Setting Up a Company in Turkey

Establishing a business in Turkey can be rewarding for foreign investors. Here’s a comprehensive guide to help you navigate the company types, associated costs, procedural steps, timelines, and tax obligations in Turkey.

Setting Up a Company in Turkey

Company Types Available to Foreigners:

• Limited Liability Company (LLC): Suitable for SMEs, allowing 1-50 shareholders and 100% foreign ownership. Minimum capital requirement: 10,000 TRY.
• Joint Stock Company (JSC): Ideal for larger businesses, Requires at least one shareholder; 100% foreign ownership is allowed. With a minimum capital of 50,000 TRY.
• Branch Office: Enables foreign company operations without a separate legal entity; No specific capital requirement, but the parent company must allocate sufficient funds for Turkish operations.
• Liaison Office: Allows foreign companies to conduct market research and feasibility studies without engaging in any commercial activities. It is fully owned by the parent company and does not require any capital investment, as it is restricted from participating in revenue-generating operations.

Associated Costs:

• Registration Fees: Between 1,000 to 2,000 TRY. Varying by company type and region.
• Notary and Translation Fees: Estimated 500 to 1,000 TRY.
• Legal and Consultancy Fees: Vary based on service providers; advisable to consult local experts.
• Bank Deposit: Required by some banks.

Procedural Steps:

1. Name Verification: Verify the uniqueness of the proposed company name through the Central Trade Registry System (MERSIS).
2. Articles of Association: Draft and notarize the company's Articles of Association.
3. Obtain Tax IDs: Acquire tax IDs for the company and shareholders from the local tax office.
4. Capital Deposit: For LLCs, deposit at least 25% of the capital before registration; the remainder within two years. For JSCs, 25% must be deposited before registration.
5. Registry and Notarization: Submit necessary documents to the local Trade Registry Office. Notarize required company books, such as the journal and ledger.
6. Tax Office Registration:: Register with the local tax office and obtain a tax certificate.
7. Social Security Registration: Register employees with the Social Security Institution

Timelines: Limited Liability Company (LLC): 1-2 weeks; Joint Stock Company (JSC): 2-3 weeks; Branch Office: 2-4 weeks; Liaison Office: 2-3 weeks.

Tax Obligations:

Corporate Income Tax:
Standard rate of 25% on net profits.

Value Added Tax (VAT):
Standard rate of 18%, with reduced rates of 1% and 8% for specific goods and services.

Withholding Tax:
Rates vary; for example, dividends paid to non-residents are subject to a 15% withholding tax.

Social Security Contributions:
Employers contribute approximately 22.5% of an employee's gross salary.