How to set up a business in Turkey

Setting up a business in Turkey
Updated 2020-05-26 12:55

Starting your own business is always an intense experience. On the one hand, there is the excitement of seeing your project come alive, along with the expectation of financial gain; and on the other hand, there are burdensome administrative requirements. Turkey is no exception and you will have to go through a number of bureaucratic procedures, but the country's significant business opportunities definitely make it worth the effort.

Types of companies in Turkey

Before we delve into the details, you should know that setting up a company in Turkey is a speedy process. You can complete your application in an hour if all the necessary documents are ready. The Turkish Commercial Code defines several legal business structures, all open to foreigners. Here is an overview of the most common ones.

The limited company, requiring a minimum of one partner and 10,000 Turkish Liras in capital, is relatively simple to set up and is hence one of the most popular corporate forms for small and medium businesses. More than 80% of the new firms set up in Turkey are organised this way.

The joint-stock company (known as A.S.), involving a minimum capital of 50,000 Turkish liras and a minimum of one shareholder on the board, is more suitable for larger-scale projects. It must be registered with the Capital Market Board and obtain a stock certificate.

In both these types of companies, your accountability is limited to your stakes in the company's capital.

You will, on the other hand, be personally accountable for the liabilities of your business if you start your activity under the status of sole proprietorship or of collective company. No minimum capital is required for these companies.

Good to know:

Turkey's corporate law is based on the principle of equal treatment, entitling international investors to the same rights and duties as local ones. However, foreigners must request special authorisations to invest in a few regulated sectors such as energy or aviation.

Registering your business in Turkey

Whichever legal structure you select, you will be required to apply for registration with the Trade Registry System (MERSIS), providing notarised copies of the company's statuses and of the partners' identification documents, a tax identification number for the company, bank receipts stating that at least 25% of the capital has been deposited and that another 0.04% has been transferred to the Turkish Competition Authority via the Central Bank or a public bank, and a declaration of commitment to operating in an ethical and legal manner.

Legal operating costs in Turkey

The Turkish minimum gross monthly salary is set at 2,943 Turkish Liras as of 2020. Moreover, the employer must contribute to the social security fund (22.5% of wages) and to the national unemployment insurance plan (2% of wages). The net amount after all deductions is 2,324.70 Turkish liras.

Employees' working time should not exceed 45 hours a week, with overtime paid at a rate of 1.5. Working on public holidays entitles workers to double pay. For more information about labour conditions in Turkey please see our Working in Turkey article.

As for Turkey's corporate tax, it is one of the most competitive in the region, at a flat rate of 22% as of 2020. Any dividends are taxed at 15%.

Useful links:

Invest in Turkey
Turkish Industry and Business Association

Independent workers in Turkey

Working in Turkey for at least 5 years continuously makes you eligible for an independent work permit allowing you to work as a self-employed individual. The independent worker certificate costs about 1,522 Turkish liras for a period of two years. Permanent work permit certificates cost 7,612 Turkish liras for independent workers. There is also an additional valuable paper fee of 89 Turkish liras for all type of certificates regardless of their duration.

We do our best to provide accurate and up to date information. However, if you have noticed any inaccuracies in this article, please let us know in the comments section below.