The foreign companies with associated group companies in Turkey put effort for sending relief through their group companies in Turkey following the earthquake. They have started to transfer some of their annual relief budgets to Turkey. Firstly, I would like to start with a warning. If a donation is made to an association and it is made through rendering the group company in Turkey an intermediary, it will be beneficial to notify that the aid is foreign-sourced. The reason for it is that the foreign-sourced donations should be notified to the local authorities by the associations before using them as per the article 18 of Regulation on Associations. AFAD is not an association since it is within the public administration and an administrative unit under the Ministry of Interior. Let’s examine the questions on this subject.

1. Will an invoice be issued? Is it an income? Is it subject to VAT?

In case that a foreign-sourced aid is sent to an institution in Turkey, the company in Turkey is an intermediary to ensure that the donation is delivered to the relevant receiver. Therefore, the amount sent should not be associated with the commercial gain or activity of the intermediary company. There is no need to issue invoice for the amount since no goods or service delivery is in question. Quite the contrary, this will be off the mark. Such amounts do not constitute an income nor subject to VAT.

2. Does it pose a problem to make donations to charities during and after the capital increase?

Companies may go for capital increase any time. There is no restriction on where and how the increased capital will be used. Donating the amount increased after capital increase does not pose an obstacle.

3. Does aid collection constitute a breach of law?

As the amount sent by foreign group companies for the purpose of donation to Turkey will not be considered as aid collection activity of the group company in Turkey, no breach is in question as part of the Law on Aid Collection No 2860.

4. If an aid collection campaign is organized abroad, will it be contrary to the law no 2860?

Group companies can sometimes organize campaigns and collect aids among their own employees or other group companies abroad. The amount of aid collected can be transferred directly or through the group company in Turkey to the relevant recipient company. In this case, Law no 2860 will not be executed since the aid collection activity is performed outside Turkey.

5. Is it possible that “you pay the amount of aid to the recipient organization in advance and I make the payment to you”?

This can be preferred in a way that the related institution in Turkey sends aid in advance upon the request and on behalf of the company abroad, for the purpose of acting promptly, as per the demand of and in the amount provided by the company abroad, then the amount of aid is transferred into Turkey later. It will be enough that the correspondences with the company sending aid represent the situation as it is. After donation, it would be to the point that the recipient institutions and amounts donated should be included in the writing to be sent to the donating company, adding the documents to be received from relevant companies, and that all of the correspondences are kept at the intermediary company together with the records of such payments.

6. Is it possible that the amount of aid is transferred to the group company in Turkey and the group company sends the amount of aid to the relevant institution?

In case that a company founded abroad wants to send aid for the earthquake in Turkey at its sole discretion, it may render the group company in Turkey intermediary. In my opinion, it will not be considered within the law no 2860 if such aid is sent to the relevant institutions and organizations.

7. Is it possible to send aid to the relevant company in Turkey directly from abroad?

It will be the easiest way to transfer aids directly to the bank accounts of recipient institutions from abroad.

8. Will it cause any problem at the bank to receive the money as donation?

It will not cause any problem to explain that the money sent is a donation for the earthquake. It cannot be reported as debt, property, or service fee, and capital.

9. Will it cause any problem for the company in Turkey to decide the recipient of donation?

No, it will not. It does not change the fact that the donation is made by the company abroad.

10. What should be written on the documents?

The money to be transferred to the related company from abroad can be named as donation. It will be beneficial for the sending company to notify in writing that it sends the amount for the purpose of aid for the earthquake disaster in Turkey and that it will be donated to the relevant institutions.