Turkish Tax News
Nazmi KARYAĞDI
26 April 2020Nazmi KARYAĞDI
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Limitations Profit Distribution in Turkey

Countries are taking both healthy and economic measures to address the negative effects of coronavirus (COVID-19).

In this context, tools such as cash support and easy access to credit are used to protect households, small and medium-sized businesses, and self-employed businesses.

Last couple of weeks, a Law (Number 7244) passed in the Parliament to protect cash structure of the company in Turkey.

Generally speaking, it is aimed at limiting the profit distribution of the companies with the regulation made.

Law No. 7244 has added “Provisional Article 13” to the Turkish Commercial Code No. 6102 with Article 12.

Until September 30th; 2020;

  • Companies cannot distribute dividends exceeding twenty five percent (25%) of their net profit for the 2019 fiscal year
  • Companies cannot distribute retained earnings or free reserve funds
  • The general assemblies of companies cannot grant the board of directors the authority to distribute advance dividends
  • Even if the general assembly adopted a dividend distribution resolution for the 2019 fiscal year, if the shareholders have not yet been paid or if partial payments have been made, companies must postpone dividend payments exceeding twenty five percent (25%) of their net profit for the 2019 fiscal year (until 30 September 2020).

If the President sees fit, he will be able to shorten or extend the regulation by the end of 2020.

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