23 September 2020
Amendment to the Associations Regulation: Declaration Obligations Regarding Cash and In-Kind Donations Received From Abroad
The Associations Regulation ("Regulation"), which is a key piece of legislation regulating the activities of international NGO's ("INGO"), has been amended on 9 July 2020. One of the most important changes related to the declaration requirements for cash and in-kind donations received by the INGO’s Turkey office.
Accordingly, INGO’s in Turkey will be required to declare all cash and in kind assistance acquired from abroad – including those received from the INGO’s headquarters (“HQ”). Authorized individuals should be diligent with respect to these obligations since it may result in criminal liability punishable with a prison sentence or judicial fine of up to three months.
Declaration Obligations and Previous Exemption
The Regulation stipulates that all donations received - from abroad - by Turkish associations as well as representative offices, direct activities offices and branches of INGO's are required to be declared to the Governorship where they are registered (“Declaration”).
Previously, this provision included an exception for INGO's as long the donation was carried out by the INGO headquarters. For example, a representative office registered in Turkey would be exempt from declaring any amounts sent to it from abroad as long as these amounts were sent by the HQ.
What is a Donation?
The regulation interprets donations broadly to mean any cash or in kind assets received. Under the interpretation of the legislation any cash or in-kind assets received by the INGO from HQ (or any third party) shall also constitute a donation. If these donations are made from abroad they will need to be declared.
What Does the Amendment Change?
The recent amendment to the Regulation includes an explicit provision which removes the exception for INGO's to declare donations made by the HQ. As of July, all representative offices, direct activities offices and branches of INGO's are required to declare any funds or in kind assets received from abroad, including funds received from HQ.
How is the Declaration Carried Out?
The Declaration is carried out through the use of "Form Annex 4" provided in the annexes of the Regulation. The respective form is required to be filled out, signed by the authorized representative of the INGO in Turkey and submitted to the relevant authority. Alternatively, organizations which have access to the DERBIS system may submit the declaration electronically.
The regulation stipulates that certain organizations will be required to submit their declarations electronically through DERBIS. Each organization should review the requirements for the procedure of application applicable to them.
When is the Declaration Required to be Made?
The Regulation specifically indicates that the declaration is required to be made before the funds are received through bank transfer and before their use. The historical practice of the Governorship has been to accept that declarations are compliant if they have been made after the funds have been received but before they are spent. However, this practice may change and we would advise that the declaration is carried out before the HQ transfers any amounts.
Content of the Declaration
The content of the declaration has also been expanded. The Declaration will include the following information relating to the use of the donation:
whether the donation is cash or in kind;
up front, in installments, conditioned, relates to a project;
the institution which will carry out the donation, contact details of the institution;
where the donation will be spent or how it will be used, including nature of the activities it will be used for with specific reference to activity classifications; and
certain details relating to the project if the donation relates to a project.
The legislation has not clarified the actions the INGO is required to undertake if the projections or foresight with respect to the use of the donations changes. In the event the donations are going to be used differently than originally declared we evaluate that additional action will be required.
Penalty for Non-Compliance
The Law of Associations stipulates that individuals who breach provisions regarding the Declaration may be imposed a prison sentence or judicial fine of up to three months. These sanctions will be imposed on individuals who are authorized to represent the organization, such as board members or registered representatives.
With the recent amendments to the Regulation; representative offices, direct activities offices and branches of INGO's are obligatds to submit a declaration for donations received from abroad, even if the donation is sent by the HQ. Authorized individuals should be diligent with respect to these obligations since it may result in criminal liability punishable with a prison sentence or judicial fine of up to three months.