The Limassol Chamber of Commerce & Industry

Incorporation in Turkey

Turkey is strategically located between Europe, the Middle East and Central Asia and offers significant opportunities for foreign investors.

There are several types of company in Turkey; Joint Stock Companies, Limited Liability Companies, Collective Companies, Partnerships Limited by Shares and Cooperative Associations. The difference between these companies concerns the allocation of liability and the legal form of the entity. The most commonly used company for international business companies is the Limited Liability Company.

Advantages of Turkey:

Turkey is ranked as the 15^th most attractive destination for foreign direct investment (FDI) in the world (UNCTAD World Investment Prospects Survey, 2008-2010)
Customs union with the EU
Large high quality, cost-effective labour force.
Flexible exchange rate and liberal import regulations
Turkey has a large number of double taxation agreements and tax incentives
Turkey has a large consumer base with substantial purchasing power

Summary of Requirements for a Limited Liability Company (Ltd Si):

General Information
Type of Company	Limited Liability Company
Timescale to incorporate	Approx. 14 working days
Taxation	Progressive Taxation System. Corporate Tax Rates vary between 15% and 35%, the standard rate being 20%.
Double Tax Treaty Access:	Yes, over 70 DTT’s in place
Directors
Minimum No. Required	1, Foreign Director permitted however it is advisable to have a local director
Local Director Required	No, but advisable
Publicly accessible information	Yes
Location of Meetings	Anywhere
Shareholders
Minimum No. Required	2
Publicly accessible information	Yes
Location of Meetings	Anywhere
Company Secretary
Required	No
Local Secretary Required	N/A
Registered Office Required	Yes
Share Capital
Standard Currency	TL, Turkish Lira (1 TL = €0.45)
Minimum Authorised	5,000 TL (approx. €2,260.00 )
Minimum Paid Up Capital	25% of Authorised Share Capital must be paid-up within the incorporation period and the balance of the subscribed capital paid within 3 years.
Accounting & Compliance
Requirements to prepare Accounts	Yes. A foreign owned company is required to appoint a local accountant before the incorporation process is completed.
Requirement for Audit	A company can be exempt from audit if it meets the following criteria: Annual turnover less than 4,264,000 TL (approx. €2 million ) Balance sheet total is less than 8,528,000 TL (approx. €3.8 million )
Local Auditor Required	Yes
Requirement to File Accounts	Yes
Requirement to file Annual Return	Yes
Additional Information
VAT	VAT is imposed on goods delivered and services rendered including imported goods and services. General rate of VAT is 18%. Returns are filed monthly.
Bank Account Opening	The beneficial owner must visit the bank in order to open an account.

Procedure to Incorporate:

The procedure to incorporate an Ltd Si in Turkey is quite straightforward. We require the following in order to proceed:

Completed application form
A certified copy of the beneficial owner and each director and shareholders passport
A utility bill, under 3 months old

Upon receipt of the above the following is completed:

Obtain company name approval
Once name approval is obtained the share capital is transferred. A Bank Deposit Certificate will then be received.
Registration documentation will be submitted to the Trade Registry Office
Application submitted to the Ministry of Industry and Trade
Registration at the Tax Office. A Tax Identification Certificate will be received.
The company is incorporated.

The whole process of incorporation takes approximately 14 working days; Eltoma Corporate Services will ensure that this process is expedited as much as possible.

Opening a Bank Account in Turkey:

It is mandatory to have a bank account in Turkey as it is required to deposit the minimum capital during the incorporation process. This can be done using a legal representative in order to initially deposit the capital for the incorporation process to be completed. However the Beneficial Owner is required to visit the bank in order to complete the account opening process, this can be done after incorporation.

Taxation:

Individual Tax Rate:	15% – 35%
Corporate Income Tax Rate:	20%. Companies are required to pay advanced corporation tax based on their quarterly balance sheets and income statements. Advanced corporate tax paid during the year is offset against the corporate tax liability calculated over the annual corporate tax return. The balance of advance tax can be refunded or used to offset against other tax liabilities. Deductions of ‘all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on trade or business’ are allowed Corporate losses may be carried forward for 5 years but not carried back.
Capital Gains Tax Rate:	Capital gains are subject to 20% corporation tax.
Withholding Tax:	Dividends distributions to individuals and non-resident corporate shareholders are subject to withholding tax at a rate of 15%. Reduction however can be achieved through utilization of a Tax Treaty.
Royalties:	20%
Taxable Income:	According to Turkish Tax Legislation, income taxation differs significantly based on where the taxpayer is resident. If both the legal and business headquarters of a company are located outside of Turkey then the company is regarded as a non-resident entity If only one of the headquarters are located within Turkey the company is regarded as a resident entity Resident entities are subject to tax on worldwide income whereas non-resident entities are taxed solely on the income from activities in Turkey.

Fee Schedule (EUR):

Incorporation: Certificate of Incorporation M&AA Company Stamp Registered Office	€4,750.00
Bank Account Opening Fees: Turkey Bank Account Opening	€500.00
Annual Renewal Fee: Registered Office Payment of Government Fees Maintenance of Register of Directors Maintenance of Register of Shareholders	€2,000.00
Nominee Fees: Local Nominee Director	Price on application. Based on the business activity
Accountancy Fees: VAT Annual Return Withholding Tax Return All required Filings Bookkeeping	Between €950.00 – €1,250.00 (dependent on number of transactions. Individual quote will be provided)

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