Cash pooling is a cash management model which enables group of
companies to minimize expenditure and optimize excess liquidity by
way of having a central management of the cash and liquidity
positions of their subsidiaries. Cash pooling system is growing
more popular each day and widely used in many countries such as
Germany, France, the Netherlands and England, however, in some
countries, namely China, Argentina, Taiwan and Brazil, cash pooling
system is prohibited.
Although it is not prohibited, cash pooling system is not
regulated in Turkey. This memorandum aims to explain the purpose
and different types of cash pooling mainly focusing on its
advantages and risks in light of Turkish law. Although cash pooling
mechanism has crucial tax implications under Turkish law that need
to be carefully considered, this memorandum will not touch on such
tax issues.
