Company Formation and Consultancy Services in Turkey

Turkey offers several legal structures for establishing a business: Limited Sirket (Ltd. Sti.) – Limited Liability Company: The most commonly used company type in Turkey. Minimum capital is 10,000 TL, and it can be established with 1 to 50 shareholders. Shareholders’ liability is limited to their committed capital contributions. Share transfers require notarization and a shareholders’ resolution. Ideal for small and medium-sized enterprises. Anonim Sirket (A.S.) – Joint Stock Company: Suitable for large-scale investments and IPO plans. Minimum capital is 50,000 TL (100,000 TL for companies adopting the registered capital system). Can be established with at least 1 shareholder with no upper limit. Shares are freely transferable. A board of directors is mandatory. Sahis Sirketi – Sole Proprietorship: The simplest and fastest business structure to establish. The owner is personally liable for all debts. Suitable for small-scale commercial activities and freelancers. Kollektif Sirket – General Partnership: Established by two or more natural persons with unlimited liability. Used for operating commercial enterprises. Komandit Sirket – Limited Partnership: Consists of at least one unlimited liability partner (komandite) and one limited liability partner (komanditer). Preferred for capital and labor partnerships. Kooperatif – Cooperative: A variable-partnership structure established to protect the economic interests of its members. Common in agriculture, consumer goods, and credit sectors.

MERSIS (Merkezi Sicil Kayit Sistemi – Central Registration System) is the online platform through which company formation procedures in Turkey are processed electronically. This system has significantly accelerated the formation process. Formation Steps via MERSIS: • Register on the MERSIS portal (mersis.gtb.gov.tr) • Select the company type and draft the articles of association • Obtain a provisional tax number • Pay the Competition Authority contribution (0.04% of capital) • Submit the application to the Trade Registry Office Required Documents: • Identity documents and signature declarations of the founders • Articles of association (prepared via MERSIS) • Lease agreement or title deed for the registered office • Bank receipt confirming deposit of at least 25% of the capital • For foreign shareholders: apostilled passport and proof of address The MERSIS system is accessible 24/7, and formation applications can be submitted online. Approval by the Trade Registry typically takes 1-3 business days.

Companies in Turkey must be registered with the Trade Registry Office (Ticaret Sicili Mudurlugu) to commence business operations. Registration follows the MERSIS application. Trade Registry Registration Process: • Submission of the MERSIS application to the Trade Registry Office • Physical presentation of required documents • Publication in the Turkish Trade Registry Gazette (Ticaret Sicili Gazetesi) • The company obtains legal personality Chamber of Commerce Registration: Simultaneously with registration, the company is enrolled with the relevant Chamber of Industry and Commerce. Chamber membership is mandatory, and annual dues must be paid. Chambers of commerce offer their members business development, training, and networking opportunities. Tax Office Registration: Following trade registry registration, the company is automatically registered with the tax office. A tax certificate (Vergi Levhasi) must be obtained and displayed at the business premises. Transition to e-invoice and e-bookkeeping is mandatory for companies exceeding certain revenue thresholds.

The Turkish tax system is competitive and aligned with international standards. Corporate Tax (Kurumlar Vergisi): • The standard rate is 25% • 50% of export revenues may be deducted from the corporate tax base under certain conditions • Income from software and R&D activities in Technology Development Zones (Technoparks) is exempt from corporate tax • Income from manufacturing activities in free trade zones is 100% exempt from corporate tax Value Added Tax (KDV – Katma Deger Vergisi): • Standard rate: 20% • Reduced rate: 10% (basic foodstuffs, healthcare, education, tourism) • Super-reduced rate: 1% (newspapers, magazines, certain agricultural products) • Export deliveries are VAT-exempt Other Taxes: • Income tax withholding: Progressive rates from 15% to 40% on employee salaries • Stamp duty (Damga Vergisi): Up to 0.948% on contracts and documents • BSMV: 5% on banking and insurance transactions • Special Consumption Tax (OTV): On vehicles, fuels, alcohol, and tobacco Turkey has concluded double taxation agreements with over 80 countries.

All companies with employees in Turkey must register with the SGK (Sosyal Guvenlik Kurumu – Social Security Institution). SGK notification is legally required for every hired employee. Employer SGK Obligations: • Workplace SGK registration (before hiring the first employee) • Submission of employee entry notifications (at least 1 day before start of work) • Preparation of monthly contribution and service documents (APHB) • Timely payment of SGK contributions SGK Contribution Rates: • Employer share: Approximately 20.5% (short-term, long-term insurance, general health insurance) • Employee share: 14% • Unemployment insurance: Employer 2%, Employee 1% • A 5-percentage-point employer contribution incentive (state subsidy) is in effect e-Bildirge System: SGK notifications are submitted electronically via the e-Bildirge system. Administrative penalties are imposed for late notifications and insufficient contribution payments. Occupational Accidents and Diseases: Employers are required to report occupational accidents and diseases to the SGK within 3 business days.

Turkey’s free trade zones (Serbest Bolgeler) offer highly attractive tax advantages for foreign investors. There are 18 active free trade zones nationwide. Free Trade Zone Benefits: • Profits from manufacturing activities are 100% exempt from corporate tax (until Turkey’s EU accession) • VAT exemption: No VAT is charged on sales within free trade zones • Customs exemption: Raw materials and goods imported into free trade zones are duty-free • Free profit transfer: Profits can be transferred abroad without restrictions • Currency freedom: Transactions can be conducted in any currency Key Free Trade Zones: • Aegean Free Trade Zone (Izmir) • Mersin Free Trade Zone • Istanbul Ataturk Airport Free Trade Zone • Antalya Free Trade Zone • Kayseri Free Trade Zone • Bursa Free Trade Zone Employee Incentives: Wages of employees engaged in manufacturing activities in free trade zones are exempt from income tax. This exemption significantly reduces labor costs for companies.

Turkey offers comprehensive incentive packages for both foreign and domestic investors. Investment Incentive System (4 Tiers): 1. General Incentives: VAT exemption and customs exemption for all investments 2. Regional Incentives: Tax reductions, SGK contribution support, interest subsidies, and land allocation depending on the investment region 3. Priority Investment Incentives: Enhanced incentives for strategic sectors (defense, pharmaceuticals, energy) 4. Strategic Investment Incentives: Comprehensive support for large-scale investments that reduce import dependency KOSGEB (Small and Medium Enterprises Development Organization): • Start-up support: Grants and credit support for newly established companies • R&D and innovation support: Non-repayable grants for R&D projects • Business development support: Trade fair participation, consultancy, and training support • SME technology product investment support: Support for technological manufacturing investments • Credit support: Favorable credit terms Technology Development Zones (Technoparks): Turkey has over 90 technoparks nationwide. Companies in technoparks benefit from corporate tax exemption on software and R&D income.

Employment relationships in Turkey are governed by Labor Law No. 4857 (Is Kanunu). Employers are subject to the following obligations: Employment Contracts: • May be written or verbal, but contracts exceeding 1 year must be in writing • Indefinite-term and fixed-term contract types are available • The probation period is a maximum of 2 months (extendable to 4 months by collective agreement) Working Hours: • Maximum weekly working hours: 45 hours • Overtime compensation: 50% premium on regular wages • Annual overtime may not exceed 270 hours Annual Leave: • 1-5 years of service: 14 working days • 5-15 years of service: 20 working days • Over 15 years of service: 26 working days Severance Pay and Notice Period: • Severance pay (Kidem Tazminati): 30 days gross salary for each full year of service • Notice periods: 2 to 8 weeks depending on length of service Minimum Wage: The Turkish minimum wage is updated twice annually. As of 2024, the gross minimum wage is 20,002.50 TL. Employment Protection: In workplaces with 30 or more employees, workers with at least 6 months of service enjoy employment protection.

Accounting and bookkeeping obligations in Turkey are governed by Tax Procedure Law No. 213 (Vergi Usul Kanunu – VUK). Mandatory Books: • Journal (Yevmiye Defteri) • General Ledger (Defteri Kebir) • Inventory Book (Envanter Defteri) • Share Ledger (for capital companies) • Board Resolution Book (for A.S.) • General Assembly Minutes Book e-Bookkeeping and e-Invoice: Taxpayers exceeding certain revenue thresholds must transition to e-bookkeeping and e-invoice. This system, managed by the GIB (Revenue Administration), digitizes accounting processes. Filing Calendar: • VAT return: Monthly (by the 28th of the following month) • Withholding tax and contribution service declaration: Monthly • Corporate tax return: Annually (by end of April) • Provisional tax return: Quarterly Independent Audit: Companies meeting certain criteria (total assets, net revenue, employee count) are subject to independent audit. Auditing is regulated by the KGK (Public Oversight, Accounting and Auditing Standards Authority). Retention Period: Legal books and documents must be retained for 5 years.

Turkey offers unique advantages for international trade with its geographical position at the crossroads of Europe, Asia, and Africa. Geographical Advantages: • Access to 1.5 billion consumers within a 4-hour flight radius • Simultaneous access to European and Asian markets • Strategic ports on the Black Sea, Mediterranean, and Aegean coasts • International maritime trade transit point via the Straits Infrastructure: • Istanbul Airport: One of the world’s largest airports with an annual capacity of 200 million passengers • Marmaray and Eurasia Tunnel: Europe-Asia connection • Extensive motorway network and high-speed rail lines • Ports of Ambarli, Mersin, and Izmir Young and Dynamic Population: Turkey’s population of over 85 million has a median age of 33. This young population creates a large domestic market and a skilled labor pool. Over 800,000 university graduates enter the labor market annually. Customs Union: Turkey has maintained a Customs Union agreement with the EU since 1996. Under this agreement, no customs duties are levied on industrial products. Free Trade Agreements: Turkey has free trade agreements with over 20 countries and country groups.