Turkey is a dynamic and prosperous country with a vibrant economy. She is among the 20 largest economies in the world. Furthermore, thanks to its young workforce, robust domestic demand and access to international markets, starting business in Turkey is attracting more foreigners every other year. In this article, we will share an essential piece of information about how to start a business in Turkey and steps that are needed to take in that quest.
Turkey presents a very favorable environment for foreign investors. Especially for Gulf and other Arabic speaker countries, Turkey’s proximity and bilateral trade relation with EU countries is an important advantage. Moreover, Turkey’s membership to Customs Union with EU enables her to access to one of largest and wealth markets in the world free of any tariff. Taking into account the good exchange rates, relative convenient labor cost and well-trained local population, any investment in Turkey would yield very profitable results with its opportunity to export to the EU.
One good feature to keep in mind that equal right of opening a business and transferring shares are enshrined in Turkish Commercial Code. So regardless of where the investor is from, everyone is treated the same in front of Turkish authorities.
It is also a very quick process to establish a new enterprise in Turkey, which the government is really proud of. As the matter of fact, according to OECD figures, it takes only 7 days to set up a company in Turkey. Turkey also ranked 33rd in the world in terms of ease of doing business.
So, before move on to the steps that are need to adhered to, let's learn about the types of companies that are operating in Turkey. Based on your area of operation, this knowledge will help you pick and choose which type of enterprise you will want to launch.
Types of Companies under Turkish Commercial Code
There are five types of companies that are stipulated in Turkish Commercial Code. Among them there are corporate ones namely:
- Joint Stock Company (Anonim Şirketi),
- Limited Liability Company (Limited Şirket),
- Cooperative Company (Kooperatif)
and two of them are non-corporate ones namely:
- Collective (Kollektif Şirket)
-Commandite Company (Komandit Şirket).
Just like in every other country, most common forms of companies are Joint Stock Company and Limited Liability Company in Turkey as well. To understand this distribution in figures, %82 of the companies are Limited Company, %13 of Joint Stock Company and %4 of them are Cooperative Company in Turkey.
All the companies in Turkey are subject to the corporate tax, which is levied as %20 of business profits.
Steps to take when opening a business in Turkey
Regardless of nationality of the founder, company establishment transaction in Turkey is free of charge.
1- Drafting Memorandum
In this stage founders or their representatives need to go https://mersis.gtb.gov.tr/ where they need to sign up and start the process. When drafting the Memorandum, foreigners must present their passport numbers. Prior to this, foreigner need to register themselves to tax offices and acquire a tax number. They also need to register to the Registry of Commerce (Ticaret Sicil Müdürlüğü).
Since the memorandum is forwarded to the Notary, there is no need for a hard copy version to be presented.
2- Signature Circulars of Company Officials
Individual who deemed the official representative of the company must issue his or her signature declaration and get it certified by the relevant authority. Any Registry of Commerce in Turkey would be able to do this certification.
3- Competition Authority Percentage
%0,04 of capital must be deposited to a bank to the account of Competition Authority (Rekabet Kurumu). In addition to this, for the Joint Stock Companies, %25 of the capital must be deposited to the account of the company before the registration.
4- Application to Registry of Commerce
Founder must apply to the Registry of Commerce with other necessary documents in order to finalize the registry process. Joint Stock and Limited companies along with cooperatives must also get their commercial books registered by the Registry.
Another type of business that worth mentioning is the sole proprietorship which is subject to the income tax. Some benefits of this type of businesses are less capital and other requirements. Like companies, these type of business can be owned by foreigners as well. They can be established just by registering to the any Registry of Commerce. It is considered better method for consulting activities and small business. The commandite and collective companies are also can be formed as sole proprietorship.
Opening a bank account in Turkey is very easy as well. Residence or work permit ID and address document for foreign nationals who reside in Turkey and potential tax number, passport, an official document that shows address for foreign national who do not reside in Turkey are required. It is also possible to open an account online without going to a branch. İşbankası, Akbank, Garanti BBVA, Yapı Kredi are some prominent banks with branches all over the country.
Despite the fact that every authority or agency officers in Turkey are assumed to speak English, it would be very useful to know some level of Turkish in carrying out the related transactions in opening business. This would help understand the process and ensure effective communication between the counterparts. It would also be welcomed by Turkish people having a foreigner speaking their language.
Furthermore, getting familiar with the life in Turkey would also help. One important way of doing this would be getting accustomed to the customs and manners in Turkey. Comprehensive information about this can be found at the following link: https://turacoon.com/en/blogs/customs-and-manners-in-turkey
Citizenship through Investment
One important benefit of setting up a business in Turkey is it would enable foreigners to obtain Turkish citizenship. Some ways one can become a Turkish citizen by investment are:
- Employing at least 50 people
- Making a fixed capital investment of 500,000 USD
- Depositing into bank account the amount of 500,000 USD
- Ventura capital investment fund of 500,000 USD
Turkish Government is taking an active stance and presents vital incentives in attracting foreign investment into country. Some of these incentives are: Customs Duty Exemption, VAT Exemption, Corporate Tax Reduction, Social Security Premium Support, Land Allocation, Interest Rate Support and so on. A categorized list of incentives can be seen in the figure.
In the end, starting a business in Turkey is really an easy and simple process. It offers its benefits as well. Although most of the foreigners concentrate on investing in service sectors, any sector in Turkey would be beneficial for any savvy entrepreneur, regardless of his or her nationality.