Company Formation in Turkey
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Turkey Company Formation
The process of the registration and establishment of a company in Turkey is handled by one ministry, which acts as the coordinator between all authorities and governed under the New Turkish Commercial Code numbered 6102.
In order to establish a business in Turkey you will need to fill out a Company Establishment statement and submit to the local Trade Registry Office located at the local Chamber of Commerce. After you have filled out a Business Registration Form, you will need to submit the following to the trade Registry Office:
- The notarised 'Articles of Association’
- A completed Company Establishment Form
The company formation process in Turkey is a 6-stage process which is as follows:
- Notarise the articles of association, managers' signature declaration, copies of each manager's ID card or passport and the commercial books. This can be done 1 day and costs can vary between 1000TL-3000TL depending on company type.
- Deposit an amount of the capital in the bank account held by the Competition Authority. This takes 1 day and costs approximately 0.04% of deposited capital.
- Submit the incorporation notice, commitment letter and Chamber registration statement to the Trade Registry Office. This takes 2 days and costs approximately 700 TL.
- Obtain a preliminary Tax Number, and open company bank account Deposit capital. This may require additional Identification documents from the Shareholders.
- Check with the tax office to ensure that they have received the Commercial Registry's notification of the company's incorporation. This can be done online.
- A minimum 25% of the capital requirement has been deposited in advance the remainder can be deposited within 24 months of incorporation.
Foreign companies and individuals may choose to set up 100%-foreign owned subsidiaries in Turkey either in the form of a joint stock company (AS) or a limited liability company (Ltd Sti). Such subsidiaries are treated in the same way as the resident companies.
Subsidiaries may also be in the form of a joint venture with a Turkish or international partner. There is no requirement for a local shareholding or directorship for establishing a subsidiary.
The most common types of legal entities in Turkey are:
A Limited Company is established with at least one persons or legal entities. The liability of the shareholders is limited with the share capital. Minimum capital requirement is 10,000 TL.
Joint Stock Company
A Joint Stock Company is a limited company that can issue stock certificates, and is established with a minimum of one shareholder or legal entity. The company's stock capital is divided into shares, and the liability of the shareholders is limited with the share capital. Minimum capital requirement is 50,000 TL. A general assembly, board of directors and supervisory board are requirements.
Foreign companies can establish a branch in Turkey. The parent company is required to allocate capital of minimum 10,000TL for a (Ltd Sti) or 50,000TL for to the branch office at the establishment phase, although there is no maximum capital amount that can be applied. Branches are established according to the provisions of the Turkish Commercial Code with the approval from the Ministry of Industry and Trade.
Representative offices of foreign companies are not permitted to perform any commercial activity in Turkey. Their activities are limited to representation of a foreign company in Turkey and providing information. Expenses of the representative office must be financed by the head office abroad.
The representative office may not generate any income from its activities in Turkey, just as it is not itself subject to corporate income tax or personal income tax. However, it should maintain statutory books and provide any necessary information to the authorities when required. Employees of a representative office are not subject to income tax either, provided that their salaries are paid from abroad in foreign currency.
Note: Certain business activities have different capital and shareholding requirements, specialist advice should be taken in sectors such as Banking, Finance, Telecommunications, Health and pharmaceuticals.
Companies based abroad can open liaison offices in Turkey providing that commercial activities are not carried out through them.
By choosing to incorporate an offshore company, business owners and investors can set-up a business outside the jurisdiction of its operations. Offshore companies are traditionally, but not exclusively, incorporated for lower fees and taxes. Business owners must abide the regulations of the offshore jurisdiction, and must not trade within the jurisdiction.
The benefits are vast. As aforesaid, reduced tax and fees are often big factors when considering offshore incorporation. A company may also choose and offshore location to:
- Simplify set-up and maintenance - entrepreneurs may find bureaucracy and red tape less of an obstacle in offshore jurisdictions
- Assume anonymity - the names of owners and directors are not for public record, and references to the company may only be made in its registered agent
- Ensure legal protection - for instance, some jurisdictions favour corporate governance, meaning a company is only liable to offshore laws as opposed to those in its areas of operation
- Protect assets - business owners may opt to arrange their assets and transactions in such a way that protects them from liability
Characteristics of an offshore company:
- Memorandum and Articles of Association
- Certificate of Incorporation
- Registered Office/Agent
- Shareholders / Members
- Directors / Managers
- Company secretary
- Statutory Register
Traditional locations for offshore incorporation are tax havens, such as the British Virgin Islands, Panama and Monaco. Other favoured areas include India, the Bahamas, Dubai, the Cayman Islands, Cyprus, Seychelles, Marshall islands, Delaware, Turks & Caicos Islands, Hong Kong, Jersey, Guernsey and the Isle of Man.
Organisations that can assist with Company Formation
OZBEK CPA is an independent certified public accounting and consulting firm founded in 2002 and based in Istanbul, Turkey. We specialize in providing a wide range of services to small, medium and large sized companies looking to strengthen and expand their presence in Turkey.