Language and Currency Regulations
All financial records must be documented in Turkish, as specified in the statutory books (refer to Table 2 for details). However, companies have the flexibility to maintain additional records in other languages to accommodate international operations. Transactions within these books are recorded in Turkish Lira (TRY), the official currency. While it is possible to keep records in foreign currencies, the equivalent value in TRY must also be indicated, except for documents intended for international customers where displaying TRY is not obligatory.
In line with Turkish tax laws, businesses are required to utilize the Uniform Chart of Accounts. This standardized accounting framework helps streamline financial reporting and ensures consistency across all records, facilitating easier compliance and audit processes.
The Council of Ministers holds the authority to permit accounting in currencies other than the Turkish Lira for entities with significant foreign investment. Specifically, establishments with at least 40% of their capital owned by investors without a legal residence, headquarters, or business operations in Turkey, and with a paid-up capital of at least US$100 million or its equivalent in TRY at the time of book certification, may qualify for this exception. For transactions in TRY that need conversion, the exchange rate published by the Central Bank of Turkey on the transaction date is used.
The opening and year-end closings of statutory books are required to be authenticated by a public notary, ensuring the integrity and official recognition of the financial records. Companies must retain their accounting records, such as the Journal Ledger, Inventory Ledger, and General Ledger, for five years following the relevant accounting period as per Turkish tax procedural law. Additionally, to comply with the New Turkish Commercial Code and the Social Security System, these records should be kept for a duration of ten years.
Conclusion
Adhering to these statutory bookkeeping requirements is crucial for both regulatory compliance and effective financial management in Turkey. By understanding and implementing these guidelines, companies can ensure they meet the legal standards, thereby avoiding potential legal issues and facilitating smoother business operations within the Turkish market.