Company Registration in Turkey: Your Guide to Setting Up a Business in Turkey

Business setup in Turkey sounds interesting, right? For entrepreneurs and investors, yes, it does. In fact, it is very lucrative and beneficial for businesspeople to open a company in Istanbul, Turkey. If you are unaware of how to set up a business in this country, this guide is for you. We will be discussing the complete process along with requirements so that you know everything required in order to start a business in Turkey.

Reasons for Business Setup in Turkey in 2023

Turkey has grown to be an enticing destination for international business visionaries eager to contribute and expand their operations in the country. The main motivations for investing in Turkey include its friendly business environment, its strategic location between Europe and Asia, and its young and well-educated workforce. The number of foreign investments in Turkey increased 8.5 times over the last 10 years compared to the entire “multi-decade,”. Also, this country has developed a thriving commercial sector, comparable to that of BRIC countries which are China, Brazil, India, and Russia.

Istanbul is the capital and largest city of Turkey. The city has attracted significant foreign investment in recent years due to its unique status as the only metropolis in the world to spread over two continents – Europe and Asia, its strategic location, highly skilled labor force, and excellent infrastructure. Furthermore, investors choose Turkey’s three largest and most developed cities—Bursa, Ankara, and Izmir—to establish their businesses.

It’s now very easy to start a business in Turkey thanks to recent regulations designed to attract investment from foreign countries. It is simple to understand why Turkey attracts new businesses as a dream location. Some reasons are that half of its 80 million people are under the age of 30, and they are becoming more educated, skilled, and wealthy to spend money. Then, economic ties with Europe and the Middle East have grown significantly. Also, infrastructure for banking and communications has immensely improved.

Here are a few other major reasons to choose Turkey to establish your new business:

Steps to Set Up a Business in Turkey

Step 1. Submit the Memorandum and Status Online at MERSIS

A central information system called MERSIS is used to set up business registration procedures and daily store business register data electronically. Legal entities involved in the business are each given a unique number.

Step 2. Get Power of Attorney

After that, you must present a Power of Attorney from the partners to the Notary Public in order to form the firm.

Step 3. Choose and Reserve the Company Name

You must be the first to register your trading name and no one else may have already done so. The phrases “Turkiye; Milli; Turk; Cumhuriyet” cannot be used without the express consent of the Turkish Council of Ministers. Your name should not be utilized in a way that could mislead third parties. The trading name can only contain foreign terms and titles that do not violate any governmental or cultural laws or policies.

Step 4. Sign a Lease Contract

Post that, you need to sign a lease contract to get an address for your company.

Step 5. Complete and Notarize Company Documents

• Four copies of notarized articles
• If a power of attorney follows the procedure, a notarized copy of a power of attorney is required permitting the attorneys who will represent the application before the relevant trade registry office and other official authorities to proceed with the application (if applicable).
• Articles of Association (AoA)
• One copy of managers’ identification cards that have been notarized
• Resolutions made by the shareholder legal entity(ies)’s competent administrative authority approving the incorporation; For the sake of clarity, the resolution should include any specific requirements (such as the company name or area of business) that must be met before the proposed company can be formed.
• Two copies of notarized declarations of signature
• The name of the actual person who will act on behalf of the legal entity and the authorized person, if a legal person will be appointed as a member of the board of directors of the potential company to be established. For the sake of clarity, it must be stated in the same resolution or with a separate statement.
• Submit all the documents at the Istanbul Chamber of Commerce and pay official company registration fees in order to get a company registration certificate from them
• The required paperwork is as follows when a foreign partner is a real person:

1. Two copies of each shareholder’s passport for a real individual

• Submit company details at the Istanbul Chamber of Commerce online
• The following paperwork is needed if the foreign partner is a legal person:

2. The activity certificate for the legal company designated as the shareholder, issued by the appropriate body in the investor’s country. Information on the company’s signatories and its present state must be included in the certificate.

• Submit Articles of Incorporation of the company online and get them approved

Step 6. Get a Potential Tax Identification Number

The relevant tax authority or office must issue the company, any non-Turkish shareholders, and any non-Turkish board members with a potential tax identification number. Businesses need a tax identification number to open a bank account and deposit the capital for the company that will be incorporated.

Ongoing Trading and Taxes

Private limited companies registered and residing in Turkey are subject to full taxation on all earned and declared profits. Before forming your company, do look for the advice of a reputable accountant as laws and taxes can change frequently in the country.

Additionally, you will need to hire an accountant. Do remember that they work differently here in Turkey and typically charge a monthly fee that, in some cases, can seem expensive for work that they perform only occasionally.

Step 5. Open a Bank Account

Then, you need to open a bank account in a corporate bank for your business transactions.

Step 6. Deposit a Capital’s Percentage in the Competition Authority’s Account

You need to deposit a percentage of capital in the account of the competition authority. Plus, you need to get an original bank statement from the Halk Bank branch in Ankara confirming that 0.04% of the capital has been placed in the account of a state-owned bank or the Competition Authority of the Central Bank of the Republic of Turkey (CBRT). Or you may get an EFT that has been stamped and marked “collected.”

Step 7. Deposit a Minimum of 25% of the Start-up Capital

Before the new business is registered, 25% of the share capital must be paid. Additionally, you must obtain a copy of the deposit proof. Within two years, the remaining 75% of the subscribed share capital must be deposited. A different option is to pay the capital sum in full prior to registering your company.

Step 8. Apply for Entry in the Commercial Register

Once the registration process at the Commercial Registry Office is complete, the Commercial Registry Office informs the tax office and the social security institution ex officio of the establishment of the firm. Within about ten days of the company’s registration, the Commercial Registry Office arranges for an announcement to be published in the Commercial Registry Gazette.

Shortly after the Commercial Registry Office notifies the local tax office, a tax registration certificate must be obtained from the local tax office. The appropriate social security organization provides the company with a social security number. After the business has registered with the social security institution, an individual application must be made for each employee.

Step 9. Certify the Legal Books by a Notary Public

On the day the company is registered with the Trade Registry Office, you must certify the legal books. The tax office must be notified by the notary of the business books’ certification.

Step 10. Wait for Notification from Trade Register Office

Finally, you need to follow up with the tax office for notification from the trade register office that your company has been established.

The tax office and the social security institution are initially notified of the company by the commercial registry office. A determination report is prepared at the corporate headquarters by a tax officer. The determination report must contain one authorized signature at minimum. Trade registrars forward the company’s establishment form to the tax office, along with a notification of the tax number.

How Many Days Needed to Open a Company in Turkey?

If partners are in Turkey, you can register your company, open bank accounts, and access online banking in just 1 to 2 days. The company formation process will also be less expensive and quicker. If you are not in Turkey, you can still form your company, but the setup will take longer and cost more.

Shareholders in a Business in Turkey

The shareholders are precisely, the company’s owners or the company’s founders. These can be individuals or corporations, and they have obligations within the company but also a variety of rights. Both private and public Turkish firms are limited to having a minimum of one shareholder. These can be Turkish residents or citizens of Turkey, but foreigners can also hold sole shareholder status when establishing a business here.

Contributing to the company’s share capital is one of the shareholders’ primary duties. They will be given more or less ownership rights in the company depending on their contributions. In the case of limited liability businesses, the shareholders’ biggest benefit is that their liability to the debts and other liabilities of the business will be constrained to the amount of money they put into the business. In a partnership, the members or partners take on the function of shareholders.

Special Investment Zones in Turkey for Foreign Investors

The following three major special investment zones are the main points of interest for foreign investors:

Free zones

20 zones are specifically created to increase the number of export investments. Also, they offer a 100% exemption from VAT, customs duties, corporate income tax for manufacturing enterprises, and income tax on personnel salaries for companies that export at least 85% of the goods produced here. You also enjoy the ability to deposit goods free of charge unlimited and the ability to transfer the profits to and abroad from Turkey.

Organized industrial zones

These are 276 with low natural gas, water, and telecommunications costs. Here is a five-year real estate duty exemption, zero VAT on land acquisition, and municipality tax on construction or solid waste (the latter if the zone doesn’t benefit from the municipality service).

Technology development zones

These zones are 50 in total with significant exemptions from VAT on software application sales, income and corporation taxes on software development revenue, and salaries of R&D staff – but not to exceed 10% of the total number of employees – are available until 2024.

Only 34 of the technology development zones are operational at the moment; the rest are still being constructed in Turkey.

Hair transplantation is a highly developed industry in Turkey. Due to the high demand for these kinds of medical aesthetic services, this industry is both fiercely competitive and attracting investors.

There are tons of other incentives that Turkey offers for foreign investors. The double tax treaties exempt foreign investors from paying taxes in both Turkey and their country of residence.

Free Trade Agreements, which allow zero custom taxes, are signed with countries like Liechtenstein, Albania, Switzerland, Chile, Croatia, Egypt, Georgia, Iceland, Palestine, Jordan, Lebanon, Mauritius, South Korea, Macedonia, Montenegro, Bosnia and Herzegovina, Morocco, Norway, Tunisia, Serbia, Syria. They also provide additional incentives to foreign investors.

FAQs

How much does it cost to set up a business in Turkey?

It will cost around between 1500 and 2000 USD to set up a business in Turkey.

Can a foreigner start a business in Turkey?

Yes, a foreigner can start a business in Turkey.

What type of business is profitable in Turkey?

Turkey’s economy is mostly based on agriculture, therefore growing, packing, and exporting hazelnuts is a lucrative industry there. It’s cheap money, there are some clever ways to build up the infrastructure, and the area is fertile for growing hazelnuts.

Is Turkey good for starting a business?

Yes, Turkey is a fantastic country to start your business.

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