Turkey’s FDI Law is based on the principle of equal treatment, allowing international investors to have the same rights and liabilities as local investors.
Company Types under TCC and Alternative Forms
There are corporate and non-corporate forms for companies under the TCC, which states that companies may be established under the following types:
Although some financial thresholds (i.e., minimum capital) and organs differ from each other, the procedure to be followed for establishing a JSC or an LLC are the same.
Although companies may be established according to these five different types, JSC and LLC are the most common types chosen both in the global economy and Turkey. In addition to these types of companies, branches and liaison offices may also be considered as two further alternatives when setting up a business in Turkey. However, branches and liaison offices are not considered to be legal entities.
Establishing a Company
When establishing a company in Turkey, one needs to adhere to the following rules and regulations:
Pursuant to the Trade Registry Regulation, trade registration transactions must be fulfilled through MERSIS (Central Registry Record System). MERSIS is a central information system for carrying out commercial registry processes and storing commercial registry data electronically on a regular basis. A unique number is given to legal entities that are actively involved in business. Online establishment of new companies is possible on MERSIS, and already-established companies may operate through the system after the transfer of their records.
The following documents are required for registry application at the relevant Trade Registry Office:
It should be noted that, except the first item above, all the necessary documents that will be issued and executed outside Turkey must be notarized and apostilled or alternatively ratified by the Turkish consulate where they are issued. The original executed, notarized, and apostilled documents must be officially translated and notarized by a Turkish notary.
A potential tax identity number for the company, non-Turkish shareholders, and non-Turkish board members of the company, must be obtained from the relevant tax office. This potential tax identity number is necessary for opening a bank account in order to deposit the capital of the company to be incorporated.
The documents required by the tax office are as follows:
If the process is going to be followed by proxy, a power of attorney must be issued specifically showing the authority to act on behalf of the company before the tax authority in order to obtain a tax identity number or potential tax identity number
Original of bank receipt (from Halk Bank, Ankara corporate branch) indicating that the 0.04 percent of the capital has been deposited to the account of the Competition Authority at the Central Bank of the Republic of Turkey (CBRT) or a public bank, or the EFT receipt signed and stamped “collected” (account no: 80000011 - IBAN no: TR40 0001 2009 4520 0080 0000 11), which shows an amount equal to 0.04 percent of the company’s capital has been paid to the account of the Competition Authority.
25 percent of the share capital must be paid in prior to the new company registration. The remaining 75 percent of the subscribed share capital must be paid within two years. Alternatively, the capital may be fully paid prior to registration.
Pursuant to gathering the following documents, founders may apply for registration:
Following completion of the registration phase before the Trade Registry Office, the Trade Registry Office notifies the relevant tax office and the Social Security Institution ex-officio regarding the incorporation of the company. The Trade Registry Office arranges for an announcement in the Commercial Registry Gazette within approximately 10 days of the company registration. A tax registration certificate must be obtained from the local tax office soon after the Trade Registry Office notifies the local tax office.
A social security number for the company must be obtained from the relevant Social Security Institution. For the employees, a separate application has to be made following the registration of the company with the Social Security Institution.
The founders must certify legal books the day they register the company with the Trade Registry Office. The notary public must notify the tax office about the commercial book certification.
General assembly meeting minutes book
The Trade Registry Office notifies the tax office and the Social Security Institution of the company’s incorporation. A tax officer comes to the company headquarters to prepare a determination report. There must be at least one authorized signature in the determination report. Trade Registry Officers send the company establishment form, which includes the tax number notification, to the tax office.
Issuance of signature circular: After the company has been registered before the Trade Registry the signatories of the company must issue a signature circular.
Repatriation of branch profit is allowed. The branch profit transferred to the headquarters is subject to dividend withholding tax at a rate of 15 percent, which may be reduced by Double Taxation Prevention Treaties
An application with the following documents must be submitted to the relevant Trade Registry Office for the registration of a branch:
It should be noted that all the necessary documents that will be issued and executed outside Turkey must be notarized and apostilled or alternatively ratified by the Turkish consulate where they are issued. The original executed, notarized, and apostilled documents must be officially translated and notarized by a Turkish notary.
Applications of international investors to establish liaison offices to operate in sectors that are subject to special legislation, such as money and capital markets, and insurance, etc., are assessed by the relevant authorities
The documents required by the Ministry of Economy for establishing a liaison office in Turkey are as follows:
It should be noted that all the necessary documents issued and executed outside Turkey must be notarized and apostilled or alternatively ratified by the Turkish consulate where they are issued. The original executed, notarized and apostilled documents must be officially translated and notarized by a Turkish notary.