Establishing a Business

  • ​​​​​​​​​​Turkey’s FDI Law is based on the principle of equal treatment, allowing international investors to have the same rights and liabilities as local investors.
  • The conditions for setting up a business and share transfer are the same as those applied to local investors. International investors may establish any form of company set out in the Turkish Commercial Code (TCC), which offers a corporate governance approach that meets international standards, fosters private equity and public offering activities, creates transparency in managing operations and aligns the Turkish business environment with EU legislation as well as with the EU accession process.
  • Turkey has introduced reforms with a view to making it easier to do business in order to enhance the investment environment, eliminating red tape in setting up a business and minimizing costs and procedures. To this end, establishing a company is now only carried out at Trade Registry Offices located in Chambers of Commerce and designed to be a ‘one-stop shop’. The process is completed within the same day.

Company Types under TCC and Alternative Forms

There are corporate and non-corporate forms for companies under the TCC, which states that companies may be established under the following types:

a.         Corporate forms

  • Joint Stock Company (JSC)
  • Limited Liability Company (LLC)
  • Cooperative Company

Although some financial thresholds (i.e., minimum capital) and organs differ from each other, the procedures to be followed for establishing a JSC or an LLC are the same.

b.         Non-corporate forms

  • Collective Company
  • Commandite Company

Although companies may be established according to these five different types, JSC and LLC are the most common types chosen both in the global economy and Turkey.

Liaison Offices

Any company incorporated under the laws of a foreign country may establish a liaison office (aka representative office) in Turkey upon obtaining a license from the Ministry of Industry and Technology, provided that the company does not engage in any commercial activities in Turkey. To establish a liaison office, the following documents should be submitted to the Ministry of Industry and Technology​​​​, General Directorate of Incentive Implementation and Foreign Investment (GDIIFI).

·         Application form
·         Statement outlining the works to be conducted by the liaison office, an undertaking that the office shall not engage in any commercial activities*, and proof that the signatory to the statement is fully authorized by the company
·         ​A certificate of activity issued by the foreign country and verified by the relevant Turkish Consulate or in accordance with the provisions of the Hague Convention Abolishing the Requirement of Legalization for Foreign Public Documents (the Apostille Convention)
·         A certificate of activity issued to foreign companies or balance sheet and income statement
·         A certificate of authorization issued to the individual(s) appointed to conduct the activities of the liaison office
·         A power of attorney in the event that the procedures for establishing the liaison office are carried out by another representative
*May be obtained from the Ministry of Industry and Technology​

In the event that the original documents are submitted to GDIIFI, copies of the same shall be approved by GDIIFI. The originals shall be returned to the applicant.

During the initial application for liaison offices, licenses are granted for a maximum of three years within the scope of the declared activities. Liaison offices willing to extend their term of operation shall apply to GDIIFI before the expiration of their terms of operation. GDIIFI may conclude applications for the extension of their tenure based on the nature of activities of the office over the previous year, business plan, the company's future objectives in Turkey, existing and anticipated amount of expenditure and the number of employees. The tenure of operation of offices licensed to conduct market research or promotion of foreign company products or services shall not be extended.

Applications for establishment and tenure extension shall be concluded in fifteen working days from the date of application provided that the requested information/documents is/are complete and accurate.

Applications submitted by foreign companies to set up a liaison office to conduct financial activities subject to special legislation such as money and capital markets or insurance shall be evaluated by competent agencies such as the Capital Markets Board of Turkey and the Banking Regulation and Supervision Agency – both being the duly authorized bodies pursuant to special legislations. The ministry may conclude foreign companies’ applications to set up liaison offices in other industries that require licenses for operations or similar authorizations, if necessary, upon consulting competent bodies that are duly authorized to issue such permits or licenses.

Copies of tax registration and tenancy agreement for the liaison office shall be submitted to GDIIFI within a maximum of one month. Liaison offices shall notify GDIIFI of any changes with regard to the office representative(s) or foreign company title within a maximum of one month following the change. Liaison offices shall produce a new tenancy agreement comprising the new address, the certificate of authorization of the newly appointed representative or the document(s) related with the change of title of the foreign company.

In the event that a liaison office terminates its operations, it shall furnish GDIIFI with a statement of termination to be obtained from the relevant tax office. Offices may not claim transfers of funds except for balances that remain outstanding upon termination and liquidation thereof.

​​​​​​​​​​​​​​​​​​​​​​​​​​There are three different special investment zones in Turkey:

1. Technology Development Zones - Technoparks

Technology Development Zones (TDZ) are areas designed to support R&D activities and attract investments in high-technology fields. There are 84 TDZs, of which 63 are operational and 21 have been approved and are currently under construction. ​
Advantages of TDZs

  • ​Profits derived from software development, R&D, and design activities are exempt from income and corporate taxes until December 31, 2023.
  • Sales of application software produced exclusively in TDZs are exempt from VAT until December 31, 2023. Examples include software for system management, data management, business applications, different business domains, the internet, mobile phones and military command and control systems.
  • Remuneration for R&D, design and support personnel employed in the zone is exempt from all taxes until December 31, 2023. The number of support personnel covered by the exemption may not exceed 10 percent of the total number of those involved in R&D, though.
  • Investments to produce technological products developed based on the outcome of R&D projects conducted in the TDZ may be made in the TDZ if deemed suitable by the operator company and allowed by the Ministry of Industry and Technology.
  • 50 percent of the employer’s share of the social security premium will be paid by the government until December 31, 2023.
  • Customs duty exemption for imported products and stamp duty exemption for applicable documents within the scope of R&D, design, and software development projects.

2. Organized Industrial Zones

Organized Industrial Zones (OIZ) are designed to allow companies to operate within an investor-friendly environment with ready-to-use infrastructure and social facilities. The existing infrastructure provided in OIZs includes roads, water, natural gas, electricity, communications, waste treatment and other services. There are 331 OIZs in 80 provinces, 234 of which are currently operational, while the remaining 97 OIZs are being constructed throughout Turkey.
Advantages of OIZs
In addition to the investment incentives scheme in Turkey (general investment incentives, regional investment incentives, large-scale investment incentives, strategic investment incentives, employment incentives, R&D support, etc.), investors operating in the OIZs may benefit from the following advantages:

·         No VAT for land acquisitions.
·         Exemption from real estate duty for five years starting from the date of completion of the plant construction.
·         Low water, natural gas, and telecommunication costs.
·         No tax is payable in cases of merging and/or separation of plots.
·         Exemption from municipality tax for the construction and usage of the plant.
·         Exemption from the municipality tax on solid waste if the OIZ does not avail of the municipality service.

3. Free Zones
Free zones (FZ) are special sites deemed outside the customs area, although they are physically located within the political borders of the country. FZs are designed to boost the number of export-focused investments. Legal and administrative regulations in the commercial, financial and economic domains that are applicable within the customs area are either not implemented or partially implemented in FZs.
There is a total of 19 Free Zones in Turkey located close to the EU and Middle Eastern markets, 18 of which are active and 1 is at the stage of establishment. FZs are strategically located at points that grant easy access to international trade routes via ports on the Mediterranean, Aegean Sea, and the Black Sea.
Advantages of FZs
·         100% exemption from customs duties and other assorted duties.
·         100% exemption from corporate income tax for manufacturing companies.
·         100% exemption from value-added tax (VAT) and special consumption tax.
·         100% exemption from stamp duty for applicable documents.
·         100% exemption from the real estate tax.
·         100% income and corporate tax exemption for certain logistics services to be offered at the FZs, provided that they are export oriented.
·         100% exemption from income tax on employees’ wages (for companies that export at least 85% of the FOB value of the goods they produce in the FZs.
·         Goods may remain in FZs for an unlimited period.
·         Companies are free to transfer profits from FZs to abroad as well as to Turkey, without restrictions.
·         Exemption from title deed fees when acquiring and selling a property.
·         VAT exemption during construction, design, settlement, and approval processes.
·         Ready infrastructure exempt from VAT and other taxes.
·         Import permit for second-hand, used machinery. ​

​​​​​​​​​​​​​Turkey has one of the most competitive corporate tax rates among OECD member countries. The Turkish corporate tax legislation has noticeably clear, objective, and harmonized provisions that are in line with international standards. The Turkish tax legislation may be classified under three main headings:

1.Income Taxes
The Turkish tax legislation includes two main income taxes, namely personal income tax and corporate income tax.

  1. Personal Income Tax

Real persons' income is subject to personal income tax. Income is defined as the net amount of all earnings and revenues derived by an individual within a single calendar year. An individual’s income may consist of one or more income elements listed as follows:  ​

  • ​Agricultural profits​​
  • B​​usiness profits
  • ​Salaries and wages
  • ​​Income from
  • independe​​nt personal services
  • ​​Income from immovable property and rights (rental income)
  • Income from movable property (income from capital investment​)
  • O​ther income and earnings

Individual income tax rates vary from 15% to 35%.

  1. Corporate Income Taxes

In case income elements specified in the Income Tax Law are derived by corporations, taxation is applicable on the legal entities of these corporations. Corporate taxpayers defined in the law are as follows:

  • C​apital companies
  • ​C​ooperatives​
  • P​ublic economic enterprises
  • Economic enterprises owned by associations and foundations​
  • J​oint ventures

In Turkey, the corporate income tax rate levied on business profits is 20%. The rate for corporate income tax has been increased to 22% for the tax periods however, the Council of Ministers is authorized to reduce the 22% rate to a rate as low as 20%. for further information kindly visit the link below.
2. Taxes on Expenditure
2.1. Value Added Tax (VAT)
The generally applied VAT rates are set at 1%, 8%, and 18%. Commercial, industrial, agricultural, and independent professional goods and services, goods and services imported into the country, and deliveries of goods and services as a result of other activities are all subject to VAT.
2.2. Special Consumption Tax (SCT)
There are four main product groups that are subject to SCT at different tax rates:

  • ​Petroleum products, natural gas, lubricating oil, solvents, and derivatives of solvents
  • Automobiles and other vehicles, motorcycles, planes, helicopters, yachts
  • Tobacco and tobacco products, alcoholic beverages
  • Luxury products

Unlike VAT, which is applied on each delivery, SCT is charged only once.

2.3. Banking and Insurance Transaction Tax
Banking and insurance company transactions remain exempt from VAT but are subject to a Banking and Insurance Transaction Tax. This tax applies to income earned by banks, such as loan interest. Although the general rate is 5%, some transactions, such as interest on deposit transactions between banks, are taxed at 1%. No tax has been levied on sales from foreign exchange transactions since 2008.
2.4. Stamp Duty
Stamp duty applies to a wide range of documents, including contracts, notes payable, capital contributions, letters of credit, letters of guarantee, financial statements, and payrolls. Stamp duty is levied as a percentage of the value of the document at rates ranging from 0.189% to 0.948% or is collected as a fixed price (a pre-determined price) for some documents.
3. Taxes on Wealth
There are three kinds of taxes on wealth:

  • ​Property taxes
  • Motor vehicle tax
  • Inheritance and gift tax

Buildings, apartments, and land owned in Turkey are subject to real estate tax ranging at a rate between 0.1% and 0.6%, while Contribution to the Conservation of Immovable Cultural Property is levied at a rate of 10% of this real estate tax. Motor vehicle taxes are collected on the basis of fixed amounts that vary according to the age and engine capacity of the vehicles each year. Meanwhile, inheritance and gift taxes are levied at a rate of 1% to 30%. ​


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  • Business Services
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  • ICT
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  • Machinery
  • Financial Services
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