Business In Turkey
Doing Business in Turkey
Foreign investment may be direct as well as indirect.
Equal treatment among the Turkish investors and foreign
investors.
No formal permission required for portfolio (indirect)
or direct investment.
The income from direct or indirect investment may
be transferred out of the country through banking system
without any permission.
The income from direct or indirect investment may
be subject to various taxes.
A foreign entity can establish a business operation
in Turkey
1) by incorporating a subsidiary company in the form
of a new company or joint venture, or
2) by a branch office either of the foreign corporation
itself or of a subsidiary or affiliated company resident
outside Turkey, or
3) by appointing a person or corporation which is resident
in Turkey to act an agent or a representative or a liaison
office, or
4) by investing in or acquiring an existing Turkish
company
Foreign investors may set up a company of their own
for a special purpose.
A foreign capital company is established in accordance
with the provisions of the Turkish Commercial Code.
A company could be 100 % foreign capital-owned.
There is no minimum amount of foreign capital that
may be brought into Turkey.
The foreign investor would be freely an individual
and/or an entity.
Turkish Commercial Code requires a minimum of five
shareholders for the establishment of a joint stock
company, which must have at least TL 50.000 capital,
(about USD 35,000). The foreign shareholders may arrange
freely the capital structure of the company. A minimum
two shareholders are required to establish a limited
liability company,
Investment capital brought into Turkey may be kept
as foreign exchange account in a Turkish Bank.
Foreign capital may be brought in cash or in the form
of capital goods as well as intangible rights.
Shares of any foreign investor must be issued as registered
share.
Foreign investors may also invest in an existing Turkish
firm by purchasing its shares, without obtaining any
permission from any governmental authority.
The transfer of shares issued by any company resident
in Turkey to persons and entities resident abroad is
not subject to the permission from any governmental
authority.
Foreign investors can freely repatriate the dividends
from their investment in Turkey.
Liquidation proceeds, including the proceeds from
the sale of shareholding interest, may be repatriated.
Profit may be transferred after the fiscal year-end
and a decision taken on the payment of a dividend at
the annual meeting. All money transfer must be realized
through the banking system.
Foreign investor may open a branch or a liaison office
freely in Turkey. The branch does not constitute a separate
legal entity. The head office abroad is liable for obligations
incurred by the branch. Branches are subject to limited
tax liability based on income derived in Turkey, where
subsidiary companies are subject to full tax liability.
Branches and subsidiaries benefit from tax incentives.
The purpose of the liaison office must be conducting
only non-commercial activities (research, market study,
representation etc.). All the expenses of a liaison
office shall be transferred as foreign currency from
abroad. Liaison offices shall not apply for transfer
of profits, unless closing down and liquidation cases
are existed. The liaison office can be established for
the period of two years. The liaison office may not
collect revenues on its own account in Turkey. A liaison
office is not subject to corporation or income tax since
it does not generate income from its activities. Employees
of a liaison office are not subject to income tax if
their salaries are paid in foreign currency and the
income is not paid from Turkish sources.
Any company, which has foreign capital in Turkey,
operates under the same conditions as domestic firms
as well as on equal terms. Such a company may purchase
real estate required for its activities in Turkey.
Transfer of shares among the foreign partners or local
associates are not subject to any permission from any
governmental authority, with the exception of broadcasting
companies.
Foreigners and foreign experts may freely be employed,
and obtain work permits. The number of foreign managers
or technical staff employed in Turkey is not subject
to limitation. Foreigners employed in Turkey are allowed
to transfer their wages in foreign currency after the
deduction of the taxes.
A joint venture may be established with individuals
or ordinary limited partnership in order to perform
a certain project for a certain period and to share
the resulting profit. The parties forming the joint
venture should jointly undertake the project. Joint
ventures are subject to corporation tax. However, parties
may prefer to fulfil separately their own tax obligations.
In that case, foreign party is subject to tax liability
for income derived in Turkey. The parties forming consortia
undertake to conclude a different part of the job do
not fall within the category of joint ventures. Foreign
parties of the consortia are subject to tax liability
for income derived in Turkey.
The books for commercial enterprises must be kept
in Turkish and Turkish Lira (TL). These records must
be retained for ten years.
A merger case is also possible for any foreign corporation
to do business in Turkey. For mergers, merging companies
must be the same type companies and engage in the same
fields of activity.
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