NEWSLETTER-2017

365 MISCELLANEOUS nomic enterprises, in the decision of joint chambers of the Council of State, numbered E. 1992/2 K. 1994/2 and dated 16.6.1994. This deci- sion is important as it enlightens the reasoning underlies the fact that economic enterprises of foundations are subject to corporation tax: “Although the associations are excluded from the scope of the corporation tax as they do not have an economic character, their economic enterprises are subject to the corporation tax pursuant to economic public enterprise taxation provisions. In the event that the economic enterprises of the associations are excluded from the scope of the taxation, they obtain an advantage in proportion of the tax amount vis-a-vis the profit-oriented en- terprises. In this case the competition equity will be deteriorated. Moreover the development of individual enterprises and the en- terprises that belongs to private persons will be precluded. In this respect, in order to eliminate the abovementioned inconveniency and protect the competition equity, in the preamble of the Draft Corporation Tax Law it is stated that, the economic enterprises of associations are subjected to taxation.” 14 In this regard, one of the points to pay attention is that; the fact that foundations benefit from the tax exemption by the Council of Ministers in accordance with Art. 20 of the Law on the Amendment to Certain Laws and Recognition of Tax Exemptions to Foundations No. 4962 does not mean that the economic enterprise of the foundation can also benefit from the tax exemption 15 . The Economic Enterprises of Foundations’ Being Subject to Audit Pursuant to Art. 111 of the CC, General Directorate for Founda- tions shall audit whether foundations manage their assets in accor- dance with their objective and whether they expend their incomes in conformity with latter. In addition, pursuant to Art. 33 of the Law of Foundations and Art. 39 of the Regulation on Foundations the com- patibility of foundations to their objectives and to the legislation and the compatibility of their economic enterprises to the legislation shall 14 Council of State Joint Chambers Decision, E. 1992/2 K. 1994/2, 16.06.1994. 15 Aydın, Erkan, p. 59.