Starting a business in Turkey opens doors to a fast-growing economy with big opportunities. The country sits at the crossroads of Europe and Asia, giving it a valuable, strategic advantage.
Turkey offers a diverse market, a rich culture, and a young, skilled workforce.
Turkey is a strong choice for entrepreneurs and investors. The tech sector is booming & government support and new tech centers amplify Turkey as a great place to launch fresh ideas.
Tourism also fuels the economy, drawing millions of visitors each year.
Manufacturing is another key area. Turkey has a solid industrial base, especially in textiles, automotive, and machinery.
Moreover, its location allows easy access to European and Asian markets. An ideal location for manufacturing and exports.
To set up a business in Turkey, you’ll need to understand the local laws and rules.
This guide covers each step: picking the right business structure, securing permits and licenses, and learning about tax requirements.
Whether you’re interested in tech, tourism, manufacturing, or another industry. With this guide, you’ll be ready to step into the Turkish market confidently.
Why Start a Business in Turkey?
Turkey shines as a prime spot for foreign investment. Mainly due to its unique economic structure, strategic location, and the distinct advantages arising from the devaluation of the Turkish lira.
Affordable investment and operating costs
The Turkish lira’s devaluation has made setting up and running a business more affordable for foreign investors.
Office rentals, real estate, wages, and daily expenses are lower when paid in stronger currencies (like USD and EUR.)
This currency shift also translates to lower hiring costs compared to other nations.
Turkey’s minimum wage and average salaries are competitively low in dollar terms. Which allows companies to hire skilled talent without bearing steep labor costs.
High-quality, young workforce
With over half of the population under 35, Turkey has one of the youngest workforces in Europe and the Middle East.
This demographic is not only tech-savvy and adaptable but also highly motivated.
Furthermore, Turkey’s universities produce a strong flow of engineering and IT graduates.
However, it’s important to note that English is in fact not a strong suit in the country. Notably only 15% – 20% of the Turkish population is proficient.
Strategic location for global trade
Strategically situated between Europe, Asia, and the Middle East, Turkey offers connectivity. An essential component of a successful international business.
Istanbul alone connects to over 1.5 billion consumers within a four-hour flight radius. Ideal for companies aiming to establish a regional center.
Turkey’s free trade agreements with 21 countries and its participation in the EU Customs Union, open doors to easy trade across Europe. This reduces tariffs and disentangles cross-border business for companies.
Sector-specific investment opportunities
Turkey is fertile ground for investment in solar, wind, and hydropower projects. Now aiming for 52.5% of its energy to come from renewable sources by 2030.
The government offers tax reductions and grants to support foreign investors in this sector.
Government-backed support for R&D has propelled Turkey’s tech industry, which has grown at 7.5% annually.
The Istanbul Startup Hub attracts global investors, with Turkish startups achieving international success in e-commerce, fintech, and artificial intelligence.
Investment incentives and support for foreigners
Turkey’s Organized Industrial Zones (OIZs) and Free Zones offer tax exemptions & breaks, reduced customs duties, and lower social security costs. This is attractive for manufacturers and exporters, particularly in the automotive and electronics sectors.
Companies focused on research and development can benefit from up to 100% corporate tax exemptions, cash incentives, and lower costs for Research and Development staff, especially in tech and innovation projects.
Foreign nationals can easily buy property in Turkey, and the devalued lira makes prices favorable in dollar terms. Additionally, property investments over a set threshold may qualify investors for Turkish citizenship, offering an added incentive.
Emerging market with strong consumer demand
With a population exceeding 84 million, including a growing middle class, Turkey presents a substantial local market for consumer goods, real estate, and services.
Demand for products and services continues to rise, particularly in major cities like Istanbul, Ankara, and Izmir.
-Updated projections for 2024 GPD suggest a growth of 3.0%, following a 3.2% growth in 2023.
-In 2023, Turkey’s exports reached $255.8 billion.
-Turkey has a consumer base of approximately 85 million.
Choosing the Right Business Structure in Turkey
Picking the right business structure in Turkey hinges on your company’s goals, size, and scope of operations. Here’s a straightforward breakdown of the three most common types:
Limited liability company (LLC)
- Best suited for small to medium-sized businesses.
- Capital requirements: Minimum of 50,000 TRY.
- Shareholders: Between 1 and 50, with each shareholder’s liability limited to their investment.
- Setup Process: Quick and hassle-free, with fewer regulatory demands.
Joint stock company (JSC)
- Best suited for large businesses, particularly those with plans to go public.
- Capital requirement: Minimum of 250,000 TRY. But for non-public JSCs adopting the registered capital system: the minimum is 500,000 TRY.
- Shareholders: No cap on the number of shareholders, and shares can be publicly traded.
- Setup process: More involved, but ideal for companies requiring significant capital and greater flexibility.
Branch and representative offices
- Branch office: Functions as an extension of a foreign parent company, fully permitted to conduct business in Turkey.
- Representative office: Set up for non-commercial activities (such as research) and cannot generate revenue or profits.
Useful Tips:
- LLC: A popular choice for startups due to its simplicity and ease of setup.
- JSC: Well-suited for larger, scalable ventures looking to grow over time in Turkey.
- Branch/representative offices: Perfect if you want a Turkish business presence without establishing a full legal entity in the country.
Required Documents for Starting a Business in Turkey
The documents required differ based on the type of investor (individual vs. legal entity). Here’s what you need to get started:
For Individual entrepreneurs:
-Notarized passport copies: Certified by a local notary.
–Tax identification number (TIN): Obtainable from a local tax office.
–Proof of address: Recent utility bill or bank statement showing your current address.
-Power of attorney: If you’re appointing someone to act on your behalf in Turkey.
For legal entities:
-Certificate of activity: Issued by the relevant authority in the investor’s country.
-Board resolution: An official decision by the board of directors to open a business in Turkey.
-Notarized and apostilled documents: Includes articles of association and certificate of incorporation.
-Tax identification number (TIN): Necessary for legal entities as well as individual shareholders.
Business in Turkey: Step-by-Step Company Registration Process
1- Prepare the articles of association
Drafted according to Turkish regulations and signed by all shareholders.
2- Obtain a tax identification number (TIN)
Both the company and shareholders must have a TIN, available from the tax office.
3- Deposit capital
Open a Turkish bank account and deposit a minimum of 25% of the required capital before registration.
4- Register with the trade registry office
Submit the signed articles and all required documents. Approval typically takes a few days.
5- Announce in the trade registry gazette
Officially declare your business’s establishment in this public record.
6- Register for taxes and social security
Complete registrations with the local tax office and social security institution for employee-related processes.
7- Consulting services
Recruitment agencies like Gini Talent can assist you with document preparation, market research, and regulatory compliance. Our experts ensure a smooth setup, saving you time and effort. Our PEO and EOR services can help you set up a business in Turkey with ease, while you focus on your core operations & growth.
Navigating Taxation and Social Security in Turkey
About corporate taxes
–Corporate income tax: Companies in Turkey are subject to a corporate income tax rate of 23% (as of 2024). Foreign companies pay tax on their Turkey-sourced income only.
-Value added tax (VAT): VAT rates vary by industry, generally ranging from 1% to 18%. Essential goods (like food) may have lower rates, while luxury items have higher rates.
–Withholding tax: A withholding tax may apply to certain payments, like dividends (15%), royalties (20%), and interest (10%).
Social security contributions
Employers must register employees with the Social Security Institution (SSI) and contribute to social security. Contributions cover retirement, health, and unemployment benefits. Employers contribute about 20.5% of each employee’s salary, while employees contribute 14%.
Employment regulations for foreign-owned businesses
Turkey’s labor laws offer protections for both local and foreign employees, ensuring fair treatment in areas like wages, working hours, and termination rights.
Work permits & residency
To employ foreign staff, a work permit is essential. The process involves the following:
–Initial application: Employers or employees apply through Turkey’s Ministry of Labor.
–Document requirements: Passport, diploma, employment contract, and other documents as per the employee’s qualifications.
–Renewals: Work permits are typically valid for one year and must be renewed annually for the first three years.
Minimum wage and benefits
–Minimum wage: The Turkish minimum wage is revised annually; as of 2024, it’s TRY17,002.12 monthly.
-Employee benefits: Turkish labor law mandates benefits such as severance pay, annual leave (14 days for the first year), and overtime pay.
Opening a bank account in Turkey
Opening a corporate bank account is essential for managing business finances and complying with Turkish regulations. Here’s how to proceed:
-Choose a bank: Major banks in Turkey include Akbank, Garanti BBVA, İşbank, and Ziraat Bank.
-Provide necessary documentation:
- Tax Identification Number.
- Signatory authorization form (for the person authorized to operate the account).
- Proof of address.
- Bank representatives usually require a face-to-face meeting to verify documentation and final approval.
Real Estate and Office Leasing
Choosing a suitable location for your business is crucial, whether you need an office, warehouse, or retail space. Real estate in Turkey is affordable relative to European markets, especially outside major cities like Istanbul and Ankara.
Other Considerations
Lease Agreements: Leases are usually signed for a 1-3 year period. Ensure terms are clearly defined, covering rent, maintenance responsibilities, and penalties for early termination.
Property Ownership: Foreigners can purchase property in Turkey for business purposes, offering an alternative to leasing if you’re planning long-term operations.
Tax Implications: Real estate purchases incur VAT, title deed fees, and potential capital gains tax if sold.
Consult a real estate expert to understand market prices and legal aspects of leasing or buying in Turkey.
Incentives and Support for Foreign Investors
Turkey offers several investment incentives to attract foreign businesses:
Tax Reductions: Reduced tax rates are available in sectors such as manufacturing, R&D, and technology.
Employment Subsidies: Companies can receive partial refunds on social security contributions when hiring local employees.
Land Allocation: In certain cases, the government allocates land to foreign investors to encourage specific industries.
R&D and Innovation Support: Startups and companies in tech, energy, or R&D can apply for grants and tax exemptions for innovation-focused investments.
Compliance Requirements for a Succesful Business in Turkey
Maintaining compliance in Turkey is challenging but essential for long-term business success.
Annual financial reporting
–Financial Audits: Companies must submit audited financial statements annually. An external auditor should verify the accuracy of reports.
–Tax Returns: Corporate tax returns are submitted annually, and VAT returns are filed monthly or quarterly, depending on the business type.
–Employment Reporting: Employers must report employee wages, benefits, and social security contributions monthly.
Penalties for non-compliance
-Non-compliance with Turkish regulations may result in fines, interest on unpaid taxes, or legal action.
-Staying updated on changes in labor and tax laws, as well as regular consulting with a local accountant or attorney, is advisable.
Ready to Start Your Business in Turkey?
Setting up a business in Turkey opens the door to a thriving market with access to both European and Middle Eastern economies.
With the proper planning, documentation, and local knowledge, the process can be straightforward.
Gini Talent’s team can help you navigate each stage, from registration to staffing, so you can focus on growing your business in this promising landscape.
We are a global recruitment agency with an office in Turkey. With our local know-how and large network. We can set u up here in no time.
For a free consultation, contact us at Gini Talent and let us help you establish a solid foundation for your business in Turkey.
