Setting Up a Company in Turkey: A Comprehensive Guide

Introduction

This guide provides a detailed overview of the processes and requirements for setting up a company in Turkey, including the types of companies, necessary documentation, tax obligations, and relevant legal procedures. Key topics include company types, establishment steps, tax rates, and regulations for foreign investors.

Company Types in Turkey

In Turkey, there are five main types of companies regulated by the Turkish Commercial Code:

1. Joint Stock Company (Anonim Şirket - A.Ş.):

   • Share capital is divided into shares.

   • Shareholders' liability is limited to their capital contribution.

   • Minimum capital requirement: 50,000 TRY.

   • Can be established by one or more shareholders, who can be individuals or legal entities.

2. Limited Liability Company (Limited Şirket - Ltd. Şti.):

   • Suitable for small to medium-sized businesses.

   • Minimum capital requirement: 10,000 TRY.

   • Can be established by one or more shareholders, with a maximum of 50 shareholders.

3. Collective Company (Kollektif Şirket):

   • Formed by at least two partners with unlimited liability.

   • Partners are responsible for the company’s debts and obligations.

4. Commandite Company (Komandit Şirket):

   • Includes two types of partners: active partners with unlimited liability and silent partners with limited liability.

   • Active partners manage the company.

5. Cooperative (Kooperatif):

   • Formed by at least seven members to serve common economic interests.

   • Operates under a variable capital system.

Establishing a Company in Turkey

The establishment process involves several steps:

1. Preparation of Articles of Association:

   • Drafted in Turkish and include essential details like company name, headquarters, business activities, and capital.

2. Registration with MERSIS:

   • The Central Registry System (MERSIS) facilitates electronic company registration.

   • Users must obtain a tax identification number before registering.

3. Notarization and Registration:

   • Articles of Association must be notarized.

   • Company registration is completed at the relevant Trade Registry Office.

4. Obtaining a Tax Identification Number:

   • Necessary for all business transactions.

5. Opening a Bank Account:

   • Required to deposit the initial capital.

6. Notification to Tax Office:

   • The company must notify the local tax office of its establishment.

Required Documentation

The documents required for registering different types of companies vary but generally include:

1. Joint Stock Companies:

   • Notarized Articles of Association.

   • Payment receipt of the Competition Authority fee (0.04% of the capital).

   • Signature declarations of company representatives.

   • Bank receipt showing the initial capital deposit.

2. Limited Liability Companies:

   • Similar documents to those required for Joint Stock Companies.

3. Foreign Company Branches:

   • Documents proving the company’s existence in the home country.

   • Decision of the parent company to establish a branch.

   • Appointment of a resident representative in Turkey.

Taxation in Turkey

Companies in Turkey are subject to various taxes, including:

1. Corporate Tax:

   • The standard corporate tax rate is 20%.

   • Temporary tax returns must be filed quarterly.

2. Value Added Tax (VAT):

   • Standard VAT rate is 18%.

   • Reduced rates of 1% and 8% apply to specific goods and services.

3. Withholding Tax:

   • Applicable to dividends, interest, and rental payments.

   • Rates vary depending on the nature of the payment and the recipient’s residency status.

4. Social Security Contributions:

   • Employers must contribute to employees' social security funds.

Regulations for Foreign Investors

Foreign investors can establish companies under the same conditions as local investors. Key considerations include:

1. Investment Incentives:

   • Various incentives are available for foreign investors, including tax exemptions, customs duty exemptions, and land allocation.

2. Legal Compliance:

   • Foreign investors must comply with Turkish commercial laws and regulations.

   • They must also adhere to sector-specific regulations, especially in industries like banking, insurance, and telecommunications.

3. Work Permits:

   • Foreign nationals employed by the company must obtain work permits.

   • The process involves an application to the Ministry of Labor and Social Security.

Conclusion

Setting up a company in Turkey involves a clear understanding of the types of companies available, the legal and administrative steps required, and the tax obligations. By following the outlined procedures and ensuring compliance with local laws, investors can successfully establish and operate their businesses in Turkey.

Key Points Summary

• Company Types: Joint Stock Company, Limited Liability Company, Collective Company, Commandite Company, Cooperative.

• Establishment Steps: Prepare Articles of Association, Register with MERSIS, Notarization, Obtain Tax ID, Open Bank Account, Notify Tax Office.

• Required Documents: Vary by company type, generally include notarized Articles of Association, competition fee receipt, signature declarations, initial capital deposit proof.

• Taxation: Corporate Tax (20%), VAT (standard 18%), Withholding Tax, Social Security Contributions.

• Foreign Investors: Same conditions as locals, investment incentives, legal compliance, work permits required.

This guide provides a comprehensive overview to assist in the successful establishment and operation of a company in Turkey.

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