Turkey, with its vibrant economy, strategic location bridging Europe and Asia, and a growing entrepreneurial culture, presents exciting opportunities for foreign investors and business owners. Whether you’re considering a small startup or a larger venture, starting a open company in turkey is both feasible and rewarding. In this article, we will walk you through the essential steps and considerations for setting up your business in Turkey, from legal requirements to the practical aspects of operation.
Why Start a Business in Turkey?
Before diving into the practicalities of starting a business, let’s explore why Turkey is an attractive destination for foreign entrepreneurs:
- Strategic Location: Turkey’s position as a gateway between Europe, Asia, and the Middle East opens up vast trade opportunities, both for local and international businesses.
- Growing Economy: Despite economic challenges, Turkey has one of the largest economies in the region, offering a wide range of industries and markets.
- Supportive Government Policies: The Turkish government has introduced incentives to attract foreign investment, including tax breaks, support for innovation, and simplified processes for company registration.
- Diverse Market: With a population of over 80 million, Turkey offers a large domestic market, as well as access to other international markets.
- Cost-Effective Operations: Compared to many European countries, Turkey offers lower operational costs, making it attractive for small and medium-sized enterprises (SMEs).
Step-by-Step Guide to Starting a Business in Turkey as a Foreigner
Now that you know why Turkey is a promising business destination, let’s break down the steps for starting your business.
1. Choose the Right Type of Business Entity
The first step in starting a business in Turkey is deciding on the type of business entity that best suits your needs. As a foreigner, you can choose from several options, including:
- Limited Liability Company (LLC): This is the most common form for small to medium-sized businesses. Foreign investors can establish an LLC in Turkey with just one shareholder. The minimum capital requirement is TRY 10,000 (approximately USD 1,000).
- Joint Stock Company (JSC): If you plan on raising capital through the stock market or intend to have multiple investors, a JSC may be appropriate. The minimum capital for a JSC is TRY 50,000 (approximately USD 5,000).
- Branch Office: A foreign company can set up a branch office in Turkey to operate in the same capacity as its parent company. However, a branch must comply with certain regulations, and profits must be repatriated to the home country.
- Representative Office: This option allows foreign companies to establish a presence in Turkey for market research or promotional activities, but it cannot conduct direct commercial activities or generate revenue.
2. Register Your Company
After deciding on the type of business entity, you must register your company with the relevant authorities. The steps for registration are as follows:
- Choose a Company Name: Ensure your company name is unique and complies with Turkish regulations. The name must be available and approved by the Turkish Trade Registry.
- Prepare Your Articles of Association: This is the legal document that outlines your company’s operations, structure, and shareholders. It is essential to have this document drafted according to Turkish laws.
- Obtain a Tax Identification Number: You’ll need a tax number to register your company. You can obtain it from the Turkish Tax Office (Vergi Dairesi).
- Open a Bank Account: To deposit the minimum capital required for your business (if applicable), you must open a Turkish bank account. This account will be used for financial transactions, including capital contributions.
- Register with the Trade Registry: Once you have all the documents ready, you can apply to the Trade Registry Office to officially register your company. This process is typically completed within a few days.
3. Obtain the Necessary Licenses and Permits
Depending on the nature of your business, you may need specific licenses or permits to operate legally in Turkey. For example, if you plan to open a restaurant, you will need a health and safety license, food handling permits, and potentially a liquor license. Make sure to check with local authorities or your legal advisor to ensure you are compliant with all regulations.
4. Set Up Social Security and Insurance
In Turkey, both employers and employees must contribute to the social security system (SGK) for healthcare, pensions, and other benefits. As an employer, you’ll need to register your company with the Social Security Institution (SGK) and ensure that all employees are covered. This is a legal requirement for businesses with staff in Turkey.
5. Taxation and VAT Registration
Turkey has a progressive tax system, and understanding your tax obligations is essential to running a successful business. As a business owner, you’ll need to register for:
- Corporate Tax: Companies in Turkey are subject to a corporate tax rate of 22%. Some tax exemptions and incentives may be available depending on the industry and region.
- Value Added Tax (VAT): If your business engages in taxable activities, you must register for VAT. The standard VAT rate is 18%, though reduced rates apply to specific goods and services.
- Other Taxes: In addition to corporate tax and VAT, there are other taxes, including payroll tax, property tax, and stamp duty, depending on the nature of your business.
6. Hire Employees (If Needed)
If you plan on hiring staff for your business, you must comply with Turkey’s labor laws, which govern everything from employee contracts to wages, working hours, and termination procedures. Ensure you are familiar with the Turkish Labor Law (4857) to avoid any legal issues. Foreign entrepreneurs may also face restrictions when hiring expatriates, so it’s crucial to understand the regulations related to work permits and employee rights.
7. Comply with Local Regulations and Labor Laws
Once your business is established, you must ensure compliance with local regulations and industry-specific standards. Regular audits and updates from legal or accounting professionals can help you stay compliant with Turkish laws.
Starting a Business in Turkey
Starting a business in Turkey as a foreigner is a process that requires careful planning and understanding of Turkish regulations. By following these steps—choosing the right business entity, registering your company, obtaining necessary licenses, and staying compliant with tax and labor laws—you can set yourself up for success in one of the most dynamic markets in Europe and the Middle East.
Turkey’s strategic location, growing economy, and supportive government policies make it an attractive destination for foreign entrepreneurs. With the right preparation and professional advice, you can take full advantage of the opportunities the Turkish market has to offer.