Understanding Turkey’s Foreign Investment Laws
Turkey is an attractive destination for foreign investors due to its strategic location, diverse economy, and promising market opportunities. However, navigating the country’s complex legal framework can be challenging, especially for those unfamiliar with the Turkish legal system.
In this post, we provide a short guide to Turkey’s foreign investment laws, covering everything from the types of investments allowed to the procedures for establishing a business and obtaining work permits. By the end of this post, readers should have a clear understanding of Turkey’s foreign investment laws and the steps they need to take to invest in the country successfully.
1. Types of Investments Allowed in Turkey
Foreign investors can invest in Turkey in several ways, including:
- Establishing a Turkish company or branch: Foreign investors can set up a Turkish company or branch by registering with the Turkish Trade Registry. A Turkish company is a legal entity that can conduct business and enter into contracts, while a branch is an extension of a foreign company.
- Acquiring an existing Turkish company: Foreign investors can acquire an existing Turkish company by purchasing shares or assets.
- Investing in real estate: Foreign investors can invest in Turkish real estate, subject to certain restrictions.
- Investing in the stock market: Foreign investors can invest in the Turkish stock market through the Istanbul Stock Exchange.
Choosing the right vehicle starts with understanding the available structures, which our guide to company types in Turkey for foreign investors and entrepreneurs explains in detail.
2. Procedures for Establishing a Business in Turkey
To establish a business in Turkey, foreign investors must follow these steps:
- Choose a legal form: Foreign investors can choose from several legal forms, including limited liability companies, joint-stock companies, and branches.
- Reserve a company name: Foreign investors must reserve a company name with the Turkish Trade Registry.
- Draft the articles of association: The articles of association set out the company’s purpose, structure, and governing rules.
- Obtain a tax number: Foreign investors must obtain a tax number from the Turkish tax authority.
- Open a bank account: Foreign investors must open a bank account in Turkey and deposit the company’s capital.
- Register with the Turkish Trade Registry: Foreign investors must register their company with the Turkish Trade Registry.
3. Obtaining Work Permits
Foreign investors (depending on the circumstances) and their employees must obtain work permits to live and work in Turkey. Work permits are issued by the Turkish Ministry of Labor and Social Security and are granted based on the type of work, duration of stay, and qualifications of the applicant. Foreign investors can apply for a work permit once their company is registered with the Turkish Trade Registry. Because permit eligibility is closely tied to immigration status, it is worth reviewing Turkish immigration law for foreign entrepreneurs alongside the work-permit process.
4. Taxation and Incentives
Foreign investors in Turkey are subject to several taxes, including corporate income tax, value-added tax, and social security contributions. However, Turkey offers several tax incentives to foreign investors, including reduced corporate income tax rates, exemption from value-added tax on certain imports, and tax exemptions for investments in certain regions. International investors should also examine how double taxation agreements in Turkey affect their overall tax position, and which business expenses are deductible in Turkey when calculating taxable income.
Conclusion
Turkey’s foreign investment laws can be complex, but foreign investors can successfully invest in the country by understanding the legal framework and following the necessary procedures. By choosing the right legal form, registering with the Turkish Trade Registry, obtaining work permits, and taking advantage of tax incentives, foreign investors can capitalize on Turkey’s promising market opportunities and expand their businesses in the country.
