What is a Free Trade Zone (FTZ) Company in Northern Cyprus?

A Free Trade Zone (FTZ) Company in Northern Cyprus is a business entity established within designated free trade areas, benefiting from tax exemptions and other incentives. FTZ companies engaged in international trade are exempt from corporate tax, VAT, and customs duties. However, if they conduct business within the Turkish Republic of Northern Cyprus (TRNC), they are subject to a 10% corporate tax and a 15% income tax on remaining profits.

What are the costs involved in establishing a Free Trade Zone (FTZ) Company in Northern Cyprus?

The costs of setting up an FTZ company in Northern Cyprus include an initial application fee of $1,500 – $2,500, notarization and translation fees of $200 – $500, and consultancy fees ranging from $2,000 – $3,000. The required minimum capital deposit is €25,000. Additional expenses include monthly accounting fees of $200 – $500, an annual license renewal fee of around $500, office rental, and staff costs.

What are the steps to establish a Free Trade Zone (FTZ) Company in Northern Cyprus?

The process involves several steps: (1) Registering and approving the company name, (2) Preparing and notarizing the Articles of Association, (3) Depositing the required capital in a TRNC bank, (4) Completing company registration and obtaining the Free Trade Zone operational license, and (5) Ensuring annual compliance with tax submissions and renewals.

How long does it take to set up an FTZ company in Northern Cyprus?

The timeline for establishing a Free Trade Zone (FTZ) Company in Northern Cyprus typically ranges from 3 to 4 weeks, depending on the efficiency of document submission, approval processes, and regulatory requirements.

What are the tax benefits of an FTZ company in Northern Cyprus?

FTZ companies in Northern Cyprus enjoy significant tax benefits, including full exemption from corporate tax for international operations, exemption from VAT on transactions, and no customs duties on imports. If an FTZ company conducts business within the TRNC, it is subject to a 10% corporate tax and a 15% income tax on remaining profits after corporate tax deduction.

What are the employee-related obligations for an FTZ company in Northern Cyprus?

FTZ companies must comply with employee-related tax obligations, including withholding income tax from wages and contributing to employees' social insurance and provident fund premiums.

What are the main advantages and disadvantages of setting up an FTZ company in Northern Cyprus?

Advantages of an FTZ company include full tax exemption on international operations, free international fund transfers, and access to business incentives. However, disadvantages include limited international recognition of TRNC, potential bureaucratic delays, and a smaller local market compared to larger economies.

Establishing a Free Trade Zone Company in Northern Cyprus

Setting up a Free Trade Zone (FTZ) Company in Northern Cyprus offers attractive tax benefits and strategic advantages for foreign investors. Below is a comprehensive guide covering the costs, procedures, and important considerations.

Company Establishment Costs

Application and Registration Fees: $1,500 – $2,500 USD
Notarization and Translation: $200 – $500 USD
Consultancy and Legal Fees: $2,000 – $3,000 USD
Minimum Capital Requirement: €25,000 (to be deposited in a local bank account)

Monthly and Annual Costs

Accounting Fees: $200 – $500 USD per month
License Renewal: $500 USD annually
Office Rental & Staff Costs: Varies based on location

Step-by-Step Process

Company Name Registration: Approval of business name
Document Preparation: Notarization of Articles of Association
Bank Account Setup: Deposit required capital
Registration & Licensing: Obtain Free Trade Zone operational license
Annual Renewals: Maintain tax compliance and renew license

Taxation for FTZ Companies

Exemption on International Operations: FTZ companies conducting business exclusively outside the Turkish Republic of Northern Cyprus (TRNC) are fully exempt from corporate tax (0%).
Domestic Operations Taxation: If an FTZ company trades within TRNC, profits are subject to:
- 10% corporate tax
- 15% income tax on the remaining profit after corporate tax deduction
VAT Exemption: FTZ companies are exempt from Value Added Tax (VAT) on their transactions.

Employee Obligations

Withholding Taxes: FTZ companies must deduct applicable income taxes from employee wages.
Social Insurance & Provident Fund Contributions: Employers are required to contribute to employees' social insurance and provident fund premiums.