Similar to previous years, as we approach the year-end, we would like to draw your attention to the requirements for the annual certification of company commercial books.
In accordance with requirements of the Tax Procedure Law and Turkish Code of Commerce, the commercial companies established in Turkey must keep the following books:
- General Journal,
- General Ledger,
- Inventory Book,
- Share Ledger,
- Minutes Book for Resolutions of Board of Directors,
- Minutes Book for General Assembly Meetings
COMPANY BOOKS THAT MUST BE KEPT ACCORDING TO THE TYPE OF COMPANY
|Every merchant (real or legal person)||Limited partnerships in which the capital is divided into shares and Cooperatives||Partnership companies||Joint-stock Company||Limited Liability Company|
|Minutes Book for Resolutions of Board of Directors||X||X|
|Minutes Book for General||X||X||X||X|
(a) Commencement certification of the company books to be maintained physically
The commencement certification of the books kept physically by the commercial companies established in Turkey shall be affected by a notary public until the end of the month preceding the company's next activity year. Accordingly, for those companies whose accounting period coincides with the calendar year, the commercial books to be used in the year 2021 should be certified by a notary public until the close of business on 31 December 2020, the last working day of the year. Although there is a new process where certification of company commercial books can be affected by the trade registries, this is applicable only during the establishment and registration of the relevant company. Therefore please be aware that companies are still required to certify the commencement of their commercial books before the notaries. Here, we would also like to point out that despite diverse practices until now, the Turkish Association of Notaries in their Circular no.22 dated 16.11.2018 has emphasized that the previous company books themselves or (in case these books have been lost) the duly issued lost certificates will also need to be submitted during the certification of the new company books, be it at the year-end, or when they run out of pages.
However, the share ledger and the minutes' book for general assembly meetings currently used by the company may continue to be used in the succeeding activity periods without any commencement certification, as long as they have a sufficient number of blank pages.
In the event the company books run out of blank pages before the end of the activity year or in the event the company is obliged to use new company books for any reason, they must obtain a commencement certification before starting to use them.
(b) Closing certification of the company books to be maintained in a physical mode
Pursuant to the provisions of the Turkish Commercial Code, closing certification is mandatory only for the general journal and the minutes' book for board resolutions.
- Closing certification for general journals may be obtained from a notary public until the end of the sixth month in the succeeding activity period (until 30 June 2021 for the taxpayers whose accounting period coincides with the calendar year)
- Closing certification for the book of board resolutions may be obtained until the end of the first month in the succeeding activity period (until 31 January 2021 for the taxpayers whose accounting period coincides with the calendar year).
(c) Renewal certification of the company books
For the minutes book of board of directors' resolutions, general journal, inventory book and, general ledger, companies who wish to continue to use the same books in the following year may obtain interim approval from the notary public during the first month of the new accounting period (until 31 January 2021 for the taxpayers whose accounting period coincides with the calendar year) provided that such books have a sufficient number of blank pages. In such cases, there will be no need to repeat the commencement and closing certification procedures.
(d) Certification of the company books maintained electronically
As per paragraph 3.2.1 of the General Communiqué on the Electronic Books (the "Communiqué"), the taxpayers who are under the obligation of issuing e-invoices and the companies who are subject to independent auditing as per paragraph 4 of article 397 of the Turkish Commercial Code, are subject to e-book keeping requirements. These taxpayers and companies will also be obliged to maintain e-books as of 01.01.2021.
Commencement or closing certification is not required for company books maintained electronically. According to the Communiqué, obtaining the e-book certificate for the first month of the accounting period will substitute for the commencement certification, obtaining the e-book certificate for the last month will substitute for the closing certification, and obtaining an e-book certificate for other months will substitute for the notary certification of the books. However, the companies which start maintaining e-books within the accounting period or the calendar year must obtain closing certifications for their former physical books.
The companies that maintain e-books however, are still obliged to physically maintain the books except for the general journal and the general ledger and obtain their certifications accordingly.
(e) Penalty due to the infringement of the obligation of certification
Last but not least, we would kindly like to remind you that failure to obtain commencement and closing certifications for the company's commercial books is subject to an irregularity fine pursuant to Article 352 of the Tax Procedure Law and also an administrative fine as per Article 562 of the Turkish Commercial Code. Furthermore, please also note that as per Article 222 of the Turkish Code of Civil Procedure, unless the company's commercial books were duly certified, recorded, and maintained in compliance with the relevant laws, these books would not be deemed as acceptable evidence for the company in case of a dispute.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.