Getting a work permit has been made easier.

The Turkish parliament has approved a bill that enables foreigners to get a work permit easier. Due to the new bill the following groups will not need a work permit anymore:

For those who do not to any of these groups, you have to follow the normal procedure for a work permet. If an application for a certain position has been denied, the applicant has to wait one year before he can apply again. Work permits are only provided if there is a shortage of Turkish personnel for that partical position.

Source : Hello Anlanya

Unlimited risks within a LTD?

Next month I will elaborate about the conditions for work permits in Turkey for foreigners. This month’s subject is the liability of shareholders in a limited company (Limited Sirketi) in Turkey.

One of the most obvious reasons for establishing a limited is to limit the liability of the partners. This in contrary to a personal company in which an entrepreneur is also liable with his personal assets for the debts of the company. Private assets are more protected with a limited company.

The liability of the shareholders in a limited company is limited in most countries to the amount which is invested in the company. The limited is a legal person and has individual rights and obligations. Persons involved, like directors and commissioners are not liable with their private assets for the debts of the company. However: this is the law in most countries… Turkey can be called remarkable in this respect.

Due to the fact that in most countries this limited liability was abused, anti-abuse provisions have been established. Because of this the director (as managing director) and those who have stipulated the governance of the limited, are liable with their private assets if certain conditions are met, for instance if there is a double method of accounting. Turkey however goes much further.

The Limited Liability Company is defined in Article 503 of the Turkish Commercial Code (TCC) as a capital company “with a specific amount of share capital founded, under a specific trade name, by two or more natural or legal persons whose liability therein is limited to the amount of capital subscribed to by them.”

As the definition denotes, in a limited liability company, each shareholder (member) is liable up to the amount of capital subscribed to by them. If the members have met their capital subscription, they are liable for no debt of the company, even at bankruptcy of the company.

However, Article 35 of Act No. 6183 on the Procedures for Collection of Public Claims (tax debts”) expands liability of the members as regards collection of taxes, fees, duties, tax penalties, tax default penalties, tax default interests and any other public claims due from their company. Article 35 thereof provides that “shareholders in a limited liability company will be directly liable in proportion to their respective capital interest and thus be pursued in accordance with the provisions of this Act, for any public claims uncollectible from their company.”

Accordingly, shareholders of a limited liability company may be pursued only when proceedings brought against their company as per Article 54 et seq in Act No. 6183 result in no or insufficient collection of any public claim from the company.

Cases resulting in no or insufficient collection of any public claim from the company are listed as follows in “General Communiqué S/N 405 on Collections” of Act No. 6183:

- If the value of the attached assets of the company as determined according to the provisions of Act No. 6183 fails to satisfy (all) the public claim or if there is still any public claim remaining uncollected despite a forced sale;

- If the company has no assets suitable for being attached;

- If there is an opinion that the public claim will remain uncollected even after bankruptcy proceedings when a petition has been filed against the company or when the company has been adjudged bankrupt;

- If the indebted company cannot be located despite all searches and inquiries.

Above mentioned conditions need to be met, if the Tax Office wants to hold the shareholders responsible.

Summarized it all comes down to the fact that if there is any public claim insufficient collectible from the company or its managers, the Tax Office is able to collect these debts according to article 35 from the shareholders.

The nationality of the legal person is not relevant. In other words: also a Dutch, Belgium, Swedish, Norwegian, Danish, Irish or English national, participating in a Turkish Ltd. Can be held responsible according to the provisions in the law to ultimately pay the public debts (tax debts).

My advice is: if you participate in an existing Ltd. or establish a Ltd. in Turkey, it is necessary to be aware of the fact that “limited” is valid only for ordinary creditors. Your private assets are always liable for tax debts. If you participate in an existing Ltd., you might consider asking a statement from the Turkish Tax Office about the position of company regarding tax debts. Also a research by a certified public accountant may shed some light on the matter.

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Partly based on an article by Alo Maliye (Hikmet Kabuk) with thanks to mr. Henk Sepers

Source : Hello Alanya 20 October 2007

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