Tests of doing business and penalties for unregistered entities considered as doing business in Türkiye

1) What is considered doing business without registration?

Operating a continuous for-profit sale of goods or services without the mandatory tax registration, trade registry entry, or necessary licenses is considered an "unregistered business." This includes making regular sales without issuing invoices/receipts, generating systematic income through e-commerce platforms, or opening a business premises without establishing a tax liability. Essentially, once a commercial or freelance activity qualifies as a "business," it must be reported to the tax office; if it continues without being reported, it is an unregistered activity.

2) What are the key indicators of doing business?

Continuity and organisation are the most important criteria: regular sales, keeping stock, having a workplace/office/workshop, using a website or brand, advertising and maintaining a customer base all indicate business activity. Frequent collections via POS devices, commercial bank accounts or e-commerce infrastructure also create commercial character. Recent tax authority audits have revealed individuals making millions of lira in sales without tax registration, demonstrating how these indicators are assessed in practice.

3) What are the legal consequences of doing business without registration?

Once unregistered activity is detected, undeclared revenue is assessed, followed by tax loss penalties and late-payment interest. In practice, tax loss penalties may be imposed in multiples of the avoided tax (up to three times in serious cases). In addition, failure to issue invoices/receipts, failure to obtain required documents, failure to keep statutory books or failure to use mandatory electronic systems (e-invoice, e-archive, etc.) triggers special irregularity fines. Depending on the severity of the conduct, these administrative fines may be applied cumulatively, causing a very substantial financial burden.

4) What is the penalty amount in 2025?

In 2025, the special irregularity fine for failing to issue or obtain documents such as invoices, expense vouchers, producer receipts or self-employment receipts is set at 10% of the amount, but not less than TRY 14,000 per document. The total fine for the same type of document within a calendar year may reach millions of lira. Consumers who fail to obtain required documents may also face separate irregularity fines per missing document. Moreover, assessed tax, tax loss penalties and late-payment interest must also be paid—meaning the sanctions form a multi-layered penalty package rather than a single fine.

5) Is criminal liability possible?

Yes. If the unregistered activity reaches the level of deliberate tax evasion, imprisonment penalties may arise under Article 359 of the Tax Procedure Law. Acts such as falsifying documents, issuing/using fake or misleading invoices, or concealing books and records may result in prison sentences ranging from 18 months to 8 years. While small-scale unregistered activities generally lead to administrative fines, large-scale, systematic or document-based evasion carries a realistic risk of criminal prosecution.

6) Who identifies unregistered business activity?

The primary authority responsible for combating the informal economy is the Turkish Revenue Administration (GİB), which identifies risky taxpayers by analysing bank transactions, e-invoice/e-archive data and information from e-commerce platforms. Between 2021–2024, inspections revealed TRY 44.5 billion in unregistered revenue across 17,104 individuals, demonstrating the effectiveness of data-driven audits. Additionally, SGK and municipalities report unregistered operations detected during workplace inspections; whistleblowing, complaints and inter-agency data sharing also play important roles.

7) What should be done if the activity is already ongoing without registration?

The safest approach is to immediately formalise the activity, establish tax liability with the tax office and complete any required trade registry or chamber registrations. Past revenue should then be declared, missing returns filed and resulting taxes, penalties and interest paid. Thousands of taxpayers who responded positively to GİB’s “invitation to explain” (izaha davet) process were able to resolve their cases with significantly reduced penalties, demonstrating the benefits of voluntary compliance. However, because each situation must be evaluated individually, obtaining tailored legal advice at this stage is highly important.

8) What obligations arise after registering a business?

After registration, the business becomes subject to full bookkeeping, document issuance, tax return filing and payment obligations. This includes income/corporate tax, VAT (where applicable), withholding tax and provisional tax declarations, all of which must be filed and paid on time. If employees are hired, the business must notify the Social Security Institution (SGK), register the workplace and comply with labour law and occupational safety rules. Even taxpayers under the simplified “basit usul” regime must maintain proper records and comply with document-issuance requirements under current legislation.

9) From what income level must an individual register as an entrepreneur?

As a rule, tax registration is required as soon as a commercial or self-employment activity is conducted continuously and systematically; therefore, not only the income level but the nature of the activity is decisive. For small taxpayers under the simplified “basit usul” regime, the 2025 thresholds under Article 48 of the Income Tax Law are: annual purchases up to 990,000 TL and annual sales up to 1,580,000 TL for traders; and an annual gross service revenue limit of TRY 480,000 for service providers. If these thresholds or other conditions are exceeded, the taxpayer must shift to the full (real) taxation regime with full bookkeeping and reporting obligations. Operating with high turnover while remaining unregistered creates substantial risks of retroactive taxation and significant penalties.

Authors: Esra Dicle Ulusoy, Aigerim Sabit Bikmaz