Turkey has a young, vibrant population and a rapidly expanding economy. As a result of that, this country is becoming a desirable location for new business launches. Setting up a business in Turkey can be a rewarding experience since the Turkish government has recently made it simpler for foreigners to open enterprises there.
Turkish commerce has a long history that dates back to the Ottoman Empire era. The Turkish economy did not, however, start to open up to international investments until the early 1980s. A surge in new business startups was induced by such initiatives.
Two main types of businesses can be set up in Turkey: limited liability companies (LLCs) and joint stock companies (JSCs). LLCs are the most prevalent corporate structure. This kind of business may be established with a minimum capital of 100,000 Turkish lire, and it is quite simple to commence. JSCs demand a minimum capital of 50,000 Turkish lire and are more difficult to develop.
Based on data sheets produced by the Turkish Statistical Institute, approximately 3 million firms have been operating in Turkey in 2022. Over 600,000 of these companies are owned by foreigners. In Turkey, the following sectors witnessed the highest number of new company launches:
- Technology
- Tourism
- Manufacturing
- Construction
- Retail
On the other hand, the most popular cities in Turkey for new business startups are Istanbul, Ankara, Izmir, Antalya, and Bursa.
Why is Turkey a Good place to start a business?
Turkey's economy is continuously evolving, and its youthful population makes it an appealing location for new ventures. The advantageous mix has drawn investors from all over the world to investigate business prospects in the country.
The Turkish government has also made massive efforts to facilitate business startups, with an emphasis on simplifying this for international investors and individuals. These initiatives have successfully improved the climate for entrepreneurs trying to access the Turkish market.
In addition, Turkey is a fantastic destination to launch a business for the following reasons:
- Strategic Location: Turkey's unique geographical location acts as a bridge between Europe and Asia, allowing easy access to both markets.
- Growing Market Potential: Turkey's national market is booming, and it also acts as a gateway to adjacent areas, offering numerous development opportunities.
- Robust Infrastructure: Turkey has a well-developed infrastructure, which includes highways, trains, airports, and telecommunication channels. This facilitates the procedures for importing and exporting products and services.
- Flexible Taxation System: The Turkish tax regime is somewhat friendly to enterprises. The corporation tax rate is 20%, and firms may make use of a variety of tax breaks and exemptions.
- Access to Talented Manpower: Turkey has a huge and talented workforce. The country has a robust educational system and a diverse pool of competent people across a wide range of industries that are growing daily.
- Business-friendly Environment: The Turkish government is devoted to fostering business development. The government has streamlined the business registration procedure, and enterprises may take advantage of a variety of government initiatives and incentives.
What is the process of setting up a company in Turkey?
Establishing a business in Turkey can be an exciting journey, as the country has tremendous potential for growth and success. As the economy continues to flourish and the properties in Turkey have become more functional, an increasing number of entrepreneurs are opting to set up new ventures in this dynamic market. In the World Bank's Ease of Doing Business 2020 report, Turkey is placed 33rd out of 190 economies.
By following the steps mentioned below and adhering to the legal requirements, you may start your business in Turkey and minimize probable setbacks:
- Choose the sort of business you wish to start: Limited liability companies (LLCs) and joint stock companies (JSCs) are the two primary business structures that may be established in Turkey. LLCs are the most common type to choose. They are simple to establish and require a minimum capital of 100,000 Turkish lira. JSCs are more difficult to set up and must have a minimum capital of 50,000 Turkish lira.
- Select a company name: The name of the firm must be unique and must not be the same used by any other company that is already registered in Turkey.
- Prepare the company's paperwork: The articles of organization, shareholders' agreement, and power of attorney must all be included in the business documentation.
- Registration with the Trade Registry chamber: To legally function in Turkey, the firm must be registered with the Trade Registry.
- Get a tax identification number: To pay taxes, the corporation must receive a tax identification number from the tax authorities.
- Create a Bank Account: To perform financial activities, the firm needs to open an appropriate bank account.
Can Foreigners set up an LLC in Turkey?
Yes, foreigners can form a limited liability company (LLC) in Turkey. The Turkish government vigorously supports foreign investment and has put in place measures to make the process easier for international business owners. This welcoming policy has enabled foreigners to establish enterprises and tap into the promising potential of the Turkish market.
However, you must meet specific requirements to establish an LLC in Turkey as a foreigner, which includes:
- Minimum Capital Requirement: Turkish legislation establishes a minimum capital requirement of 10,000 Turkish Lira for LLCs. You must fulfill this capital requirement as a foreign investor while forming the firm.
- Legal Representation: Foreigners registering a corporation must designate a local lawyer or notary public to act as their legal representative. This legal representative will help with document preparation and make sure all local laws are considered.
- Residence Permit: To legally reside in Turkey and form an LLC, foreigners may be required to apply for a residence permit. Depending on nationality and other criteria, different residency permits may have different restrictions.
- Tax Commitments: As a company owner in Turkey, you are responsible for meeting certain tax requirements, which include enrolling with the tax authorities, routinely reporting your income, and paying taxes on time.
Whom can I consult while starting a business in Turkey?
It is quite advantageous to consult with accredited experts and organizations while launching a business in Turkey. You may negotiate legal requirements using their experience, networks, and understanding of the local environment to ensure compliance and make wise judgments. As you begin your business adventure in Turkey, you may improve your chances of success and reduce potential obstacles by making use of their advice.
Entities to Recommend for Business Consultation:
- Lawyers: To assure legal compliance and assist with contract preparation, intellectual property protection, and dispute resolution, work with knowledgeable attorneys who focus on business and corporate law.
- CPA Accountants: Employ certified public accountants (CPAs) who are familiar with Turkish tax laws and financial reporting requirements. They can support you with financial management, auditing needs, and tax planning.
- Business Consultants and Advisory Firms: consult with firms that provide complete services relating to market research, feasibility studies, business planning, and strategic advice.
- Chambers of Commerce and Trade Associations: Local chambers of commerce and trade organizations can offer helpful tools, networking possibilities, and information particular to a given sector.
- Government-affiliated Investment Support: Organizations like the Investment Support and Promotion Agency of Turkey (ISPAT) can help by providing details on investment incentives, sector-specific advice, and company location selection.
How much does it cost to start a business in Turkey?
If you are thinking about launching a business in Turkey, you should do your homework and understand the fees involved. The cost of establishing a business in Turkey varies based on several factors, including:
- Shareholder count: The more stockholders a firm has, the more expensive the legal costs will be.
- The type of business: The cost to start a business will also depend on the type of business. For instance, the costs of a manufacturing company will be higher than those of a service company.
- Location: The cost of starting a business will also depend on where it is located. An office in Istanbul, for instance, will incur more expenditures than a company in a smaller city.
However, the standard costs for starting a business can be listed as follows:
- 100,000 Turkish Liras are reserved as the initial capital of the company.
- The size and address determine how much it will cost to rent the company's space.
- The monthly accounting cost is about $120.
- Office rent is subject to a 23% tax, while official offices charge a $400 yearly fee.
- The corporation pays a 22% tax on its net profits.
- Water, electricity, phone, and internet fees.