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How to Start Up Your Business in Turkey?

Foreign companies have three different options for establishing an office in Turkey.

Set up a Branch

A foreign company is required to get permission from the Ministry of Commerce and Industry to establish a branch in Turkey. A branch of a foreign entity is not a separate entity. Therefore branch has the same article of association with parent company indicating the scope of activity of the Turkish Branch. Every branch should use the name of the parent company including ‘branch’ phrase in it. Branch will be represented by a representative or branch manager with full authority, who is residing Turkey as a Turkish citizen or a foreigner who has a work and resident permits. There is no minimum capital requirement for the establishment of a branch, but the funds needed for the activities are provided by headquarters. Branch is dependent on its head office in internal relations, but it can act independently its own account in external relations. A branch is subject to corporate tax only for income generated in Turkey due to limited liability status.

Set up a Liaison Office

Liaison offices are not allowed carrying on any commercial activities in Turkey and its activities limited to non-commercial activities such as; collecting information about investment opportunities in Turkey, preparing feasibility and market research studies about Turkish Market, gathering information on the Turkish Economy and providing information about parent company and its products. Permission is required to establish Liaison Office from Foreign Investment Department under the Turkish Prime Ministry and the permits are granted renewable for three years. Liaison Office is not subject to income tax because it is not permitted to generate any income from its activities. All the expenses generated by the liaison office have to be paid by aboard with foreign currency.

Set up a Subsidiary

A subsidiary company is treated as a locally incorporated legal entity that’s separate from its parent company. As such, its liabilities do not extend to the parent company. Joint Stock or Limited Liability Company types are preferred by international inventors. A subsidiary company is treated as a resident company and therefore company’s income for the year will be subject to corporate tax, a flat rate of 20% in Turkey.

ISTANBUL October, 19th 2017 / 05:44 PM

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