7.1 Company Formation
Turkey’s Foreign Direct Investment (FDI) Law is built upon the principle of equal treatment, enabling international investors to enjoy the same rights and obligations as domestic investors.
The conditions for company formation and share transfers are identical to those applied to local investors. Accordingly, international investors can establish all types of companies specified in the Turkish Commercial Code (TCC). The TCC offers a corporate governance approach that meets international standards, encourages private equity and public offering activities, ensures transparency in management operations, and aligns Turkey’s business environment with EU legislation and the EU accession process.
Focusing on the ease of doing business through its investment climate enhancement reforms, Turkey has eliminated the bureaucracy involved in company formation, reducing costs and procedures to a minimum. Consequently, company registration is now carried out exclusively at the Trade Registry Directorates operating within Chambers of Commerce—designed as "one-stop shops"—and can be completed within the very same day.
7.2 Company Types and Alternative Structures Under the TCC
Under the TCC, companies can be established under the following corporate and non-corporate structures:
7.2.1 7.2.1 Corporate Structures
- Joint-Stock Company (A.Ş.)
- Limited Liability Company (Ltd. Şti.)
Note: Although certain financial thresholds (e.g., minimum capital) and governing organs differ, the procedure followed to establish a joint-stock company or a limited liability company is identical.
7.2.2 7.2.2 Non-Corporate Structures
- General Partnership
- Limited Partnership
- Partnership Limited by Shares
While companies can be established in these five distinct forms, Joint-Stock and Limited Liability companies are the most frequently preferred types both in the global economy and in Turkey.
7.3 Taxes
Turkey possesses a clear, objective, and highly competitive tax system in compliance with international standards among OECD member states. Turkish tax legislation is primarily categorized under three main headings:
7.3.1 Income Taxes
Corporate Income Tax: The standard corporate income tax rate applied to general commercial profits in Turkey is 25%. To support domestic production and foreign currency inflows, a 5% rate reduction is applied to the export revenues of exporting companies. For the financial sector and banks, this rate is 30%.
Personal Income Tax: Income earned by natural persons is taxed under a progressive (graduated) system ranging from 15% to 40%. To protect employees, wage payments up to the minimum wage level are fully exempt from income tax and stamp duty.
7.3.2 Taxes on Expenditures
- Value Added Tax (VAT): VAT is generally applied to the delivery of goods and services at rates of 1%, 10%, and 20%, depending on the product type or sector.
- Special Consumption Tax (SCT): Unlike VAT, SCT is collected only once on specific product groups such as fuel/petroleum products, vehicles, tobacco/alcohol products, and luxury goods.
- Stamp Duty: Levied on official documents such as contracts, letters of guarantee, and financial statements, stamp duty is applied either at a fixed amount or at rates varying between 0.189% and 0.948% based on the document's value.
- Banking and Insurance Transaction Tax (BITT): For transactions arising from banking and insurance operations, a transaction tax generally ranging from 10% to 15% is applied instead of VAT.
7.3.3 Taxes on Wealth
- Property Tax: Paid annually for buildings, apartments, and land within the borders of Turkey at rates varying between 0.1% and 0.6% depending on the type of real estate.
- Motor Vehicle Tax (MVT): Collected from vehicle owners annually in fixed amounts determined by the vehicle's age, engine displacement, and value.
- Inheritance and Transfer Tax: Inheritances and gift transfers are taxed at rates varying from 1% to 30%.
Source https://www.invest.gov.tr