Does My Turkish Subsidiary Need a Statutory Audit? 2026 Thresholds Explained

From 2026, a Turkish company must have an independent statutory audit if, in two consecutive financial years, it exceeds at least two of three thresholds: total assets of TRY 500 million, annual net sales of TRY 1 billion, and 150 employees (Presidential Decision No. 11066, Official Gazette 17 March 2026). Figures of subsidiaries are combined with the parent’s. Banks, insurers and certain regulated companies are audited regardless of size.

How do you know if a Turkish company needs an independent audit?

Compare the company’s total assets, annual net sales and average employee count with the thresholds for two consecutive financial years. If at least two of the three are exceeded in both years, the company is subject to independent audit from the following year. The test uses statutory figures, combined with those of subsidiaries.

1. Identify the category. Is the company listed in Annex I (audited regardless of size), Annex II (lower thresholds), or a general company?
2. Take two consecutive years. For the 2026 audit obligation, a calendar-year company looks at its 2024 and 2025 financial statements. Companies with a special accounting period use the two most recent periods.
3. Measure three figures: total assets on the balance sheet date, annual net sales revenue, and the annual average number of employees.
4. Combine group figures for subsidiaries and, pro rata, affiliates.
5. Apply the two-of-three rule in both years. One year above and one year below is not enough.

2025 vs 2026 audit thresholds in Turkey

Presidential Decision No. 11066 raised the general thresholds from TRY 300 million to TRY 500 million of total assets and from TRY 600 million to TRY 1 billion of net sales, effective for periods beginning on or after 1 January 2026. The 150-employee threshold and the Annex II thresholds were left unchanged.

Annex II covers electronic communications companies authorised by the Information and Communication Technologies Authority (excluding call centres), entities connected to the Savings Deposit Insurance Fund (TMSF), and companies at least 50% owned by municipalities.

How are group figures combined for the audit test?

For total assets and net sales, a Turkish parent company adds the figures of its subsidiaries to its own, after eliminating intra-group balances and transactions, and includes affiliates in proportion to its shareholding. A Turkish holding company with several operating subsidiaries can therefore be in scope even if no single company exceeds the thresholds.

The combination applies to Turkish companies that themselves hold subsidiaries or affiliates. A foreign parent’s worldwide figures are not added to a Turkish subsidiary’s figures. Two sister companies in Turkey owned directly by the same foreign parent are tested separately, unless one holds shares in the other.

Which companies are audited regardless of size?

Annex I of the decision lists companies that must be audited whatever their size. These include banks, insurance and reinsurance companies, pension companies, capital markets institutions and other entities regulated by the Capital Markets Board and the Banking Regulation and Supervision Agency, as well as certain regulated sectors. If your Turkish entity holds a licence from a financial regulator, check Annex I before applying the size test.

Statutory audit vs group audit vs YMM certification: what is the difference?

A statutory audit is the independent audit required by the Turkish Commercial Code, performed by a KGK-authorised firm on the Turkish financial statements. A group audit is performed for the parent’s consolidated accounts and has no legal effect in Turkey. YMM full certification (tam tasdik) is a tax-focused review by a sworn financial advisor and does not replace a statutory audit.

Companies subject to audit generally prepare their statutory financial statements under the Financial Reporting Standard for Large and Medium-Sized Entities (BOBİ FRS) issued by KGK, unless they apply full Turkish Financial Reporting Standards (TFRS). This is different from the tax-based accounts many small subsidiaries keep, and the first audited year usually requires conversion work on the opening balances. See our guide on Turkish statutory accounting vs IFRS.

How and when must the auditor be appointed?

The general assembly elects the auditor for each financial year, and in any case before the year to be audited ends (Turkish Commercial Code Art. 399). The board or managers then register the appointment with the trade registry, where it is also announced. The auditor must be an audit firm authorised by KGK.

1. Run the threshold test on the last two years’ figures.
2. Obtain proposals from KGK-authorised audit firms and agree the scope, including group reporting needs.
3. Hold a general assembly (ordinary or extraordinary) to elect the auditor before the audited year ends.
4. Register and announce the appointment.
5. Prepare opening balances and accounting policies under BOBİ FRS or TFRS.
6. Complete the audit so that the audited financial statements are available for the ordinary general assembly.

What are the consequences of not having a required audit?

Under Turkish Commercial Code Art. 397/4, the financial statements and the board’s annual report of a company subject to audit are deemed not to have been prepared if they are not audited. In practice this means the general assembly cannot validly approve them — which undermines profit distribution resolutions and creates problems with banks, buyers and auditors in later years.

For a foreign parent, the most immediate impact is on dividends: a distribution based on financial statements that are legally treated as not prepared is open to challenge. It also becomes a finding in any sale process or due diligence.

What drives the cost of a statutory audit in Turkey?

• Size and complexity: number of entities, transactions, inventory locations and revenue streams.
• First-year work: opening balances, conversion to BOBİ FRS or TFRS, and documenting accounting policies.
• Quality of the books: reconciled accounts and a clean month-end close reduce audit hours significantly.
• Group coordination: whether the same firm also audits the IFRS reporting package for the parent.
• Specialist areas: inflation accounting, deferred tax, transfer pricing and related-party disclosures.
• Timeline: compressed deadlines driven by group reporting calendars cost more.

Statutory audit thresholds: Turkey vs Germany vs the UK

All three use a two-of-three size test, but the reference figures differ. After the 2026 increase, Turkey’s general thresholds are TRY 500 million of assets, TRY 1 billion of net sales and 150 employees. Germany exempts small companies below EUR 7.5 million of assets, EUR 15 million of turnover and 50 employees. The UK exempts small companies below GBP 7.5 million of assets, GBP 15 million of turnover and 50 employees.

Labour-intensive Turkish subsidiaries — engineering, software and shared service centres — often exceed the 150-employee threshold early. They enter audit scope once either total assets or net sales also crosses its threshold for two consecutive years.

Case analyses

Illustrative, anonymised and simplified scenarios based on recurring situations. The result in any real case depends on its facts.

What happens if…

What happens if the auditor is appointed after the year has ended?

Art. 399 requires the auditor to be elected before the end of the financial year to be audited. If this was missed, the practical fix is to appoint an auditor as soon as possible so the statements can be audited before the general assembly; the delay should be discussed with the auditor and, where relevant, the trade registry.

What happens if dividends are paid on unaudited statements?

If the company was subject to audit, its unaudited statements are deemed not to have been prepared, so the approval and the distribution resolution based on them are open to challenge. The audit should be completed and the statements approved before cash is distributed.

What happens if we cross the thresholds only through the employee count?

The employee count alone does not trigger an audit. At least two of the three thresholds must be exceeded in both years, so assets or net sales must also be over their limit.

What happens if our Turkish company is sold or merged?

Buyers routinely ask whether the statutory audit obligation was met. Missing audits appear as a legal-compliance finding in due diligence and can affect warranties and price. See our due diligence guide.

Common mistakes

1. Treating the parent’s group audit as the Turkish statutory audit.
2. Testing the Turkish holding company on standalone figures instead of combined figures.
3. Applying the test to one year instead of two consecutive years.
4. Appointing the auditor after the year to be audited has ended.
5. Assuming a YMM certification or a tax inspection satisfies the audit requirement.
6. Stopping an audit without checking the exit rule and bank or shareholder agreements.

Frequently asked questions

Conclusion

Whether a Turkish subsidiary needs a statutory audit in 2026 comes down to a mechanical test — two of three thresholds, two consecutive years, group figures combined — applied to the right financial statements. The 2026 increase to TRY 500 million of assets and TRY 1 billion of net sales takes many mid-sized subsidiaries out of scope, while the 150-employee threshold is unchanged. Where the audit is required, it must be a Turkish statutory audit by a KGK-authorised firm elected before year-end; a group audit does not replace it.

This article is provided for general informational purposes and does not constitute legal, accounting or audit advice. Whether a company is subject to independent audit depends on its sector, group structure and financial figures. Professional advice should be obtained before taking action.