Starting a business in Turkey as a foreigner can be an exciting opportunity. Turkey’s strategic location between Europe and Asia, diverse economy, and business-friendly environment make it an attractive destination for entrepreneurs. Whether you’re looking to open a retail store, establish a tech startup, or invest in the tourism sector, Turkey offers various incentives for foreign investors. This article provides a step-by-step guide on how to start a business in business in turkey for foreigners, covering essential legal, administrative, and financial requirements.
1. Understanding the Legal Framework for Foreign Entrepreneurs
Turkey has become one of the most foreign-investor-friendly countries in the region. The country’s legal system allows foreigners to start businesses, own 100% of a company, and benefit from tax incentives. However, understanding the local legal framework is crucial for a smooth startup process.
Types of Companies for Foreigners
Foreigners can choose from several types of business entities, with the most common being:
- Limited Liability Company (LLC): The most popular type of business for small to medium-sized companies. It requires a minimum capital investment of TRY 10,000 (about USD 550), and the company must have at least one shareholder and one director.
- Joint Stock Company (JSC): Suitable for larger businesses, requiring a higher initial capital of TRY 50,000 (about USD 2,750). JSCs are ideal for companies planning to publicly trade shares in the future.
- Branch Office: Foreign companies can set up branch offices in Turkey. These branches are not considered separate legal entities and must follow the rules and regulations set by the parent company.
- Representative Office: If you are looking to explore the market without direct involvement in trading or earning income, a representative office is a good option. However, it cannot conduct profit-generating activities.
2. Research the Market and Business Opportunities
Before starting your business in Turkey, it’s crucial to conduct market research to understand the demand for your product or service. Turkey offers many opportunities in industries such as:
- Tourism and Hospitality
- Real Estate
- E-commerce and Technology
- Manufacturing and Exporting
- Food and Beverage
- Renewable Energy
Assessing the market will help you identify the best sectors to invest in and ensure your business is competitive in the Turkish market.
3. Choose a Business Location
Turkey is a vast country with different regions offering various business opportunities. The key cities for foreign investment include:
- Istanbul: The financial, commercial, and cultural hub of Turkey. Ideal for international businesses, startups, and e-commerce ventures.
- Ankara: The capital, home to many government institutions and international organizations.
- Izmir: Known for its industrial and export-oriented economy, making it an excellent choice for manufacturing and trade-related businesses.
- Antalya: A tourist hotspot, making it great for businesses in tourism, hospitality, and services.
Consider the local infrastructure, availability of skilled labor, and access to markets when choosing your location.
4. Register Your Business
Once you’ve decided on the business type and location, the next step is to officially register your business in Turkey. This involves several steps:
A. Choose a Company Name
You’ll need to choose a unique company name that complies with Turkey’s regulations. The name should be available and not infringe on any trademarks or existing business names.
B. Notary and Articles of Association
The articles of association must be drafted and notarized. These articles outline the company’s structure, operations, and purpose. The notary public in Turkey will verify the documents.
C. Open a Bank Account
You must open a Turkish business bank account in the name of your company. The bank will require documentation, including the notarized articles of association and proof of the company’s capital.
D. Register with the Trade Registry
All companies must be registered with the Turkish Trade Registry. This process requires submitting your company’s documents, including the articles of association, identification documents, and tax numbers for shareholders.
E. Obtain Tax Identification Number
All business owners in Turkey are required to obtain a Turkish tax identification number (TIN) for themselves and their companies. This can be done at the Turkish Tax Office.
F. Register for Social Security
Employees in Turkey must be registered with the Turkish Social Security Institution (SGK) for healthcare and pension contributions. If you plan to hire staff, registering your business with SGK is a legal requirement.
5. Obtain Necessary Permits and Licenses
Depending on the type of business you want to run, you may need specific permits or licenses. These can include:
- Tourism licenses for businesses in the hospitality industry.
- Import/export permits for businesses involved in international trade.
- Health and safety certificates for food and beverage businesses.
- Building permits for construction or real estate businesses.
Make sure to consult local authorities and ensure that you comply with all legal requirements.
6. Hiring Employees and Labor Laws
If you plan to hire employees, you’ll need to comply with Turkey’s labor laws. The minimum wage in Turkey is subject to periodic adjustments, and employers are responsible for providing social security and insurance for their employees. You should also be aware of employee rights regarding working hours, paid leave, and termination procedures.
Foreigners can hire local Turkish employees or bring in foreign workers. The process of employing foreigners in Turkey requires additional paperwork and permits. However, highly skilled professionals may benefit from the Turkish Government’s skilled labor programs.
7. Understand Taxation in Turkey
Turkey has a relatively favorable tax system for businesses, with corporate tax rates at 22%. However, there are other taxes you must be aware of, including:
- Value Added Tax (VAT): The standard VAT rate in Turkey is 18%, but there are reduced rates for specific goods and services.
- Income Tax: Individual income tax rates in Turkey range from 15% to 40%, depending on income levels.
- Social Security Contributions: Employers and employees must contribute to the Social Security Fund.
It’s important to consult with a tax advisor to ensure compliance with Turkish tax laws and to optimize your tax obligations.
8. Funding Your Business
As a foreigner, you may need to seek funding to start your business. Turkey offers a variety of funding options, including:
- Bank loans: Many Turkish banks provide loans to foreign investors, though the terms may vary.
- Venture capital and angel investors: For tech startups or businesses with high growth potential, venture capital may be an option.
- Government grants and incentives: Depending on the sector and location, you may be eligible for grants or subsidies from the Turkish government.
9. Develop Your Business Network
Networking is crucial in Turkey, where personal relationships and trust play a significant role in business. Attend local business events, engage with Turkish chambers of commerce, and build connections with other entrepreneurs, suppliers, and government agencies.
Final Thoughts
Starting a business in Turkey as a foreigner is an exciting prospect with great potential. By understanding the legal requirements, choosing the right business structure, and following the necessary steps for registration, you can establish a successful venture in this dynamic and growing market. Always consult with local experts, including lawyers, accountants, and business advisors, to ensure your business complies with Turkish laws and regulations, and take full advantage of the opportunities this vibrant country has to offer.