Doing Business in Türkiye

ContentsSome Bullet Points

• Incentives: Why Türkiye?
• Sectors: What does Türkiye offer?
• Business vehicles
• Company Establishment: Requirements and Procedures
• Basic laws for doing business in Turkey
• Turkish citizenship by investment

Incentives: Why Türkiye?

1. Strategic Location

Türkiye has a unique strategic location that allows to be the bridge between Asia and Europe. This location has provided Turkey with access to a market of over 1.7 billion people in Europe, Asia, the Middle East and North Africa. Türkiye’s geographical location of belonging to two continents has given it an advantage in terms of logistics and labor, making the country a strong and cost-effective center for a large marketplace.

Also, the fact that the three sides of the country are bordered by the sea which has allowed for many port services; the constantly developing railways and road transportation infrastructures; the continued increase in destinations for the passenger and freight shipment systems with the flights of Turkish Airlines, all support the trade activity in an integrated way.

2. Low Cost of Doing Business

Compared to some economies in Europe, Türkiye offers foreign investors a low-operating cost.  Too, local suppliers in Türkiye are known for providing high quality goods and services – at a comparatively low cost. Additionally, Türkiye benefits from an annual robust number of well-qualified university graduates – and a lower labor cost versus its European neighbors. 

3. Strong Consumer Spending

Türkiye enjoys strong consumer spending driven in large part by a large, working, younger population – who often follow trends and regularly purchase new branded products and services.  Hence, foreign business with a well-thought-out local strategy, can appeal to consumers in Türkiye and generate new revenue and profit from a presence in the market.

4. Excellent Local Manufacturing

Turkey possessive a wealth of local manufacturing strength, well-positioned to help foreign businesses create products for domestic distribution or foreign export. Often, Turkish manufacturers are well-placed to produce smaller orders – which makes them uniquely suited to provide help to medium-sized or smaller foreign businesses that establish operations in Türkiye.

5. Skilled labour

Türkiye is the third largest country in Europe in terms of qualified labor force population. Its young population ensures that Türkiye ranks high compared to other countries. Turkey has several universities offering formal education. Also, the high quantity of industries has also ensured that the population acquires skills in production of several industrial products. This skilled labor force ensures that investors will be assured of quality goods and services.

 

Sectors: What does Türkiye offer?

1. Agriculture

Turkey’s agriculture sector is modern and advanced, and forms an essential part of the country’s economy. Because of its great importance for the economy as well as for the country’s food security, the agricultural sector receives strong support from the government. Foreign investors are also likely to have strong competent domestic partners, should they need them. Both Türkiye and Africa understand the importance of agriculture for food security.

There are several opportunities in in the agriculture sector including in: Crop production (grains, fruits, vegetables, etc.);  Livestock farming; Aquaculture and fisheries; Irrigation and water management; Seed and fertilizer production; Agricultural chemicals and pesticides

2. Food, Beverages and FMCG (Fast-Moving Consumer Goods)

Production of foodstuffs is a big component of Türkiye’s economy – forming nearly 20% of its GDP.

The Opportunities under this sector include: Manufacturing od Cosmetics, Cleaning chemicals and equipment; Food production and processing; Beverage production and bottling; Packaging of foods and snacks and Branding equipment; as well as Frozen and canned goods.

3. Health

Türkiye’s Health sector is renowned globally and makes a significant contribution to the country’s economy. Some of the opportunities are offered in: Supply of Medical equipment; Medical procedures/ health services; Production and supply of Pharmaceuticals; Fitness and exercise equipment and supplies; among others.

4. Construction

The construction sector in Türkiye is very advanced, offering very high quality construction materials, equipment, skills and services. Construction is an industry that includes the erection, maintenance, and repair of buildings and other immobile structures and the building of roads and service facilities that become integral parts of structures and are essential to their use.

The opportunities offered by Türkiye under this sector include: Supply of Building materials and Construction equipment; Interior design and decoration; Real estate; Residential, industrial and infrastructure construction.

5. Textile, Furniture, Household Items

The Turkish textile industry is a booming industry in the country and is reputable worldwide. Türkiye produces/manufatures and exports high quality textiles and one of  the world’s largest textile exporters.

Under this sector, Türkiye offers opportunities in: Textile machinery and equipment manufacturing; Home textiles and furnishings; Footwear and apparel manufacturing; Furniture and Household equipment; Home, office, outdoor, school, custom-designed furniture; Lighting and accessories; Carpets and flooring

6. Machinery

Manufacturing is the most important sector, holding 84% of total production. The biggest segments within Manufacturing are: food products, textile and apparel, motor vehicles, basic metals and fabricated metal products, plastic products, chemicals and chemical products, electrical equipment

Opportunities under this sector include: Manufacturing equipment; Conveyor lines and equipment; Packaging machinery; Industrial machinery and tools; Constructions and mining equipment; Agricultural machinery; Printing machinery; Textile machinery; Transportation and logistics equipment

 

Business Vehicles

In accordance with the Turkish Commercial Code, there are corporate and non-corporate forms of companies. The corporate forms are joint stock (JSC) (“anonim şirket”) and limited liability companies (LLC) (“limited şirket”). They are the most common types chosen both in the global economy and Türkiye. The differences between JSC and LLC include:

• Capital shares: In JSC the minimum is TL 50,000, and TL 100,000 for non-public JSC that accepted the registered capital system, whereas it’s TL 10,000 for LLC.
• Shareholders: In JSC and in LLC it is possible to establish a sole shareholders. They can be natural or legal persons. In LLC it may not exceed fifty.
• Liability: In JSC shareholders are only liable for the share they have committed, whereas in LLC, they have to fullfil the additional payment and performance obligations stipulated in the company contract. And they are responsible for capital debts due to uncollectible public debts in the rate of their capital shares.
• Transfer of shares: In JSC, shareholders may freely transfer their shares, whereas is LLC they need the approval of the general assembly
• Offer to the public: Only JSC can offer shares to public.
• Management: In JSC there are a General Assembly and a board of Director. In LLC there are a General Assembly and a Board of Managers

Company Establishment Procedures

Establishing a company in Türkiye by foreign natural and legal persons is subject to the same rules as domestic investors. The procedures are as follows:

1. Preparation of the articles of association and approval of the signatures of the founder shareholders on MERSIS
2. Issuance and notarization of company documents
3. Obtain potential tax identity number
4. Opening a bank account and depositing the founding capital into the bank account:  25  percent of the committed capital must be paid before the new company registration, and the remaining 75 percent within two years
5. Payment of Competition Authority share and cash capital: 0.04% of the Company’s capital must be deposited in the bank account of the Competition Authority as “Share of the Competition Authority”
6. Application to the Trade Registry Directorate for registration.
7. Certify the legal books
8. Follow up with the tax office on the Trade Registry Directorate’s company establishment notification
9. Preparation of signature declarations of company officials
10. Preparation of Shareholders Agreement, if needed
11. Appointment of company officials, if needed

Timeframe and costs: It takes around 2-4 weeks depending on several conditions. The fees and expenses (without the legal service fee) is around 12.000 TL for company with one shareholder, 3.000 TL additional costs for each additional shareholders.

 

 Basic Laws For Doing Business

1. Immigration laws

Foreigners must obtain permission before starting dependent or independent work in Türkiye. Without a work permit, it is against the law to work in Türkiye in any capacity, and violators will be subject to penalties. Work permit applications are made directly to the Ministry in the country, and abroad to the embassies or consulates of the Republic of Türkiye in the country where the foreigner is a citizen or legally. Work permit applications made abroad are submitted to the Ministry by the embassies or consulates of the Republic of Türkiye. Work permit applications can also be made by the authorized intermediary institution.

Types of work permits.

Limited term: A work permit may be issued for a limited period, and extended for further limited periods. A standard work permit is granted for a maximum term of one year at the first application.

Unlimited term: Foreigners that have held a work permit for eight years or that hold a long-term residence permit can be granted a work permit for an unlimited duration.

An unlimited work permit grants foreigners the same rights and status as Turkish citizens, except for:

• The right to vote and seek public office.
• The right to be employed as civil servant.
• The duty to serve in the military.
• Other limitations stipulated in various laws and regulations, such as the restriction in connection with acquisition of real estate in certain areas.

Company shareholder permits: Foreign shareholders or unlimited partners can receive a permit to act as an executive member of the relevant corporate bodies. 

Independent work permits: Independent work permits are available to individuals who live in Türkiye for five years without interruption and who make a positive contribution to the economy and employment.

Turquoise cards: A turquoise card allows highly qualified individuals to work and stay in Türkiye. Turquoise cards are a special form of work permit of unlimited duration. Turquoise card holders can work in Türkiye without time limits, and their spouse and children are automatically granted a permanent residence permit. Individuals deemed to have a solid educational, professional or scientific background, as well as investors who can make a significant contribution to Turkish economy, are eligible to obtain a turquoise card.

2. Employment laws

Foreign employees in Türkiye are subject to the same employment laws applicable to local employees.

Turkish companies must comply with certain requirements to employ foreign employees, as follows:

• There must be minimum five Turkish citizen employees working in the company for each foreign citizen applying for a work permit.
• The company must have at least either:
  • paid-up capital of TL 100,000;
  • gross sales of TL 800,000; or
  • exports for its latest financial year of USD250,000.
• If the foreign employee is a shareholder of the company, they must own at least 20% of the capital of the company, which must correspond to at least TRY40,000.

3. Tax laws

Businesses in Türkiye are subject to the following taxes:

Corporate Tax: 25% Paid on net income by corporates (for 2023)

 Income Tax: 15-40% paid on net income by real persons

VAT: 18 %

Property Tax: depends on the location

Rent tax: depends on the renting incomes.

Stamp Tax: 0.948% of the contract and documents price limited at TL 10,732,371.80

Special Consumption Tax: for certain products specified in the Special Consumption Tax Law (No 4760), including:

• Automobiles and other vehicles such as motorcycles, planes, and yachts.
• Tobacco and tobacco products, alcoholic beverages and carbonated drinks.
• Luxury items.
• Petroleum products and natural gas.

Withholding Tax: 20% to payments made to self-employed persons, 20% for rent payments, 15% to 40% for wages and salaries

 

Turkish Citizenship by Investment

There are certain forms of investment in Türkiye that can make a foreign investor eligible for Turkish citizenship including:

1. Making a minimum fixed capital investment of USD 500,000 or equivalent foreign currency, as attested by the Ministry of Industry and Technology 
2. Acquiring a property worth a minimum of USD 400,000 or equivalent foreign currency with a title deed restriction on its resale for at least three years, as attested by the Ministry of Environment, Urbanization and Climate Change 
3. Creating jobs for at least 50 people, as attested by the Ministry of Labor and Social Security
4. Depositing a minimum of USD 500,000 or equivalent foreign currency in banks operating in Türkiye with the condition that it is not withdrawn for at least three years, as attested by the Banking Regulation and Supervision Agency
5. Buying government bonds worth a minimum of USD 500,000 or equivalent foreign currency with the condition that they are not sold for at least three years, as attested by the Ministry of Treasury and Finance
6. Buying real estate investment fund shares or venture capital investment fund shares worth a minimum of USD 500,000 or equivalent foreign currency with the condition that they are not sold for at least three years, as attested by the Capital Markets Board of Türkiye
7. Depositing a minimum contribution of USD 500,000 or equivalent foreign currency in funds determined by the Insurance and Private Pension Regulation and Supervision Agency with the condition that it remains in the private pension system for at least three years, as attested by the Insurance and Private Pension Regulation and Supervision Agency