Recent Changes in Turkish Law with the Code numbered 6728 Aiming to Improve the Investment Environment

The Code numbered 6728 on the Amendment to Certain Laws with the Aim to Improve the Investment Environment (in Turkish “Yatırım Ortamının İyileştirilmesi Amacıyla Bazı Kanunlarda Değişiklik Yapılmasına Dair Kanun”) was published in the Official Gazette dated 9 August 2016 (herein after referred to as the “Code”). The Code contains several amendments on different laws such as Enforcement and Bankruptcy Law (in Turkish ”İcra ve İflas Kanunu”), Stamp Tax Law (in Turkish, “Damga Vergisi Kanunu”), Turkish Commercial Code (in Turkish “ Türk Ticaret Kanunu”) and Law of Cheques (in Turkish “Çek Kanunu”).

The Code’s primary purpose is to amend and regulate various codes for the enhancement of the investment environment, and for the reduction of the investment costs. Therefore, the Code brings considerable exceptional regulations aiming to reduce the transaction costs, notably deriving from stamp taxes and charges. Moreover, the Code brings a facilitated and a cheaper way of registration for the merchants.

Some of the important amendments that the Code sets forth have been briefly explained here below.

The Code makes several major amendments related with the Stamp Tax Law:

• As per the amendment; for the  documents subject to graduated stamp duty (in Turkish “nispi damga vergisi”); regardless of the number of the copies, only one copy of the document shall be taxed. On the other hand, for the documents subject to fixed stamp duty (in Turkish,”maktu damga vergisi”); the taxation of each copy for the same document will continue.
• Commitments made as a sanction of a contract such as earnest money / retention money (in Turkish “pey akçesi”), forfeit money (in Turkish “cayma parası”), detention of  pay (in Turkish “ücret tevkifi”), penal clause  (in Turkish “cezai şart) shall  be exempt from the stamp duty unless they are the subject  of a contract independently.
• Another considerable amendment set forth in the Code is concerning the lease contracts. From the effective date of the relevant article, all warranties and guaranties (in Turkish “tüm teminatlar ve kefalet şerhleri”) annotated on lease contracts that are exempt from stamp duty shall also be a part of tax exemption. In other words, with the amendment, for the lease contracts that are already exempt from the stamp duty (as per the legislation in effect before the amendment), the guarantor’s signatures annotated to these contracts and/or the warranties in these contracts shall also be exempt from taxation.
• Before the enactment of the Code, the documents concerning incorporation, time extension and capital increase of the joint stock  companies (in Turkish, “Anonim Şirket”), limited liability companies (in Turkish, “Limited Şirket”) and limited partnership companies (in Turkish, “paylı komandit şirketler”) were already exempt from stamp duty. Following the amendment, the documents related to the share transfer shall also constitute an exception from stamp duty.

Through various amendments made on the Turkish Commercial Code, changes in article 40 and in article 543 are remarkable:

• Article 40: The amended regulation enables the merchants to have their commercial titles and signatures authenticated by the director or deputy director of the trade registry, if they prefer so. As per the former regulation, authentication by the notary public was the only valid way for the said procedure of authentication. The purpose of this amendment is to reduce the incorporation costs by avoiding from notary fees.
• Article 543: As per the amendment, for the companies entered into liquidation, the legal period that has to be elapsed after the third announcement made to the creditors in order to distribute the remaining assets of the company has been determined as six months instead of one year (the former legal period).

The Code also has several amendments related to the Law of Cheques such as;

• Article 5: By taking into consideration the date of issuance, following the deposit of the cheque within the legal period of deposit, a judicial fine (in Turkish “adli para cezası”) up to 1,500 days for each bad cheque may be imposed to the responsible person for bad cheques upon the cheque bearer’s complaint. There was no judicial fine foreseen in the former wording of the article.

Date of Effect

Article 76 of the Code regulates the effective dates of the amendments. In this regard, the amendments briefly mentioned above came into effect on the publish date of the Code in the Official Gazette, which is 9 August 2016.

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