With the passage of the Foreign Direct Investment Law in 2003, the process of establishing a company in Turkey has become a lot easier. Foreign nationals may now become shareholders of Turkish companies with no capital investment requirement and are allowed to establish any type of entity available under Turkish law. Depending on the type and size of your company, there are many incentives available to encourage inward investments. For instance, the Turkish Board of Ministers has recently passed a decision that would allow for customs tax and VAT immunity, as well as a substantial reduction in the corporate tax for newly established companies that creates jobs in certain areas of Turkey. We have provided general information and listed the required documents for formation of a company, branch or liaison office in Turkey below.
There are two types of companies that could be established: a Limited Liability Company (LLC) and a Joint-Stock Company. Both types of entities have a legal identity. The minimum paid in capital for a LLC is 5,000 TL and requires at least 2 founders (maximum 50). For a Joint-Stock Company, the paid in capital is 50,000 TL and requires at least 5 founders. It should be noted that the paid in capital for both types of companies are not immediately due at incorporation; 1/4 of the capital is required within 3 months after establishment and the remainder within 3 years. To register for a LLC, we would have to lodge a petition to the provincial trade registration office, and for a Joint-Stock Company, the registration process would have to be done with the Ministry of Industry and Trade. The current corporate tax in Turkey is a flat rate of 20%.
Some Required Establishment Documents
1) Articles of Association
2) Letter petitioning for establishment and notice signed by company’s representative
3) Notarized signatures of company’s representative with the company’s trade name
4) Letter of Commitment
5) Bank receipt showing a deposit of 0.04% of the company’s capital
6) Notarized copies of the passport, ID and residence certificates (for Turkish citizens) of the founders of the company
7) Certificate of Activity if there is a foreign shareholder legal entity, approved by the Turkish Consulate (with apostilled and notarized translation)
A branch office does not have a separate legal identity as it is seen as an extension of a foreign company. Any income originating from the branch is taxed by the Turkish government as a non-resident company. To establish a branch, your company would have to gain permission from the Ministry of Trade and Commerce and register with the regional Trade Registry Office.
Ministry of Trade and Commerce Required Documents
1) Letter issued by the company or its representative. The letter must include the following:
- Name of Establishing Company
- Date of Incorporation
- Amount of stated capital
- Name, Last Name, Address and nationality of the company’s representative in Turkey (appointed for the branch)
- Legal Undertaking indicating that the representative shall abide by Turkish laws and regulations