Turkey offers significant business opportunities to foreign investors wishing to set up a business there. If you are wondering how to proceed, find out here.
Foreign investment is always welcome in Turkey. This is why more and more businessmen from across the globe move there in order to benefit of its open market and various opportunities. To date, there is no restriction as to the investor's citizenship, country of residence and the company's head office address. Moreover, the Turkish government has set up a series of regulations and incentives in order to encourage further investment in the country. Hence, the 19th of June 2012 regulations entitle investors to exemption from payroll taxes, customs duties for the import of machinery and equipment as part of the investment project provided the latter has an investment incentive certificate, as well as from taxes to up to 100%. These benefits rates and duration may vary according to the type and place of setting up in the country.
Types of companies in Turkey
There are five types of companies in Turkey: the limited Sirket, the Anonim Sirket, the limited liability company, the sole proprietorship and the limited liability partnership.
In the case of a Limited Sirket, there should be at least five partners and a minimum capital amounting to some TL 10,000 is required. Partners' liability is limited to the amount contributed. The only conditions attached are related to the minimum or maximum capital, which should be around TL 50,000.
As for the limited liability company, there should be between 2 and 50 shareholders and a minimum capital of TL 50,000 is required.
In the case of a sole proprietorship, the manager has no partner. Hence, there is no minimum capital requirement. The entrepreneur assets are taken into account. The latter is unlimitedly liable for his assets and debts.
Finally, the sponsored company consists of two distinct categories of partners, that is partners and limited partners. Unlike corporations, no minimum capital is required. Hence, partners are free to decide on the amount of capital to be paid for the setting up of the company. Their responsibility extends to the debts to the extent of their participation in the capital and registered shares. The management meeting is governed by the same rules as within an Anonim Sirket. Moreover, partners appointed by sponsors have the status of trader and are jointly liable for the debts on their own property.
Before setting up a company in Turkey, you are required to get three copies of its status authenticated by a notary. Once this is done, you have to register your company with the appropriate Business Registry within a maximum of 15 days. Documents to be produced are the following:
- request for setting up a business and a duly filled and signed notification form by the company's authorized representatives
- the company's status containing partner's signatures and authenticated by a notary along with an authenticated certificate proving that all the shares constituting the capital have been subscribed by the creators
- a recent Commitment Declaration signed by creators
- a bank letter stating that the capital has been deposited
- a bank receipt indicating that 0.04% of the company's capital has been transferred to the Turkish Competition Regulatory Authority via a public bank
- a compliance authorization or certificate for companies which are subject to this condition (to be obtained with the relevant ministry or other official institutions)
- certified signatures of persons who are authorized to represent and bind the company
- the application number indicating that the chosen company name has been verified and confirmed by the Commercial Register
- the company's establishment document (three originals)
- the partners' proof of residence
- a certified translation of your passport if you are physically present in the country
- an apostilled and certified translation of the registration document issued by the competent authority, if the foreign shareholder is a legal entity.
The Turkish minimum gross monthly salary amounts to some USD 493.5. Moreover, the employer must contribute to the social security fund and to unemployment insurance at a rate of 15.5% and 2% respectively.
On the other hand, Anatolia's corporate tax rate is one of the region's most competitive rates. Income tax is levied on all income, including that of foreign companies. Corporate income tax is levied at a flat rate of 20%.
Taxes are levied at source on certain resident companies' income and some charges apply to non-resident companies as follows:
- the dividend tax rate is 15%
- interest on Treasury bills and bonds for resident corporations are exempt of tax
- interest on other bonds and bills for resident corporations are exempt of tax while bank deposits are subject to tax at a rate of 10% to 18% (for bank deposits made after January 2nd, 2013)
- profit paid by banks considering participating accounts: tax rate varying from 10% to 18% for the participating accounts opened after January 2, 2013.
- repurchase title at a rate of 15%.
Difficulties often encountered
You are strongly advised to consult or hire a specialist to assist you in related proceedings in order to avoid any difficulty. In fact, there is an important cultural and business gap between Turkey and many European countries. Note that written agreements are highly preferred to oral agreements.
Workers in Turkey are entitled to a 45 hours working week, with a maximum of 11 hours daily. Night shifts are carried out between 8 pm and 6 am the next day. Hence, working for more than 7.5 hours is not allowed.
Overtime is paid at a rate of 50% extra. However, it cannot exceed a maximum of 270 hours per year. In general, employers determine the number of overtime to be granted to workers.
Working hours during week-ends are remunerated at the same rate as on week days. There is no additional remuneration for night shifts during week-ends as per the Turkish laws.
Employees having worked for one to five years within the same company are eligible to a two weeks annual leave. Those having worked for 5 to 15 years with the same company are eligible to a 20 days paid leave. Finally, those having worked for more than 15 years with the same company are entitled to a 26 days paid leave.
Retirement age is fixed at 50 years for women and 55 for men. Note that you have to be at least 16 years old to be allowed to work in Turkey.