LEGAL FRAMEWORK FOR SOCIAL ENTERPRISES IN TURKEY
Content
- Legal Framework in Turkey
- How social enterprises are defined according to Turkey’s legal framework?
- What the main types of social enterprises that exist in Turkey?
- The process of registering a social enterprises in Turkey
- How social enterprises are treated under tax law in Turkey?
Legal Framework in Turkey
According to a research by Sosyal Girisim, in Turkey,
People mistake social entrepreneurship for social enterprise or commercial enterprise, non-profit organization or else civil society organization. Legally, there needs to be a demarcation line between the entities abovementioned. The current legal structure enforces social enterprises to start in the form of associations, foundations, cooperatives or companies (Kırılmaz, 2012). As a result social enterprises have to struggle to fit in a position of a legal entity in which they cannot function soundly.
How social enterprises are defined according to Turkey’s legal framework?
There is a conceptual confusion between the concepts of social entrepreneurship, social enterprise,commercial enterprise, non-profit organization and civil society organization. This conceptual confusion poses an obstacle to social enterprises in expressing themselves clearly and increasing their numbers. Hence, it is imperative that a common definition and understanding be formed among these entities that operate closely with the social enterprises.
The main types of social enterprises that exist in Turkey
�-Foundations and Civil Society Organisations:
Foundations and NGOs can establish economic enterprises and companies to manage commercial activities,or they can be partners in companies.Income which is obtained from commercial activites can be used in the direction of the purposes of foundations and NGOS
A co-operative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointlyowned and democratically-controlled enterprise.
Companies:
In Turkey,non-profit companies arent defined as a seperate legal entities and there
isnt any specific legal regulation about it.But there are some companies which are
managed as social business
The process of registering a social enterprise in Turkey
Foundations and Civil Society Organisations:
Economic enterprises can only be established to support the activities of the
association or foundation and to generate income.
There are no tax exemptions from foundations / association economic
enterprises or companies.
At least seven people are required to establish an NGO and at least 16
people to manage it
Cooperatives:
There is no separation between cooperatives in the legislation and there is no
specific definition as social co-operative. Therefore, all cooperatives are
subject to the same principles and do not have an exception.
A high share of capital is required during the establishment phase.
Tax exemptions are not available
Companies:
In our legislation, there is no clear definition of a company; It is generally defined as a company in which two or more persons come together and combine their labor or goods with a contract to reach a common place
��How social enterprises are treated under tax law in Turkey?
Although it is known that not for profit entities function their roles for social purposes to serve the public, they are taxed the same way for-profit companies are. Tax exemption and public benefit statuses are highly bureaucratic processes and the privileges which are granted to a very limited number of Civil Society Organizations (CSOs) by the Council of Ministers in Turkey (TACSO, 2012).
Hence, it could be strongly advised that tax exemptions be provided to all social enterprises to enable them to have a coverage for the public benefit status. In present day, Turkish CSOs are more active thanks to the Foundations Law that was adopted in 2008 to improve the legal environment and also they are more aware of the deficiencies in the laws that still restrict their activities. It is evident that future reforms are both necessary and inevitable in the legal framework.
References:
https://www.ownr.co/blog/social-enterprise-examples/
http://www.dernekler.gov.tr/index.php?option=com_content&view=article&id=180% 3A5253-dernekler-kanunu&catid=30%3Akanunlar&Itemid=43&lang=tr
http://www.vgm.gov.tr/001_Menu/02_Mevzuat/01_Kanun/5737.cfm