How Do I Know If My Turkish Subsidiary Is Compliant?
A fixed-fee, independent review of an existing Turkish company’s books, tax filings, e-ledger and SGK position — for foreign parents who cannot see what their local accountant is actually doing.
- Most compliance problems in foreign-owned Turkish companies are invisible from headquarters: VAT balances that never reconcile, e-ledger files that were not sealed on time, SGK incentives silently lost, withholding on intercompany invoices not declared.
- The Entity Health Check tests the company’s records against the Tax Procedure Law, VAT Law, Corporate Tax Law and Law No. 5510 and returns a red / amber / green report with the tax exposure of each finding.
- It is priced as a fixed fee agreed in writing before we start, and it does not require you to change accountant.
Key facts
| Item | Detail |
|---|---|
| Who it is for | Foreign-owned Turkish subsidiaries, branches and liaison offices; groups before an audit, a sale, a financing round or an accountant change |
| What you receive | Written red/amber/green report in English, quantified exposure per finding, prioritised fix list, a 60-minute review call |
| Period covered | Normally the current year and the previous open tax years (the statute of limitations in Turkey is five years from the year after the tax year — Tax Procedure Law Art. 114) |
| Pricing | Fixed fee, confirmed in writing before work starts; driven by transaction volume, headcount and number of years reviewed |
| Access we need | Read-only e-ledger (e-defter) files, trial balances, VAT/withholding/SGK returns, bank statements, payroll files |
| Reviewer | Evren Özmen, Turkish Certified Public Accountant (SMMM), TÜRMOB Reg. No. 35675 |
What is a compliance health check for a Turkish company?
What we review
| Area | What we test | Legal basis |
|---|---|---|
| Statutory books and e-ledger | E-defter berat files generated and uploaded on time; trial balance ties to returns; bank and cash accounts reconcile | Tax Procedure Law (VUK) Arts. 175, 242; E-Defter General Communiqué |
| VAT | Output vs input VAT, carried-forward VAT that never unwinds, reverse-charge (Form 2 VAT) on services bought from abroad, exemptions claimed without documents | VAT Law No. 3065, Arts. 9, 11, 29 |
| Corporate tax | Non-deductible expenses, transfer pricing documentation, thin capitalisation, advance tax reconciliation | Corporate Tax Law No. 5520, Arts. 11–13, 32 |
| Withholding tax | Withholding on royalties, services and interest paid to the parent; treaty relief documentation (residence certificates) | Corporate Tax Law Art. 30; Income Tax Law Art. 94 |
| Payroll and SGK | Monthly MUHSGK filings, SGK base vs payroll, lost Treasury incentive, entry/exit notices, foreign staff work permits | Law No. 5510, Arts. 81, 86, 102; Law No. 6735 |
| Inflation adjustment | Whether 2023–2024 inflation-adjusted balance sheets were prepared correctly; confirmation that 2025–2027 are handled under the suspension | VUK Repeated Art. 298; Law No. 7571 (Official Gazette, December 2025) |
| Corporate housekeeping | Share ledger, general assembly minutes, capital registration, trade registry filings | Turkish Commercial Code No. 6102 |
Health check vs changing accountant: which do you need first?
| Entity Health Check | Changing accountant | |
|---|---|---|
| Goal | Find and size problems | Move the work to a new provider |
| Disruption | None — the current accountant keeps working | Handover of books, e-signature and portal access |
| Best when | You suspect issues but are not sure | You already know the relationship is not working |
| Output | Risk report and fix list | New monthly service |
Many groups run the health check first. If the findings are small, the current accountant fixes them. If they are serious, the report becomes the baseline for a clean accounting takeover.
What drives the fixed fee
- Transaction volume — number of invoices and bank lines per month.
- Headcount — payroll and SGK testing scales with employees.
- Years in scope — one year vs all open years.
- Intercompany activity — cross-border services, royalties and loans add withholding and transfer pricing work.
- Record quality — incomplete files or no e-ledger access lengthen the review.
You receive the fixed fee and timetable in writing before any work starts.
How Turkey compares: who checks the local accountant elsewhere?
| Country | Typical external check on a small subsidiary |
|---|---|
| Turkey | No statutory audit for most small companies — the parent often has no independent check unless it buys one |
| Germany | Statutory audit only above size thresholds; tax advisor (Steuerberater) prepares filings |
| UK | Audit exemption for small companies; HMRC compliance checks |
| Poland | Audit above thresholds; JPK electronic reporting gives the tax office real-time data |
Indicative comparison only.
Case study: the VAT balance nobody questioned
Illustrative scenario (composite of typical cases): A Dutch software group’s Istanbul subsidiary (14 employees) showed a growing “deductible VAT carried forward” balance for three years. The parent assumed it was normal.
The obvious answer: A service company with local costs will carry some VAT forward.
Why it failed: The subsidiary invoiced the parent without VAT as a service export, but the service documents did not support the exemption for part of the work. At the same time, reverse-charge VAT on software licences bought from the parent had never been declared.
The structure adopted: We quantified the exposure, the company corrected the returns through voluntary disclosure (pişmanlık, VUK Art. 371) before any tax audit, and the intercompany agreement was rewritten so each invoice line maps to a clear exemption or a VAT-able service.
What happens if…
What happens if the review finds unpaid tax?
We quantify the tax, late-payment interest and penalty, and show whether voluntary disclosure (pişmanlık, VUK Art. 371) is still available. Filing before the tax office starts an audit usually removes the tax-loss penalty.
What happens if our current accountant will not share files?
The company owns its books. E-ledger files and returns are also available through the company’s own GİB and SGK portal access. We explain which authorisations the parent needs to request.
What happens if everything is fine?
You get a written confirmation of what was tested and found clean — useful for group auditors, investors and buyers.
What happens after the report?
You choose: the current accountant fixes the items, we fix them as a one-off, or we take over the monthly work.
Frequently asked questions
How do I check if my company in Turkey is compliant?
Ask a licensed Turkish accountant who is independent from your current bookkeeper to reconcile the filed VAT, withholding, corporate tax and SGK returns against the statutory ledger and the bank, for every open tax year. That is exactly what the Entity Health Check does.
Does a small Turkish subsidiary need an audit?
Most small companies fall below the independent audit thresholds set by Presidential decision, so they have no statutory auditor. That is why parent companies often commission an independent review instead.
How far back can the Turkish tax office audit?
Five years from the start of the year following the tax year (Tax Procedure Law Art. 114). A review usually covers those open years.
Do we have to change accountant to get a health check?
No. The review is independent and works alongside your current provider.
Request an Entity Health Check
Send us the company name, headcount and the years you want reviewed. We reply with a fixed-fee proposal.
WhatsApp a CPAEmail evrenozmen@ozmconsultancy.com
Primary sources
“They are definitely the best accountant in Turkey for international business owners. They handle everything.”
“Finding a trustworthy, English-speaking CPA in Istanbul felt overwhelming at first — until I met Evren and his team.”
“Working with Evren has been the best decision for my business in Turkey.”