1. Minimum Capital Amount for Joint Stock Companies and Limited Liability Companies Increased

The minimum capital amount stipulated as TRY 50,000 for joint stock companies has been increased to TRY 250,000 the minimum capital amount stipulated as TRY 10,000 for limited liability companies has been increased to TRY 50,000. According to the statement of the Ministry of Trade, this amendment shall be applied to joint stock and limited liability companies established after 01.01.2024.

2. Default Interest Rate to be Applied in Late Payments in the Supply of Goods and Services

Pursuant to the Communiqué on the Default Interest Rate to be Applied in Late Payments in the Supply of Goods and Services and the Minimum Expense Amount that can be Requested for the Collection Costs of Receivables was published by the Central Bank of the Republic of Türkiye, in cases where the default interest rate for late payments made to the creditor in the supply of goods and services regulated under Article 1530/7 of the Turkish Commercial Code is not stipulated in the contract or the relevant provisions are invalid, the interest rate to be applied was determined as 48% per annum, and the minimum amount of expenses that can be requested for the collection of the receivable is determined as TRY 1,310. The aforementioned ratio and amount entered into force on the date of publication, effective from 01.01.2024.

3. Developments in the Electronic Commerce Regulations

As detailed in the 2022 Turkish Startup Ecosystem Investment Report, the Law Amending the Law on the Regulation of Electronic Commerce has been published in the Official Gazette dated 07.07.2022 and numbered 31889, and introduced significant changes to the electronic commerce. In addition, the Regulation on Electronic Commerce Intermediary Service Providers and Electronic Commerce Service Providers (“E-Commerce Regulation”) published in the Official Gazette dated 29.12.2022 and numbered 32058 stipulates the regulations in line with the provisions of the aforementioned Law.

Application numbered 2022/109 E. was submitted to the Constitutional Court for the annulment of various provisions of the Law No. 6563. The Constitutional Court rejected the application for annulment with its decision dated 13.07.2023. In the meantime, stay of execution and annulment of the provisions of the E-Commerce Regulation were claimed before the Council of State. The 10th Chamber of the Council of State has issued a stay of execution decision. However, it is understood that the 10th Chamber of the Council of State revoked the stay of execution decision, it filed an application for concrete review for some provisions of Law No. 6563 that were not subject to the rejection decision of the Constitutional Court mentioned above. The request for the annulment of the provisions of the E-Commerce Regulation is currently being examined by the General Assembly of Administrative Case Chambers of the Council of State, which is expected to reject this annulment request in the light of the Constitutional Court decision.

4. Developments in the Geographic Data Permission and Licence Regulations for E-Commerce Companies Collecting Location Information

The Law on the Amendment of Geographical Information Systems and Other Laws, the Regulation on Geographical Data Permits and the Regulation on Geographical Data Licence introduced the obligation for companies that collect, store, process and manage geographical data/location information such as electronic commerce companies, private law legal entities engaged in banking activities, smart city-sensor companies, telecommunication companies, private law legal entities engaged in real estate valuation activities to obtain a geographical data permit or geographical data licence certificate from the Ministry of Environment, Urbanisation and Climate Change for these activities. With the amendments published in the Official Gazette dated 31.03.2023 and numbered 32149, the geographic data licence was divided into three groups and the obligations to be fulfilled by the companies were regulated.

However, with the decision of the Constitutional Court published on 04.10.2023, the rule that the permission period of the companies and the procedures, principles and contents regarding the data will be determined by the Ministry was annulled. Since the annulment decision will enter into force on 04.07.2024, it is expected that a law on how to obtain the permit and licence will be introduced until this date. It is recommended that e-commerce companies that collect location data should apply to the Ministry for permission or licence in order not to take risks, since the rules stipulated by the Ministry regarding the application procedure for permission and licence are valid until this date.

5. Developments in the Remote Identification Regulations

With the amendments introduced by the Regulation on Measures regarding the Prevention of Laundering Proceeds of Crime and Financing of Terrorism on 05.04.2023, remote identification of legal entities was made feasible. The Communiqué amending the General Communiqué on (No. 24) published by Financial Crimes Investigation Board (“MASAK”) regulates the rules which will apply in the implementation of this amendment.

Pursuant to the Communiqué, remote identification shall be completed before the establishment of a continuous business relationship. The Communiqué also regulates the technical requirements and principles regarding how the remote identification process shall be carried out and the standards of the remote identification process during the procurement of the outsourced services. In addition, remote identification can be performed by artificial intelligence if it meets the standards detailed in the amendment.

6. Developments in the Payment Systems Regulations

Pursuant to the Communiqué on Redetermination of Minimum Equity Amounts of Payment Institutions and Electronic Money Institutions, the minimum equity amounts of payment institutions and electronic money institutions shall be increased to (i) TRY 7,000,000 for payment institutions intermediating invoice payments, (ii) TRY 15,000,000 for other payment institutions, except for payment institutions providing the service of providing consolidated information on online platforms regarding the payment accounts of the payment service user held with payment service providers, and (iii) TRY 41,000,000 for electronic money institutions.

In addition, with the regulation amendments published in the Official Gazette dated 07.10.2023 and numbered 31676, digital wallets were defined, and the authorisations required to provide digital wallet services has been regulated. Scope of the obligation for the payment service providers to offer its infrastructure services to other institutions who request to use them has been expanded. The fields of activity of payment institutions and electronic money institutions have been expanded. Finally, the provisions regarding the establishment of contracts and identification of institutions through remote communication tools have been harmonised with the MASAK regulations. Further details regarding the aforementioned regulation amendments can be found here.

7. Developments in the Portfolio Management Companies Regulations

The Communiqué Amending the Communiqué on Principles Regarding Portfolio Management Companies and Their Activities (III-55-1.d) (“Amendment Communiqué”) has introduced the sub-portfolio management. Portfolio management companies (“PMC“) which are authorised by the Capital Markets Board (“CMB“) or institutions authorised abroad to perform portfolio management activities will be able to manage a certain portion or all of the portfolio managed by an authorised institution abroad or a portfolio management company in Türkiye (sub-portfolio manager) within the framework of the agreement between them. There is no requirement to sign an agreement between the sub-portfolio manager and investors. The Amendment Communiqué allows PMCs to establish a liaison office. In order to establish a liaison office, a liaison office manager who meets the necessary qualifications as per the Communiqué on Principles Regarding Portfolio Management Companies and Their Activities and a sufficient number of personnel shall be employed.

Pursuant to the Bulletin No. 2023/82 dated 29.12.2923 issued by the CMB (“Bulletin”), the minimum initial capital of the PMCs for the evaluation of the establishment permit applications by the CMB has been increased to TRY 50,000,000. The minimum shareholders’ equity requirement thresholds and the minimum number of portfolio managers according to the size of the managed portfolio were updated under the aforementioned Bulletin.

8. Venture Capital Market has been Established

The Communiqué on the Principles Regarding the Companies whose Shares to be Traded on the Venture Capital Market (II-16.3) (“VCM Communiqué“) has been entered into force by the CMB through publication in the Official Gazette dated 18.05.2023. With the VCM Communiqué, non-public joint stock companies will be able to sell their shares to be issued through capital increase to be traded in the venture capital market (“VCM“) to qualified investors without public offering. Pursuant to the VCM Communiqué, a prospectus shall be prepared for the issuance of shares and the approval of the CMB shall be obtained. Shares listed on the VCM can only be purchased by qualified investors.

VCM Communiqué also regulates the procedures and principles regarding the rules to be complied with after the sale of the shares of the joint stock companies issued through capital increase without public offering, financial reports and independent auditing, material event disclosures, exemptions, other obligations, financial thresholds and waiting periods for the public offering of shares.

9. Thresholds in the Communiqué on Crowdfunding Updated

The Communiqué on Crowdfunding (no. III-35/A.2) entered into force through its publication in the Official Gazette dated 27.10.2021 and numbered 31641, and regulated debt-based crowdfunding along with share-based crowdfunding. Pursuant to the CMB’s Bulletin No. 2023/82, the minimum capital required for the establishment and listing of platforms in Article 5/1 of the Communiqué on Crowdfunding was increased to TRY 15,000,000, the investment limits for real persons who are not qualified investors in Article 15/1 and 18/1 were increased to TRY 250,000 and TRY 1.000,000 respectively, the maximum investment amount that real persons who are not qualified investors can make with debt-based crowdfunding was increased to TRY 100,000, the limit on fund collection target in share-based was increased to TRY 5,000,000, the limits on the amount of funds collected in share-based and debt-based crowdfunding in Article 21/4 and 22/4 were increased to TRY 5,000,000.

10. Thresholds for Venture Capital Investment Funds and Trusts Updated

Pursuant to the CMB’s Bulletin No. 2023/82, the minimum total amount of funding commitment to be collected from qualified investors in Article 22 of the Communiqué on Principles of Venture Capital Investment Funds was increased to TRY 50,000,000. Aforementioned Bulletin also regulated the thresholds under the Communiqué on Principles of Venture Capital Investment Trusts. (i) The minimum capital amount in Article 5 was increased to TRY 200,000,000 and (ii) the minimum capital amount in Article 12 was increased to TRY 60,000,000. In Article 7, (iii) the minimum total value of assets of leading shareholder in case the leading shareholder is a single natural person was increased to TRY 60,000,000, (iv) and the minimum total value of assets of leading shareholders in case the leading shareholder is more than one natural person was increased to TRY 120,000,000. (v) Upper limits of shareholders’ equity and total assets in Article 7 in case the leading shareholder is a legal person were respectively increased to TRY 600,000,000 and TRY 1,200,000,000.

11. Trademark Revocation Authority Transferred to TURKPATENT

Pursuant to Article 26 of the Industrial Property Code No. 6769 (“IPC“) published in the Official Gazette dated 10.01.2017 and numbered 29944, it is regulated in which cases the Turkish Patent and Trademark Office (“TURKPATENT“) would decide to revoke a trademark. However, since Article 26 of the IPC was regulated to enter into force seven years after the date of its publication, the authority to revoke the trademark has been exercised by the courts during this period. On 10.01.2024, the TURKPATENT took over this authority and became the competent authority to decide on trademark revocation applications submitted after this date.

In line with this amendment, the TURKPATENT released the Draft Regulation Amending the Regulation on the Implementation of the Industrial Property Code, although it has not yet entered into force. The draft includes details regarding the procedure of the trademark revocation application. It can be understood from the aforementioned draft that the trademark revocation application can be filed exclusively before the TURKPATENT and the revocation decision shall be immediately recorded in the registry.

12. Thresholds for the Obligation to Register with the Data Controllers’ Registry Updated

Pursuant to the Personal Data Protection Law numbered 6698, the obligation of real and legal persons who process personal data to register with the Data Controllers’ Registry (“VERBİS”) before starting data processing and exceptions to this obligation are regulated. With the decision of the Personal Data Protection Board (“Board”) dated 06.07.2023 and numbered 2023/1154, real and legal person data controllers whose main activity is not processing sensitive personal data and who have less than 50 employees in a year or an annual balance sheet under TRY 100 million are exempted from the registration obligation.

13. Recommendations for the Protection of Privacy in Mobile Applications Released

The Board published the Guideline on Recommendations for the Protection of Privacy in Mobile Applications (“Guideline“) in order to address the existing and potential risks regarding the protection of privacy in mobile applications and to provide general recommendations for data subjects and data controllers in terms of personal data processing activities conducted through mobile applications used on smartphones and tablets.

In the Guideline, it is mentioned that mobile applications collect various personal data ranging from identity information to health data, and it is pointed out that the data accessed by the application may constitute special categories of personal data. In addition, the Guideline distinguished between data controller and data processor in terms of mobile applications and explained in which cases a party can be qualified as data controller or data processor. In the Guideline, the importance of compliance with the general principles is emphasised and supported with examples, and it is reminded that the conditions for ensuring transparency shall be fulfilled. It stated that mobile application providers targeting Türkiye should also take into account the VERBIS obligation. Further details regarding the Guideline can be found here.

14. Amendments to the Limits of the Obligation of Companies Operating in Technopolises and R&D and Design Centers to Invest in Venture Companies

As detailed in the 2022 Turkish Startup Ecosystem Investment Report, income and corporate taxpayers operating in technology development zones (“Technopolis“) were exempted from income and corporate tax until 31.12.2028 on their earnings derived exclusively from software, design and R&D activities in Technopolis (“Technopolis Exemption“). In addition, all R&D and innovation expenditures made in R&D and design centers (“R&D and Design Center“) shall be subject to a deduction in the determination of the income subject to income and corporate tax (“R&D Deduction“). In connection with this, companies benefiting from the Technopolis Exemption and R&D Deduction were obliged to acquire the venture capital investment fund shares that are established to invest in entrepreneurs resident in Türkiye or to invest in venture capital investment trusts or other entrepreneurs operating in incubation centres under the Technopolis Law (“Investment Obligation”).

Upon the amendments regulated by the Presidential Decree numbered 7953, effective from 01.01.2024, if the amount of Technopolis Exemption or R&D Deduction granted to a company operating in a Technopolis or R&D and Design Center is equal or more than TRY 2,000,000, such company shall be obliged to invest 3% of this amount in venture companies. This Investment Obligation is limited to TRY 100,000,000 on an annual basis.

15. Implementation Period of Additional Corporate Tax Deduction for R&D and Design Expenditures has been Extended

Pursuant to the Decree of the Council of Ministers numbered 2016/9092, 50% of the increased amount of the R&D and innovation or design expenditures made by R&D or design centers compared to the previous year can be subject to an additional deducted in the determination of taxable corporate income. In order to benefit from this additional corporate tax deduction, R&D or design centers shall achieve at least a twenty percent increase in any of the indicators related to its number of patents, projects or turnover which are listed specifically in the Decree No. 2016/9902. Pursuant to the Presidential Decree No. 6652, the implementation period of the additional corporate tax deduction has been extended to 31.12.2028.

16. Scope of Income Tax Withholding Incentive to be Applied to Working Hours Spent Outside the Technopolis and R&D and Design Centers Updated

It was regulated that the income tax on the salaries of personnel working in Technopolis and R&D and Design Center can be deducted from the tax accrued on the withholding tax return, and thus, the personnel costs of the venture companies were reduced with this incentive. In addition, it was regulated that the periods spent outside the Technopolis or R&D and Design Center shall also be considered within the scope of the income tax withholding incentive. Pursuant to the Presidential Decree No. 8004, until 31.12.2024, the ratio of the working hours spent outside the Technopolis or R&D and Design Center was increased to 100% for IT personnel whose qualifications will be determined by the Ministry, and to 75% for other personnel.

17. Developments in the Tax Regulations

General corporate tax rate was increased from 20% to 25%. For banks, financial leasing, factoring, financing and savings finance companies, electronic payment and money institutions, authorised foreign exchange institutions, asset management companies, capital market institutions, insurance and reinsurance companies and pension companies, the corporate tax rate was increased from 25% to 30%. The corporate tax deduction applied exclusively to the export earnings of exporting corporations has been increased from 1 point to 5 points. This amendment shall be applied to the income of the corporations generated in 2023 and onwards, and to the tax returns to be submitted as of 01.10.2023.

Dividends received from participation shares of the venture capital funds and investment funds, income generated from the refund of these funds’ participation shares and value increase gains of the participation shares of these funds’ have been exempted from the corporate tax. With the Law No. 7456, abovementioned income and gains related to investment fund participation shares except for those related to venture capital funds are excluded from this exemption.

Both legal and real persons participating in foreign joint stock and limited liability companies whose legal and business center is not located in Türkiye are exempted from income or corporate tax at a rate of 50%, provided that they held at least 50% of the paid-up capital of the foreign subsidiary and that the dividends are transferred to Türkiye until the date of submission of the tax return for the accounting period in which the income is received.

It was regulated that 50% of the income obtained by legal and real persons from the services provided abroad in the fields of architecture, engineering, design, software, medical reporting, bookkeeping, call center, product testing, certification, data storage, data processing, data analysis, education and health services can be deducted from income or corporate tax at a rate of 50%, provided that all of the income obtained are transferred to Türkiye until the date when the tax return should be submitted. This deduction rate has been increased to 80%.

It was regulated that the depreciation period to be applied to the machinery and equipment acquired by companies located in Technopolis and R&D and Design Centers to be used exclusively in R&D, innovation and design activities can be calculated over half of the current useful life period. This application has been extended until 31.12.2024.

18. Minimum Salary has been Increased

Upon the decision of the Minimum Salary Determination Commission, as of 01.01.2024, the net monthly minimum salary will be TRY 17,002.5 and the gross monthly minimum salary will be TRY 22,022.5. With this increase, the monthly gross cost of an employee paid minimum salary to the employer increased to TRY 23,502.94.

19. Obligation to Have Occupational Safety Experts and Workplace Doctors Postponed

The obligation to have occupational safety experts and workplace doctors in less hazardous workplaces and having less than fifty employees was regulated. However, the effective date of Articles 6 and 7 of the Occupational Health and Safety Law No. 6331 was postponed to 31.12.2023. The effective date of this obligation has once again been postponed to 31.12.2024.

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