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Investing in Turkey
Turkey as a Place to Put Your Money
As a developing country, Turkey has shown remarkable performance with its steady growth over the last years. Although the economic and social crisis, Turkey keeps being attractive for foreign and domestic investors for strong reasons such as government promotions, qualified workforce and transportation network.
For the making business in Turkey with a legal entity, the companies could be listed as:
- Joint-Stock Company (JSC),
- Limited Liability Company (LLC),
- Cooperative Company,
- Collective Company,
- Commandite Company.
1- Establishment of a Joint Stock Company and Limited Liability Company
The limited liability and joint-stock companies are Turkey’s most popular company types.
Requirements for establishing a limited liability company are;
- At least one shareholder to form this type of company,
- A minimum share capital of TRY 10.000.
The liability of shareholders is limited to the amount of share capital invested in the company.
Requirements for establishing a joint-stock company are;
- A minimum share capital of TRY 50.000.
- This type of company has different rules regarding the company management process: it must have at least one shareholder and a mandatory board of directors.
The liability of the members is limited to the amount of invested capital. The capital is divided into stocks which can be made public when the company is listed on the Stock Market. A joint-stock company would be a better choice to organise a large business.
Joint-stock companies and limited liability companies share the same formal requirements for establishment. Although the LLC and JSC have differences in the amount of founding capital, organisation of administrative etc., their differences are not too much.
In Turkey, establishing a joint-stock company does not require any formal steps. The joint-stock and limited liability companies may be established in 2 or 3 days if the documents listed below have already been prepared. Mainly the steps mentioned below shall be followed to establish the company in Turkey.
- A petition signed by the authority of the company shall be submitted.
- Organisation information form shall be filled (3 copies for non-foreign establishments, in case of foreign establishment, four copies must be filled).
- Notarised passport translation copies of a real foreign person, tax number or residence permit.
- Articles of association and memorandum are submitted online at MERSIS, which is a central information system for carrying out commercial registry processes and storing commercial registry data electronically regularly.
- Signature Statement of company’s authorised person under the company name.
- Bank receipt for competition authority fee.
- Bank letter has shown that the shareholders paid the share price at least the minimum amount indicated by articles of association or articles of law (generally one in four).
- Chamber registration declaration.
- The declaration that accepts the duty of being a member of the board of directors for someone who is not a shareholder. For foreign, tax number or ID number for foreign notarised passport translation and notarised residence permit.
- If a legal entity is chosen to be a member of the board of directors, a notarised decision of the legal entity with name-surname of the person who acts with and on behalf of a legal entity, ID number (if the person is foreign, the tax number is required).
Above mentioned documents shall be given to the Istanbul Chamber of Commerce for registration and announcement. Most probably, documents shall be registered after they are delivered to the Istanbul Chamber of Commerce.
2- The Stimulus Means For Foreign Investors
Turkey is an open market to investors for many sectors as a developing country. Investors prefer Turkey to invest for some reasons such as;
- Qualified and competitive labour force,
- Liberal and reformist investment environment,
- Centrally located,
- Energy corridor and terminal of Europe,
- Low taxes and incentives,
- Customs union with the EU since 1996,
- The large domestic market,
- Successful economy.
According to the Turkish Statistical Institute (TSI) data, Gross Domestic Product (GDP) has increased from USD 213,000,000,000 to USD 800,000,000,000 within the last 12 years. In still the same period, the annual average of GDP has risen %4,7.
In consequence of the crises, government give rights and exemptions to domestic and foreign investors utilising stimulus to encourage them. The foremost and striking means of stimulus accorded by the government are indicated below:
a- Turkish citizenship
The Republic of Turkey provides Turkish citizenship for foreign investors to meet at least one of the requirements mentioned below.
- Made a min. fixed capital investment of USD 2,000,000,
- Acquired real estate worth a minimum of USD 1,000,000 with a title deed restriction on its resale for at least three years,
- Employed at least 100 people,
- Deposited at least USD 3,000,000 in banks operating in Turkey with the condition of not to withdraw for at least three years,
- Bought at least USD 3,000,000 worth of government bonds with the condition that they cannot be sold for at least three years.
b- Tax Immunity
Having invested 1,000,000 TL in capital provinces and 500,000 TL in other provinces of Turkey, domestic and foreign investors shall be granted exemption from tax tariff and VAT. Tax tariffs include the importation of machines and equipment. However, we would like to remind you that some types of investments cannot benefit from this investment promotion.
Investors are also provided with;
- A corporate tax cut,
- Income tax reduction,
- Counsellor support,
- Turnkey operation,
- Investment area allowance,
- Investment credit,
- Working capital loan,
- Assurance of credit guarantee fund.
VAT payment for domestic or imported machines and equipment shall not be required within the context of the investment incentive certificate.
Related Article: Evaluation of The Communiqué on Crowdfunding.
Income and corporate tax are calculated over discount rates until the rate of total tax abatement reaches up to the rate of contribution to investment. The contribution rate to investment would predicate the total fixed investment amount rate, which is subject to tax reduction.
From current news, the most striking investments are from a German company and Abu Dabi Investment Group that invests EUR 100,000,000 and USD 100,000,000,000 respectively in Turkey.
Article Keywords: Investing in Turkey, Invest in Turkey, Investors, Invest, Turkey.
Here is an article for further reading: Conversion of Limited Liability Company Into Joint-Stock Company Under Turkish Commercial Code.