Legal and Financial Evaluation of the Amendments Made to the SME Regulation

On 7 August 2025, Presidential Decree No. 10182 enacted the "Regulation Amending the Regulation on Small and Medium-Sized Enterprises," which was published in the Official Gazette and entered into force on the same date. This amendment primarily concerns the revision of the threshold values used to determine the SME status of enterprises.

With this amendment, the phrase "five hundred million" in Article 4(1)(b) and Article 5(1)(c) of the Regulation was replaced with "one billion":

Article 4/1-b: "Small and Medium-Sized Enterprise (SME): Refers to enterprises with fewer than 250 employees and either annual net sales revenue or balance sheet total not exceeding one billion Turkish Liras."

Article 5/1-c: "Medium-sized enterprise: Enterprises with fewer than 250 employees and either annual net sales revenue or balance sheet total not exceeding one billion Turkish Liras."

Articles 4 and 5 of the Regulation define the types of enterprises and set forth the primary criteria for classifying enterprises as micro, small, or medium-sized: annual number of employees, annual net sales revenue, and balance sheet size.

The amendment specifically doubles the turnover and balance sheet thresholds without altering the employee number criteria.

LEGAL FRAMEWORK ANALYSIS

These changes merely revise the threshold values without altering the existing definitions or conceptual framework. In this respect, the administration has exercised its discretionary power in a lawful manner. Moreover, the regulation aligns with Article 167(1) of the Turkish Constitution, which concerns the supervision of the domestic market:

Article 167/1: "The State shall take measures to ensure and promote the sound and orderly functioning of money, credit, capital, goods and services markets; and shall prevent monopolisation and cartelisation, whether by de facto practices or agreements."

ECONOMIC NECESSITY

In recent years, high inflation, fluctuations in exchange rates, and rising input costs in the Turkish economy have significantly increased the turnover and balance sheet figures of many enterprises in the real sector. However, this growth stems more from the economic environment than from actual growth in operational scale, as increased production costs and sale prices have artificially inflated enterprise revenues.

Under the outdated thresholds, many businesses had technically lost their SME status, resulting in:

• Restricted access to KOSGEB (Small and Medium Enterprises Development Organization) supports,

• Limited ability to benefit from SME credit products in the banking sector,

• Exclusion from SME advantages in public procurement.

Thanks to the updated thresholds, these enterprises can once again qualify as SMEs and regain access to public support mechanisms.

CONCLUSION AND EVALUATION

The regulatory amendment dated 6 August 2025 represents a timely and appropriate step toward realigning the SME definition with current economic realities. Enterprises are advised to reassess their status and update their access to incentive mechanisms accordingly. In this context, following legal developments and obtaining legal consultancy when necessary would be beneficial for enterprises.

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