Turkey is a country located in Eurasia. Most of the Turkey is in Asia while some of its geographical parts are in Europe. The country is at a very strategic location where the borders of Asia and Europe meet.
This is the place that connects the two continents thus is a place of trade. The country also has its three sides surrounded by the sea which makes trading via sea easier. In the recent while the country has seen dramatic changes in its politics where President Erodgan has pushed the country from secular towards Islamic and has also curbed the press freedom.
Coming to economy, the country is the 13th largest in GDP by Purchasing Power Parity and 17th largest when it comes to nominal GDP. Turkey is also the founding member of OECD and G-20. Turkey’s economy gets boosts from its exports where it exported 163 billion dollars of goods in 2012 with continuous increase every year. Turkey is also the producer of motor vehicles making it the 13th largest producer while it also indulges in shipbuilding, consumer electronics, metallic products, etc.
Doing Business in Turkey:
As a foreigner if one if attracted towards doing business in Turkey then here are some important information on Turkey in terms of doing business. According to latest report by World Bank, Turkey ranks 43rd spot in ease of doing business.
Ease of doing business covers basic parameters of doing business and how easy in a particular country is to business based on several parameters like getting credits, loans, starting a business, insolvency, etc. Here is the rating of Turkey on such parameters.
- Enforcing Contracts: 19th rank
- Protecting Minority Investors: 26th rank
- Getting Credit: 32nd rank
- Registering Property: 39th rank
- Trading across Borders: 42nd rank
- Dealing with construction permits: 59th rank
- Getting Electricity: 60th rank
- Starting a Business: 78th rank
- Paying Taxes: 80th rank
- Resolving Insolvency: 109th rank
According to World Economic Forum, Turkey ranked at 61st spot in competitive index that takes various parameters into consideration like corruption, business confidence, bankruptcy, etc.
Overview of Turkey and its Business Atmosphere:
Turkey is an open economy basically influenced by the Europe. It is Part of NATO and various other organizations like G-20. It has general agreements with various countries in Europe for cross border trade where negotiations on tariffs were discussed which now benefits both the countries.
Being a producer of various goods, Turkey’s economy growth has good contribution from exports to various European countries. The country falls in a strategic location making it attractive for tourists from worldwide who boost the country’s economy. The country also has around 35% of its economic contribution coming from agricultural sector which is also a source of employment.
The country overall is a mixed one where traditional and moderns businesses come together to contribute in its growth.
Starting a Business in Turkey:
To start a business in Turkey as a foreigner it is essential for you to know the basics of doing business in Turkey. Some key factors that matter while starting a business are:
- Getting a Visa for Startup
- Residential Permit
- Getting Capital Investment
- Deciding the Legal Entity of the Business
- Legal Issues
- Growth of Business
- Managing Employees
- Bank Accounts, Profit and Accounting
These are some of the important issues while starting your business in any country. Let us examine what it takes to start a business in Turkey based on these parameters.
Getting a Visa for Startup:
The Republic of Turkey provides E-Visa to the foreign visitors. You can click here to apply for e-visa. This application can be filled by those who want to enter Turkey for tourism and commerce purpose. Rest will have to apply to the Turkey Embassy or Consulate present in their respective countries.
You need to render some documents essential for e-visa and you can get your visa within no time by filling up the form. Your passport should be valid for more than 60 days since the last day of your stay in Turkey. For more info you can visit the official website of Ministry of External Affairs, Republic of Turkey.
There are various types of Visas that are offered by the country. Some are:
- Education visa
- Tourist visa
- Commercial visa
- Research visa
- Film visa
- Resident visa
- Work visa
Procedure for Obtaining Visa:
For investors who want to invest in Turkey need to fill their application form with the appropriate documents to the nearest embassy or consulate of Turkey in whichever country they reside.
The documents shall have labor contracts, letter of assignment or document stating partnership in the firm. Within ten days the employer or partner in business need to submit such documents to the Ministry of Labor in Turkey. After the grant of visa the person needs to enter the country within 180 days.
Visa Approval for Foreign Direct Investment:
There is a special rule made for those who are doing FDI to Turkey. Here are some criteria to it:
- The foreign shareholder must hold TRY 152, 6057 of the capital in the company given the company has turnover of 114.7 million TRY.
- The foreign shareholder holds TRY 152, 6057 of the capital when the company has 1 million TRY of export in recent years
- The foreign shareholder holds TRY 152, 6057 of the capital where 250 or more people are employed.
- The investment made should be above 38.1 million TRY.
- The company should have FDI in one more country other than where its headquarter is located
- Whether the foreign national holds key position in the company
There are many other terms and conditions for obtaining visa which can be read here.
Short Term and Long Term Visa Permit:
Short term visa permit is granted to those who are investing in Real Estate or doing business in Turkey. It is form two years. Long term visa permit is for those who are continuously living in Turkey for eight years due to work.
Establishing your Business:
After you have got your visa it is time to start your business by starting your company. There are basically three types of corporate companies.
- Joint Stock Company
- Limited Liability Company
- Cooperative Company
You can also open your business as sole proprietor, in partnership, etc.
Before you choose the legal entity of your business, be sure which type of business will work for you. It also depends upon the investment amount but for oversea businesses, LLC and JSC mostly work.
Registering your Business and Getting TIN:
For registering your business you will need to submit some documents that will include:
- Your photograph
- Passport and visa
- ID card of the country you belong
- Bank account
- Proof of capital investment (25% of the total amount deposited in your bank account)
- Residential proof
As your register you will also be required to get your TIN which is your tax identity number. TIN will be used for all the business you do and will be used to pay taxes. You will also be required to register to trade registry office.
Cost of Doing Business in Turkey:
Doing business in Turkey is a bit costly given the high wages workers charge there. Net minimum charge for work is $348.50 while the cost of employer is $441.20. Apart from this, there are also costs for water, electricity, gas, petrol, etc.
If you are doing business in elite cities of Turkey then the cost of living is extremely high. The well-developed cities charge high rates for even basic things making it difficult for survival if you don’t have the sufficient amount.
VISA and Master card are two general types of cards that work in Turkey. So if you own your credit or debit card of Visa or Master card then you won’t have any trouble while doing transaction.
Renting office, owning place for your business to establish, owning or renting residence, etc. will add up to your cost. It would be beneficial for you if do feasibility analysis test in order to get the exact amount of expenditure your business will require.
Taxation in Turkey:
Turkey has one of the most competitive and liberal taxation policy in the whole OECD. The corporate tax structure is designed in way to help the businesses grow and also giving adequate revenue to the government. There are basically three types of taxes in the country.
- Income Tax
- Tax on Expenditure and
- Tax on Wealth
In income tax there are two types of taxes. Individual income tax and corporate income tax. The individual income tax rate varies from 15% to 35% with few incentives as well. People who earn below TRY 14, 800 are not needed to pay taxes.
The corporate income tax is charged on legal entities. These legal entities are defined as:
- Capital Companies
- Joint Ventures
- Public Economic Enterprise
The corporate taxes charged in Turkey for year 2018 is 22% which was earlier 20%. For companies who are situated in Turkey, they will have to pay on all their earnings within the country and abroad while those that are not registered here but earn from Turkey will have to only pay whatever amount they have earned in Turkey.
When it comes to taxes on expenditure then VAT is charged. The tax slab in Turkey for VAT is 1%, 8% and 18%. Goods and services are divided in these three tax slabs. Apart from VAT, there is Special Consumption Tax that is charged only once and is charged on petroleum products, automobiles, planes, yachts, and alcohol, tobacco and luxury items. There is also banking and insurance tax and stamp duty tax in Turkey.
Lastly, there is tax on wealth. These are property tax, inheritance tax, gift tax, motor vehicle tax. The government also offers incentives to tax payers of various kinds as well.
Some Advantages of Doing Business in Turkey:
Like every other country, Turkey too offers opportunities to businesses to do their business and invest in the country. Here are some advantages of doing business in Turkey.
- Registering your company in Turkey is quite easy. A limited liability company will require a week’s time to get registered. A minimum of one shareholder and one director is required of any nationality. This also means that the company can be wholly owned by a foreigner.
- A minimum paid up share capital of euro 3300 is required and the client doesn’t needs to travel to Turkey.
- Turkey also has a free zone where some selected companies can do business. These free zone companies don’t need to pay any kind of taxes that include VAT, corporate tax and custom duty. These free zone businesses can also send all the earnings back to their parent company without any repatriation fee.
- Turkey is one of the fastest growing economy in the whole Europe. It connects the Europe with Asia and holds a strategic place when it comes to trade across countries
- Turkey is the 13th most attractive place when it comes to FDI. It got FDI of $91 billion which Turkey boasts about
- Turkey offers well developed infra like roads, connectivity rail, air space, waterways transport and also business infra for offices and factories.
- Turkey has an atmosphere for investors and entrepreneurs to run their business. It supports liberal market economy and incentivizes the investors.
- There are certain laws that help the innovative entrepreneurs, give them tax exemption and also sometimes fund them
Apart from these, there are many more advantages of doing business in Turkey which you will find out while working there.
The labor cost in Turkey is quite high which means that as a business you have to spend good sum on paying salaries to your employees which will reduce your profit ratio. The country also has high corporate tax rate of 20%.
There is lots of expense when it comes to registering your company. There are some laws that are stringent making it sometimes difficult to do business or getting yourself registered. Moving between the authority and bureaucracy becomes very tough given the rigid attitude and high corruption which is sometimes very annoying.
Thus, with such advantages and disadvantages Turkey offers a lot for foreign investors. Try your luck in Turkey and we hope you succeed.
You can obtain a foreign entrepreneur residence permit granted by the Directorate General of Migration Management (DGMM) of the Ministry of Interior. You will need to submit your passport and required documents, including your business plan, financial resources, and proof of compliance with all applicable laws and regulations. Once the appropriate documents are reviewed and approved, you will receive the residency permit.
You will need a business visa which is a type of long-term residence permit. This permit is good for staying up to two years. To obtain the visa, you will need to obtain the proper documents, such as a business plan, letter of intent, notarized copies of all relevant business documents, and proof of financial resources in the form of bank deposits. Once you present all the necessary documents, you will receive a residence permit from the Turkish Embassy or Consulate in the country of your citizenship.
Before starting to work in Turkey, you will need to obtain a work permit from the Ministry of Labor and Social Security. To be eligible for a work permit, you will need to submit all the relevant documents, such as a passport, notarized copies of the business documents, a CV, and proof of financial resources. Once reviewed and approved, you will receive your work permit.
To register your company in Turkey, you will need to register at the Trade Registry Office. This process involves submitting a registration form as well as other required documents, such as your business plan, notarized copies of the business documents, and proof of financial resources. Once the documents are reviewed and approved, you will obtain your company registration number.
Yes, all businesses in Turkey will have to pay taxes, the type and amount of tax will depend on the entity you register with. Generally, businesses in Turkey are subjected to corporate tax, value-added tax and potentially other foreign researchers’ tax and dividend tax. Therefore, you should research carefully on the type and amount of taxes to be paid prior to registering your business.
Aside from registering your business and obtaining the necessary permits and visas, you should also become familiar with the labor regulations in Turkey which are based on the regulations of the International Labor Organization. This includes understanding the minimum wage and other necessary labor practices. Additionally, depending on the type of business you register, other types of permits or licenses may be required. Therefore, it is important to research about all the necessary legal regulations for the type of business you intend to open.
Yes, there is plenty of assistance that you can obtain in order to ensure that your business is compliant with all the regulations in Turkey. For instance, you can seek assistance from the Turkish Chambers of Commerce and Industry, who can guide you through the whole registration process, as well as offer you numerous other services related to business establishment. Additionally, you may also consult with other professionals, such as lawyers and tax advisors, who can help you with the legal and tax requirements of your business.
You may obtain financing for your business in Turkey in several ways. Firstly, you may seek venture capital financing from either a venture capital firm or a private investor. Alternatively, you may try and get a loan from a bank in Turkey. Most banks in Turkey offer business loans for foreign entrepreneurs. Additionally, you may also seek support from business associations, such as the Turkish Small Business and Entrepreneurship Promotion Agency, which provides grants and other forms of assistance to promote small businesses in Turkey.
You can recruit employees for your business in Turkey by posting job adverts on several job recruitment websites, such as Indeed and Monster. Additionally, there are also several job fairs organized in major Turkish cities. You may also post job adverts in the local newspapers and newsletters. Moreover, you may also contact the Turkish Chamber of Commerce and Industry to receive assistance in finding qualified and suitable employees for your business.
You will need to open a company bank account in order to legally and efficiently manage the finances of your business in Turkey. To open a company bank account in Turkey, you will need to present the company registration documents, a notarized power of attorney, proof of identity, and the passport of representative’s. Additionally, some banks may also require other documents, such as copies of the articles of association, and proof of address. Once the documents are reviewed and approved, you can then open a company bank account in Turkey.