Doing Business In Turkey

Can Foreigners Start a Business in Turkey?

Yes. Turkey actively welcomes foreign investment and treats foreign entrepreneurs on equal terms with Turkish citizens. Under the Foreign Direct Investment Law (No. 4875), a foreign national or foreign company may own 100% of a Turkish company — there is no requirement for a local partner or a Turkish shareholder in the vast majority of sectors. You do not need to be a resident, and in most cases you do not even need to be physically in Turkey to complete the process. A small number of regulated sectors — including media broadcasting, aviation, maritime transport, mining and defence — carry ownership caps or licensing conditions, so sector-specific advice is worthwhile before you commit.

Choosing the Right Company Type

Selecting the correct legal structure is the single most important early decision, because it determines your capital requirement, tax position, liability exposure and how easily you can bring in investors later. The five most common vehicles for foreigners are set out below.

Limited Şirket (Limited Liability Company / LLC)

The Limited Şirket is by far the most popular choice for small and medium-sized foreign-owned businesses. It can be formed by a single shareholder, offers limited liability, and has a relatively low minimum capital (currently in the region of 50,000 TL — verify current thresholds). Shareholders are liable only up to their subscribed capital, although managers can be held personally responsible for unpaid public debts such as taxes and social-security premiums.

Anonim Şirket (Joint Stock Company / JSC)

The Anonim Şirket suits larger operations, capital-intensive projects and businesses planning outside investment or an eventual sale or public offering. It requires higher minimum capital (around 250,000 TL — verify) and is governed by a board of directors. Share transfers are simpler and can be more tax-efficient, and only a JSC can issue different share classes or ultimately list on the stock exchange.

Sole Proprietorship (Şahıs İşletmesi)

A sole proprietorship is quick and cheap to set up but exposes the owner to unlimited personal liability and progressive personal income tax. It is rarely the right vehicle for a foreign investor and usually requires the owner to already hold a valid residence and work permit.

Branch Office

A branch is an extension of an existing foreign parent company rather than a separate legal entity, so the parent bears liability for it. A branch can trade and invoice in Turkey and is useful when a foreign group wants a direct presence without forming a subsidiary.

Liaison (Representative) Office

A liaison office may carry out market research, promotion and coordination but cannot trade or generate commercial income. It is licensed by the Ministry of Industry and Technology, is tax-exempt on its non-commercial activity, and is a low-commitment way to test the market.

Figures are indicative and change with legislation and exchange rates — always verify current thresholds before filing.

Step-by-Step: How to Incorporate a Company in Turkey

1. Prepare and reserve the company details. Draft the articles of association and enter them, together with your company name, registered address and shareholding, into MERSIS (the Central Registry System).
2. Sign and notarize documents. Signatures on the articles of association and signature declarations are executed before the Trade Registry Directorate or a notary. Foreign documents (passports, parent-company records) must be notarized, apostilled and translated into Turkish.
3. Obtain tax numbers for the shareholders. Every foreign shareholder and director needs a Turkish tax number, obtained quickly from the local tax office or online.
4. Deposit capital and pay the Competition Authority fee. Pay 0.04% of the capital to the Competition Authority. For a JSC, 25% of the cash capital is deposited in a blocked bank account before registration; the balance is paid within 24 months.
5. Register at the Trade Registry. File the application; once approved the company legally exists and is announced in the Trade Registry Gazette.
6. Register with the tax office. The company receives its corporate tax number, a tax officer may verify the registered address, and the statutory books are certified.
7. Activate e-signature and e-notification. Set up the electronic notification (e-tebligat) system and, where required, e-invoicing.
8. Register with Social Security (SGK). Enrol the company as an employer and register any staff.
9. Obtain municipal and business licenses. Depending on the activity and premises, apply for the relevant workplace opening or operating license from the municipality.
10. Open a corporate bank account. Unblock the deposited capital and begin trading.

Timeline and Whether You Must Be Present

A straightforward incorporation typically takes about one to two weeks once all documents are ready; the Trade Registry stage itself can often be completed in a day or two. You do not have to travel to Turkey. By granting a power of attorney to your lawyer — notarized and apostilled in your home country, or signed at a Turkish consulate — your legal team can handle the entire process on your behalf, from the MERSIS filing to opening the bank account, although banks increasingly ask beneficial owners to appear in person or complete video verification.

Approximate Costs of Setting Up

All figures are approximate, change frequently and depend on the exchange rate — treat them as planning estimates and confirm current amounts before budgeting.

Tax Overview

Turkish companies are subject to corporate income tax (currently around 25%, with a higher rate for banks and financial institutions — verify the current rate). Most goods and services carry VAT (KDV), with a standard rate around 20% and reduced rates for certain items. Companies also deal with withholding tax (for example on dividends, rent and some service payments), stamp tax on many contracts, and payroll taxes. Filings are frequent: monthly VAT and withholding returns, quarterly advance corporate tax, and an annual corporate tax return. Engaging a licensed accountant (SMMM) is mandatory, not optional, and the books must be kept in Turkish and in Turkish lira.

Work and Residence Permits

Owning shares in a Turkish company does not by itself grant the right to live or work in Turkey. A foreign shareholder who will also actively work as a director or employee needs a work permit, applied for through the Ministry of Labour and Social Security and tied to the company. Approval usually depends on the company meeting thresholds — commonly paid-in capital of around 100,000 TL and, in principle, the employment of a set number of Turkish citizens per foreign worker, with phased exemptions for company partners. An approved work permit generally doubles as a residence permit. Purely passive shareholders do not need a work permit, and qualified investors may explore the Turquoise Card. Verify current thresholds, as they are updated regularly.

Investment Incentives and Free Zones

Turkey offers a broad incentive system. An investment incentive certificate can bring VAT and customs-duty exemptions, corporate-tax reductions and social-security premium support, with more generous terms in less-developed regions and priority sectors. Free zones provide corporate-tax and VAT advantages for export-oriented manufacturing and logistics, while technoparks and R&D centres offer income-tax and payroll incentives for technology firms. These regimes can materially improve returns, so factor them into your structuring from the outset.

Common Mistakes Foreigners Make

• Choosing the wrong structure — often a JSC when an LLC would do, or vice versa.
• Underestimating ongoing costs, especially the mandatory monthly accountant.
• Assuming that owning a company automatically grants residence or the right to work.
• Using a personal account instead of a proper corporate bank account.
• Neglecting ultimate-beneficial-owner declarations and registered-address requirements.
• Missing monthly tax and social-security filing deadlines, which trigger penalties.

How a Lawyer and Accountant Help

A good lawyer chooses the right structure, drafts articles of association that fit your commercial goals, manages the Trade Registry and permit process under power of attorney, and screens for sector restrictions and beneficial-owner rules. A licensed accountant keeps your statutory books, files your returns on time and keeps you compliant. Together they let you incorporate remotely, avoid costly missteps and focus on running the business rather than the bureaucracy. At Bayraktar Attorneys we guide foreign investors through every stage, from choosing a vehicle to obtaining work permits.