Turkey is an appealing country for transcontinental company registration due to its developed business climate and plethora of monetary incentives and advantages granted by the government in unconstrained zones. Cities such as Ankara, Istanbul, or Izmir are considered the most attractive domains for launching businesses among foreign investors. LLC is the most popular venture model, especially for small to medium enterprises.
Transnational investors aiming to open an enterprise in Turkey are also drawn to the country's advantageous geographical location, relatively low functional expenses, and skilled and multilingual personnel. However, the advantages do not end there, as foreigners may also obtain residency in Turkey through various investment programs.
This article will discuss in more detail how to enroll an LLC in the free zones of Turkey.
What opportunities are available in Turkey for international business?
Company principals positioning globalization as part of their business strategy should favor markets characterized by ease of conducting business, thus leading their regions and providing convenience for foreign contributors.
Registering an entity in Turkey provides numerous advantages in terms of accessing new markets, increasing the company's purchasing power, attracting new talent reserves, diversifying company assets, and generating competitive perks. The Republic holds a crucial position as a bridge between Europe and Asia. It is acknowledged as one of the leading nations in the worldwide economy in export performance, level of international direct finances attraction, and logistical infrastructure.
- The Republic grants extensive potentials for enterprises aiming to enter both domestic and international markets.
- The country is a developed logistics center thanks to unconstrained free domains.
- In the region this country is considered the top place to launch a startup in the research and development spheres.
What are free economic zones?
Overseas investors keen on establishing an LLC in Turkey can navigate through the commercial milieu prevalent within Free Economic Zones (FEZ). These Turkish commercial zones, officially demarcated by governmental authority, offer enterprises an array of financial incentives and specialized tax regimes in compliance with legislative mandates. The primary objective behind the establishment of such investment enclaves is to stimulate import-export activities, recognizing the pivotal role played by international commerce as a cornerstone of the local economy.
- Technology advancement districts: research and development, high-tech operations;
- Organized manufacturing regions: for encouraging industrial activities;
- Unrestricted trade zones.
Registration of an enterprise in an unrestricted zone in Turkey
Foreign citizens and Enterprises can establish business within Turkey's free economic domains, given that they function solely within the zone. Alongside their contribution to the Turkish economy, these zones, with their flexible and modern administrative framework, foster the necessary investment climate for entities aiming to expand international trade or carve a niche in the logistics sector.
Investors establishing an LLC in Turkey typically manage small businesses and opt for this form due to its simple registration process and simplicity of management. Before establishing an LLC in Turkey, business owners should be aware of certain peculiarities in the registration process.
- Name approval;
- Preparation of the company's constituent documents and their submission to the Chamber of Commerce;
- Submitting a request for licensing to the General Directorate of Free Zones under the Ministry of Trade;
- Concluding a lease treaty in the selected zone.
- Creating a Turkish bank account.
Basic documents for registering an LLC in a free zone in Turkey that should be submitted to the Chamber of Commerce and Industry:
- Founders' identity cards;
- Determining the name of the entity;
- Constituent papers signed by all members;
- Confirmation of capital deposit;
- Application with signatures of each person authorized to represent the LLC.
If the aforementioned papers are issued outside of Turkey, they should be legalized and apostilled. Note that after registering a Turkish enterprise, an account can be opened in any currency and in any local bank/affiliate of an international bank within the Republic's territory.
If you aim to register LLC in Turkey and acquire a license to operate in an unconstrained domain, you will need to go through the following stages:
- Fill out the application form;
- Cover the registration charges to the Central Bank of the Republic;
- Submit an application (+ bank receipt) to the General Directorate of Free Zones;
- Sign the lease contract with the Free Economic Zone operator during 30 days.
The last step is the acceptance of the lease treaty by the FEZ Directorate and certificate issuing. If the General Directorate approves the request, the permit is issued for a certain time, usually from 10 to 30 years, taking into account the request.
In free areas, operations are usually carried out under licenses that should be acquired in the following places:
- Production: procurement, sale, labeling, packing and display of raw materials, semifinished and finished items;
- Procurement and retailing: storing, labeling, packing and displaying commercial goods;
- Warehouse operations: storing commodities belonging to other users;
- Leasing: delivery of property to an entity for use with subsequent redemption;
- Servicing and preservation: mostly goods.
- Others: banking, insurance, engineering, consulting, etc.
Key preferences of the Turkish Free Economic Zones
Non-residents are allowed to register a company where tax incentives are available, and foreigners can get a residence permit under a simplified scheme. As previously articulated, numerous investment zones have been instituted within the nation, each serving distinct objectives and legislative imperatives:
- Encouraging financing and production to fortify the export market and increase the volume of Turkish exports outside the country;
- Ensuring the flow of services and modern technical equipment to Turkey;
- Improving international commerce conditions;
- Providing new jobs.
Technology growth domains may be selected by investors aiming to advance firm in research and development. If you are looking to launch an entity in a technology development domain in Turkey, it's essential to note that there are approximately 50 such zones offering significant incentives until 2024, comprising corporate and income levy reliefs on income from software development and VAT on sales, wages for research staff, but not surpassing 10% of the aggregate count of personnel.
Organized manufacturing zones are renowned for their advanced framework and social amenities, attracting international contributors to start companies here. Turkey offers 276 zones with minimal costs for natural gas, water, telecommunications, and no municipal construction tax. When enrolling a company in a Turkish industrial domain, investors are exempt from VAT when purchasing land, property tax for the next 5 years after launching their business, and municipal tax.
Unconstrained areas are created to facilitate export businesses. There are 20 such areas with complete exemption from customs charges, corporate revenue tax for production entities, VAT, and payroll tax for entities selling overseas 85% or more of the commodities created here, the opportunity to contribute finances and earnings without restrictions.
Other incentives presented to transnational contributors are provided by double taxation agreements and free trade arrangements.
Requirements for LLC in Turkey
In compliance with national legislation, the incorporation of an LLC necessitates enrollment within the official Trade Registry. This corporate form permits establishment by at least 1 founder, whether an individual or a juridical entity. The founder's liability is confined strictly to the extent of the capital contributed. Notably, there exists no constraint regarding the nationality of founders, thereby enabling absolute foreign ownership. Additional imperative prerequisites for the registration of an LLC in Turkey during the year 2024 include adherence to statutory stipulations:
- depositing a minimum capital of 10,000 Turkish lira into the account, with 25% of the amount to be paid upon registration and the rest within 2 subsequent years;
- members should nominate at least 1 executive;
- the enterprise should have 1 assigned auditor at least;
- To open an account in Turkey, you need to deliver a confirmation of Turkish citizenship or a labor permit. An alternative solution is to hire a resident CEO who will be authorized to create a Turkish bank account on behalf of the enterprise.
Business owners harboring intentions to inaugurate a startup venture within Turkey may avail themselves of the specialized services proffered by our proficient cadre of experts.
What prospects for business operations are available within Turkish special zones?
The Turkish distinctive domains accommodate a spectrum of operations adapted to each designated territory. For instance, the Tracia investment domain accommodates sectors such as commerce, monetary solutions, mechanical engineering, light manufacturing, and metal processing. Within the Mersin Free Zone, the creation of LLC caters to enterprises involved in agricultural product processing. Conversely, the Antalya Free Zone presents an opportune environment for the establishment of enterprises specializing in ship and boat manufacturing.
Establishing of an enterprise in the Istanbul FEZ
Istanbul stands as a magnet for intercontinental contributors aiming to register an LLC within this unencumbered jurisdiction. Notably, there exist several unconstrained investment territories, including the Free Economic Zone (FEZ) named in honor of Atatürk, the Istanbul Leather Industry special zone catering to diverse industrial enterprises, the Istanbul Stock Exchange zone catering to fiscal bodies, and the Tracia Free Zone.
The delineation of such zones' geographical placements is meticulously crafted to furnish conducive environments for prospective contributors, encompassing a plethora of office spaces and diverse dimensions of private and shared warehouses. Such strategically positioned locales cater to the requirements of both nascent small-scale startups and more expansive corporate entities.
Entities in Istanbul's FEZ gain access to transcontinental and Turkish markets, which is one of the largest in the Eurasian domain. Moreover, such unrestricted territories supply affordable labor contrasted to other territories of Turkey.
Conclusion
Turkey presents multiple monetary opportunities for international contributors. Harnessing its strategic location bridging Asia and Europe, the Republic endeavors to allure international direct contributions by fostering optimal conditions, particularly within its Free Economic Zones (FEZ). By contacting YB Case experts, you can request not only advice on the stipulations for conducting business in compliance with the law of free areas, but also support in establishing an LLC in the FEZ of Turkey.
