.
Tax is assessed and accrued annually in the beginning of January. The motor vehicle taxes are paid in two equal installments, in January and July, every year.
Motor vehicles are classified into four categories in terms of motor vehicle tax:
- List 1 : cars, special utility vehicles and motorcycles,
- List 2: minibuses, panel vans, motorized caravans, busses, pickups, trucks etc.
- List 3 : yacht-cutter and all sorts of motor ships
- List 4 : planes and helicopters
The amount of Motor Vehicle Tax for land transportation vehicles is determined according to their weight, age, cylinder capacity and the fuel used and for 2006 it ranges from 36 YTL to 10.988 YTL for cars and 121 YTL to 1.647 YTL for buses, trucks and the like.
Banking and Insurance Transactions Tax (BITT):
The subject of the tax is transactions and services produced by banks, bankers and insurance companies.
Taxpayers are banks, insurance companies and bankers.
All transactions and services produced by banks and insurance companies. There will be the tax upon the money, which they collect under the name of interest, commission and expenditure because of the services they produced on behalf of them.
Bankers’ certain transactions and services produced and stated in Law are the subject of the tax. Other transactions of bankers are subject to VAT.
Banks and insurance companies are exempt from VAT, but are subject to BITT at a rate of 5%, which is due on the gains of such companies from their transactions. The purchase of goods and services by banks and insurance companies is subject to VAT but is considered as an expense or cost for recovery purposes. Foreign exchange transactions are subject to 0.1% BITT. Taxation period in BITT is each month of the calendar year.
Taxpayers declare their taxable transactions up to the evening of the 15th day of the following month.
Gambling Tax :
The subject of the tax is betting, lotteries and other forms of gambling. Taxpayers are composers of gambling activities and Gambling Tax is calculated by applying fixed or specific rate of tax.
Taxation period in Gambling Tax is each month of the calendar year. Taxpayers declare their taxable transactions and pay the accrued tax up to the evening of the 20th day of the following month.
Inheritance and Gift Tax:
Items acquired as gifts or through inheritance are subject to a progressive tax rate ranging from 10% to 30% and 1% to 10%, respectively, of the item's appraised value. Tax paid in a foreign country on inherited property is deducted from the taxable value of the asset. Inheritance and Gift Tax is payable in biannual installments over a period of 3 years.
Property Taxes:
Property taxes are paid each year on the tax values of land and buildings at rates varying from 0,1% to 0.3%. In the case of the sale of a property a 1% levy is paid on the sales value by both the buyer and the seller. Property tax returns are filed in every four years and annual taxes are paid in two equal installments, the first being in March, April or May and the second in November.
Communication Tax:
All types of installation, transfer and telecommunication services given by mobile phone operators are subject to 25% Special Communication Tax. The tax base for Special Communication Tax is the same as the Value Added Tax base. Mobile phone operators will declare the communication tax on the VAT returns and pay the accrued tax by the 15th day of the following month.
Education Contribution Fee:
Transactions and certain documents stated in the related law are subject to Education Contribution Fee in different amounts. Education Contribution Fee is taken as a fixed levy according to the document or the transaction. Education Contribution Fee is a temporary fee applicable until 31 December 2010.
Customs Duty :
Goods imported from abroad are the subject of the tax. Taxable events are free circulation of goods, registration of customs declaration, and temporary importation in case of partial exemption. Taxpayer is principally person who declare to the customs office. Customs duties are assessed on written declaration by the taxpayer and paid within 10 days dating from communication.
Fees:
There are different types of fees: Judgment Fees, Notary Fees, Tax Judgment Fees, Title Deed Fees, Consulate Fees, Ship and Harbor Fees, Permit of License and Certificate Fees, Traffic Fees, Passport, Visa and Ministry of Foreign Affairs. Certification Fees.
Special Consumption Tax:
Goods in the Lists attached to the Special Consumption Tax Law are the subject of the tax. For goods in the Lists, Special Consumption Tax is charged only once.
There are mainly 4 different product groups that are subject to special consumption tax at different tax rates
· List I is related to petroleum products, natural gas, lubricating oil, solvents and derivatives of solvents.
· List II is related to automobiles and other vehicles, motorcycles, planes, helicopters, yachts.
· List III is related to tobacco and tobacco products, alcoholic beverages and cola.
· List IV is related to luxury products.
The Taxpayers of the Special Consumption Tax
Taxpayers are different according to the lists. They are;
For List I; manufacturers and importers of the petroleum products,
For List II; merchants of motor vehicles, exporters for using or sellers through auction
For List III; manufacturers, exporters or sellers through auction of tobacco, alcoholic beverages and cola.
For List IV manufacturers, exporters or sellers through auction of luxury products.
This brochure provides a general overview of taxation in Turkey. No rights may be derived from it.
Revenue Administration
Department of Taxpayer Services
Ilk Adım Cad. 06450
Dikmen-ANKARA - TURKEY
Gelir Idaresi Baskanligi
Mukellef Hizmetleri Daire Baskanligi
Ilk Adım Cad. 06450
Dikmen - ANKARA - TURKEY
http://www.gib.gov.tr/April 2007
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