The country’s location in southwestern Asia and southern Europe at the crossroads of many trade routes has contributed to the formation in Turkey of traditions of loyalty to foreign and international business.
The Republic of Turkey today willingly accepts both large foreign investors and small FinTech startups. It is not necessary to involve a Turkish citizen for participation or management to open a company in Turkey. Companies with 100% foreign capital get the opportunity to operate on equal terms with local business entities.
Important! You can comfortably and quickly register a company in the Republic of Turkey with the support of a team of experts in the field of legal support for international business of the Lawrange Attorneys Association. We work in close cooperation with local lawyers and certified public accountants, so that the required result is achieved without delay and with minimal involvement of the client.
Features of Turkey as a jurisdiction for business registration
For more than 20 years (since 1999) the Republic of Turkey has been in the status of a candidate member of the European Union. Despite some political disagreements, the state is implementing EU economic standards and has reformed the legal framework in terms of business regulation and investment. The state simultaneously provides reliable guarantees for foreign businessmen, as well as creates tax and other incentives for attracting capital.
Among the main characteristics of Turkey as a jurisdiction are:
- advantageous location – the presence of borders with eight states: Bulgaria, Georgia, Syria, Iran, Armenia, Greece, Iraq and Azerbaijan;
- high level of GDP;
- existence of a legislative foundation for the regulation of international business activities in the country. First of all it is the law No. 4875 “On foreign direct investment” dated June 5, 2003 and the provisions of the current Commercial Code;
- well-established import-export relationships, in particular, maritime trade, with key players in the world market USA, China, Germany, Italy, France and the UK;
- the proper level of stability of the national currency – the Turkish lira (1 TRY = 0.068 USD as of March 17, 2022);
- functioning in the country of a large number of industrial, technological and free economic zones;
- modern infrastructure, availability of qualified personnel.
Advantages of opening a company in Turkey
- A transparent and understandable process of processing all documents from direct registration to licensing, obtaining quality certificates, permits, reporting, and so on. The state apparatus works clearly and harmoniously.
- Presence of 76 DTA agreements (Double Taxation Treaties, agreements on avoidance of double taxation) with European, Asian, African states.
- Predictability and low risk for non-resident entrepreneurs. On the one hand, foreigners, along with representatives of local businesses, can enjoy the rights, subsidies and benefits from the state. On the other hand, they bear the same responsibility on a par with residents in case of offenses.
- Implementation by the government of the country of systematic steps to attract investment. In addition to the benefits of special investment zones, foreign investors are given the opportunity to receive an Investment Incentive Certificate (IIC) from the state. IIC provides for exemption from a number of fees, VAT refunds, and tax cuts.
Popular Business Destinations in Turkey
Note! The “engines” of today`s Turkish economy are the textile and food industries, pharmaceuticals, agriculture, the automotive industry, shipbuilding, and the production of electrical household goods. Contrary to popular belief, tourism is not the country’s main source of income, although it is included in the list of important business areas.
Experts recommend foreign businessmen to consider such business options as the establishment of a transport (logistics, forwarding) company, the launch of an investment project, the creation of a mining enterprise or a manufacturing enterprise. The tourist destination is also rated as quite promising.
Note! As of today, businessmen from the CIS have mainly opened companies related to the service sector. For example, the acquisition of hotels, the opening of restaurants, cafes, bars, beauty salons.
In free economic zones, residents and foreigners develop such business areas as software development, warehouse logistics, insurance, international trade and banking.
Organizational and legal forms of entrepreneurship in Turkey
From the content of the norms of Law No. 4875 “On Foreign Direct Investments” emerged the possibility of founding in this jurisdiction economic entities such organizational and legal forms (OPF):
- individual entrepreneur;
- Limited Şirket, LS – LLC, limited liability company;
- Anonim Şirket, AS – joint-stock company;
- simple partnership;
- Komandit Şirket – limited partnership;
- collective company;
Note! In terms of characteristics, these OPFs correlate with analogues in Europe – Limited Liability Company (Ltd., L.S.), Corporation (A.S.), Partnership, Branch.
Important! The most commonly used OPFs in the Republic of Turkey are LLC (LS) and JSC (AS). Approximately 82% of business entities in the country operate in these forms.
Other OPFs are less convenient for one reason or another. For example, a partnership in Turkey (Komandit Şirket) provides for such a condition as the liability of the general partner for the debts and obligations of the enterprise.
Turkish company LTD – limited liability company
Limited Şirket is a convenient and easy-to-manage form of doing business for foreign businessmen with the following key features:
- the minimal number of shareholders is one, maximum – 50;
- management is carried out by an official – manager, board of directors;
- shareholders, managers may be citizens of other states, shareholders may be a legal entity, the manager – only an individual;
- minimum authorized capital – 10 thousand Turkish liras (TRY) = approximately 680 USD;
- the statutory fund must be deposited immediately, installment is not allowed.
Note! This form of business is well suited for commercial, industrial activities. To provide insurance services, to engage in banking, it is better to consider the AS option or other alternatives.
Turkish Joint-Stock Company
Anonim Sirket, AS is a form chosen by large foreign investors, as well as entrepreneurs who plan to provide services in the field of finance and insurance. JSC can be created as an open (OJSC) or closed (CJSC) type. Characteristics of the OPF:
- minimum number of shareholders – 1 (individual or legal entity);
- management should be carried out by the manager, the board of directors;
- minimum authorized capital – 50 thousand Turkish liras (TRY) = approximately 3400 USD;
- the statutory fund is divided into shares, has a monetary value or is measured by the number of shares with a par value in TRY;
- the authorized capital must be paid in full at the time of filing an application for registration.
Note! Shareholders of Anonim Sirket, as well as members of Limited Şirket, are liable for debts and obligations in proportion to the amount of contributed capital.
Registration procedure accompanied by Lawrange
With the involvement of specialists from Lawrange, the registration of a company in Turkey can take place without a personal visit of the shareholder to the Republic of Turkey. We maintain partnerships with local lawyers and certified public accountants. For one of them, a power of attorney is issued with the definition of authority regarding the registration of the company in all relevant bodies. Another power of attorney, on behalf of the newly formed company, is issued for opening corporate bank accounts.
Important! The legislation requires the personal presence of the founders during the implementation of all notarial acts during the registration of a business entity or the presence of a corresponding power of attorney in the person representing the interests of the founders.
The cost of services for opening a company + bank account – 3900 EUR.
Opening a company in Turkey includes the following steps:
- Definition of areas of activity, the choice of the original name.
- Preparation of a package of documentation and translation into Turkish by a certified notary translator.
- Drafting, signing and notarization of the company’s charter.
- Solving the issue with the legal address – the conclusion of an agreement for the lease of premises or the use of a virtual office.
- Depositing 0.04% of the capital to the antimonopoly body – an appropriate receipt is issued.
- Entering a business entity into the MERSIS e-system – assigning a unique business number. Registration with MERSIS should not be considered as a substitute for filing documents with the Commercial Register.
- Assignment of a taxpayer identification number in the tax service.
- Registration of a bank account for depositing the statutory fund.
- Submission of an application, registration of a business entity in the Commercial Register.
***Note: When choosing a company name, it is necessary to take into account the following nuances: a) it must contain an indication of the direction of activity; b) the presence of foreign words is allowed only if it is consistent with the law; c) the name is checked by registration services (for uniqueness and compliance with laws).
Documentation package for opening a company in Turkey
The following documents are prepared for submission to the Commercial Register:
- application form;
- one biometric photo for each founder (3.5*4.5 cm);
- copy of residence permit (if available);
- two copies of the international passport (with a translation certified by a notary) for each individual founder;
- a lease agreement for premises or an agreement for the provision of a legal address;
- charter with notarized signatures of the founders;
- certificate confirming the contribution of the statutory fund;
- receipt confirming the deposit of 0.04% of the capital to the account of the antimonopoly authority;
- TIN of founders, foreign directors.
Important! The main founding document of Limited Şirket and Anonim Sirket is the charter. This document contains the trade name, legal address, information about the type of shares, and other key information about the company. The charter regulates the activities of the company, the procedure for holding meetings of shareholders, the appointment and removal of officials. The document is publicly available in the Commercial Register (in MERSIS).
Taxation and reporting of Turkish companies
Individuals and legal entities in the Republic of Turkey pay value added tax, property, expenses, banking / insurance transactions, inheritance and gifts, stamp duty and corporate income taxes. Tax rates depend on the legal status of the payer. There are certain differences in the taxation of business entities that are registered in free economic zones.
Note! You need to focus on the following tax rates:
- average VAT rate – 18% (possible reduction of the rate – 8% and 1%);
- corporate tax – 22% (for enterprises engaged in mining, a rate reduction of up to 4% is available);
- for dividends – from 0 to 20%;
- for interest, royalties – from 10 to 20%;
- on the income of individuals – 20-35%;
- for inheritance (gifts) – from 4% to 30% of the cost;
- for property: each year – approximately 0.3% -0.6%, in case of sale of an object it is a fee of 4.8% of the cost.
Contracts, bills of exchange, letters of credit, letters of guarantee, pay slips, and some other documentation are subject to stamp duty, which is levied as a percentage of the value of the document.
Important! The Commercial Code of the Republic of Turkey establishes a requirement for companies to report in accordance with national accounting standards, which are fully consistent with International Financial Reporting Standards. Businesses must file annual and monthly tax returns with the tax authorities. Every year, companies with foreign shareholders must also submit a special form with key information regarding business activities, reflecting changes in legal address, composition of shareholders, and so on.
Registration of an economic entity in a free economic zone
Among the effective ways to attract foreign investment in Turkey, there are free economic zones. Due to special regulatory regimes, tax incentives aimed at stimulating export-import operations, such zones are very popular among foreigners.
Note! In the Republic of Turkey, the legislation provides for three types of zones with special legal regulation of business:
- Organized Industrial Zones (OIZ).
Industry-based associations in specific territories, including hundreds of enterprises, for which tax preferences are provided, special rates on loans, reduced cost of energy resources. VAT is not charged in case of purchase of a land plot.
- Technology Development Zones (TDZ).
An analogue of technoparks, territories in cities where optimal conditions have been created for the development of high-tech enterprises, research projects. Until December 31, 2023, legal entities are exempt from corporate tax when developing software.
- Free trade zones (Export Processing Zones, EPZ).
They are located within the borders of the Republic. Moreover, each such territory is outside the customs zone of the state. Within its limits, there is a 100% exemption from customs duties, VAT, corporate tax, stamp duty and real estate tax.
Important! To carry out business activities in the Free Zone (Free Zone, FZ), you need to issue an Operating License. Accordingly, in order to open a company in Turkey in FZ, an additional step should be provided for in the preparation of documentation – the submission of an application for a license to the General Directorate of the Foreign Trade Office.
To obtain a license, the following documents are prepared and submitted:
- a statement with key information about the company’s activities;
- a sample signature of the founder or director along with identification documents;
- a power of attorney for a person authorized to obtain a license;
- extract from the Commercial Register (registration of a business entity);
- balance for the last three years (if the company operates in the territory of the Republic of Turkey).
Licenses are issued for different terms:
- 10 years – in case of renting a property in the Free Zone;
- 20 years – when real estate and land is acquired in the property;
- 15 years – if production activities are carried out;
- 30 years – when the business entity will be engaged in production activities through investment.
The Republic of Turkey is one of the best jurisdictions where you can quickly start a business and enter the international market with minimal financial investment. With a favorable territorial location, Turkey offers a favorable tax regime, which creates good prerequisites for all types of trade, the provision of transport services, as well as investment and banking activities. Preferences for legal entities registered in free economic zones provide an opportunity to develop IT business and high-tech industries with high efficiency.
If you enlist the support of experts from the team of Lawrange Attorneys Association, opening a company in Turkey will not require any effort. Get in touch with us, get advice and get ready to develop your business in Turkey. At the request of the client, the organization of accounting support for the company in subsequent years of activity is also provided. Business in Turkey has already become a factor in the growth of well-being for many entrepreneurs. Now you can join them too.
What are the steps to register a company in Turkey?
Step 1. Determination of the legal form.
Step 2. Reserve a unique company name.
Step 3. Preparation of a package of documentation, a power of attorney for a representative of interests in the course of registration actions.
Step 4. Registration of a business entity in the Commercial Register.
Step 5. Opening a corporate account.
How much does it cost to open a company in Turkey?
The amount of costs depends on the choice of registration option. It can be in the Free Zone or outside of such a zone. When calculating the costs, the cost of the services of a local lawyer for opening a company, a bank account, which is 3900 EUR, is taken into account. Optionally, depending on the tasks set, Lawrange`s clients are provided with the following services:
- development of founding documents;
- payment of state duties;
- acquisition of a legal address in Turkey;
- payment for notary services, fees for affixing an apostille;
- registration of power of attorney.
How quickly can you start a new business in Turkey?
In case of proper preparation of documentation and compliance with the procedures established by the legislation of the country, approximate terms of registration of a company for a full-fledged launch of a business are from one week.