- January 23, 2022
- Posted by: Cihangir Karabıyık
- Category: NGO Law
Turkish law allows for associations to apply for a Public Benefit Association (PBA)(Kamu Yararına Çalışan Dernek) status, provided that the association meets the following criteria:
- Should be active for at least one year,
- Procurement and sales transactions valued a specific amount (updated each year) or above during the past year should have been conducted at a competitive rate,
- Its purpose and activities should have resolved public problems (other than the problems of its members) and contributed to public development on a national or international level.
- At least half of the income it has generated in the past year should have been spent towards such purposes.
- Its assets and annual income should be sufficient to realize the aims of the association.
There are currently around 400 associations with PBA status in Turkey.
Application and evaluation process to receive “public benefit association” (PBA) status:
- (Minimum one year after the establishment of the association), an application is lodged at the Mayor’s Office with the following supporting documents:
- Certified Articles of the Association
- Statement on the number of members
- Statement on the number of branches and location
- Report on the activities, services provided by and works projected by the association with a view to public benefit
- Balance sheet for the past year
- List of movable and immovable assets
- Copy of the board resolution to apply for public benefit status
- Mayor’s Office forwards the application to the Ministry of Interior within a month, together with its opinion on the merits and suitability of the applicant.
- Ministry of Interior auditors perform an audit to decide whether the association meets the PBA criteria (see Section A above).
- Ministry of Interior submits the application to several ministries to get their opinions
- Ministry of Finance’s and other ministries’ affirmative opinions are received,
- President’s Office resolves on the matter and public benefit status is granted or rejected.
The whole process, from establishment of the association until the President’s Office’s decision, is estimated to take approximately one year.
The final decision of the President’s Office may be a political decision, and even if all criteria are met and all ministries involved give positive opinions, the President’s Office might choose to reject the PBA application on political grounds. However the opposite may also be true, in the sense that the President’s Office may approve the PBA application on political or diplomatic grounds even if one or more ministries provide negative opinions.
Consequences of obtaining the status of public benefit association (“PBA”):
- PBAs are exempt from VAT for the delivery of goods and services.
- 5% of donations made to PBAs are deductible from income tax for individuals, and from corporate tax for legal entities.
- 100% of donations made by PBAs related to certain activities are deductible from income tax.
- PBAs are exempt from any inheritance tax.
- Buildings and lands owned by PBAs are permanently exempt from building and land taxes.
- PBAs, as well as donation and aid receipts delivered to PBAs, are exempt from all stamp tax.
- PBAs are exempt from duty tax.
- Rehabilitation centers operated by PBAs are exempt from corporate tax.
- PBA commercial enterprises are exempt from entertainment tax.
- PBAs are permitted to freely run all fundraising activities without government permission, including for example organizing fundraising rallies and events, placing donation collection booths and kiosks in public places, placing donation boxes in public places, etc. In contrast, ordinary non-PBA associations are required to obtain a permit for fundraising.
- Most goods imported by PBA (including medical devices, pharmaceuticals, etc.) are exempt from customs tax.
- PBAs can acquire for nil consideration the usufructuary rights of public cultural and natural assets, subject to government’s approval.
- PBAs are subject to a special legal regime on the sale of lands owned by treasury.
- PBA Presidents are included in the state protocol at public celebrations, events, etc.
- PBAs are audited at least once every two years by Ministry auditors.
- Crimes committed against the property of a PBA are deemed to have been committed against state property.
- A person who unjustly jeopardizes the performance of an obligation undertaken to the benefit of a PBA shall be sentenced to jail for 3 to 7 years.
- Members of the Board of Directors and Supervisory Board of a PBA are required to declare their wealth (assets) to GoT.
- Every two years PBA associations undergo ministry inspection to verify that they still meet all PBA criteria. If the inspector and MoI have valid reasons to believe that the association no longer meets the criteria, then it may bring the matter to the attention of President’s Office, which has the power to revoke the PBA status in such an event.
- After receiving the PBA status, the PBA association’s overhead/admin expenses should not exceed 1/3 of its annual income; as per the Ministry of Finance communiqué numbered 64761, dated 20.07.2007.