Foreign Investor Guide
Reference: Presidency of the Republic of Turkey Investment office www.invest.gov.tr
BUILDING A BUSINESS
FOREIGN INVESTMENT GUIDE
- BUILDING A BUSINESS
- WORK PERMIT
- RESIDENCE PERMIT
- REAL ESTATE AND CITIZENSHIP ACQUISITION
- COST OF DOING BUSINESS
- INVESTMENT AREAS
- TAX GUIDE
- LEGAL GUIDE
- BUILDING A BUSINESS
The Foreign Direct Investment (FDI) Law of Turkey is based on the principle of equal treatment and allows international investors to have the same rights and obligations as local investors.
The conditions for company formation and share transfer are the same as those applied to local investors. Accordingly, international investors can establish all types of companies specified in the Turkish Commercial Code (TCC). The TCC offers a corporate governance approach that meets international standards, encourages private equity and public offering activities, ensures transparency in management procedures, and harmonizes Turkey’s business environment with EU legislation and the EU accession process.
With the reform of Turkey to improve the investment environment, it has been based on ease of doing business, thus removing the bureaucracy experienced in company establishment, and minimizing costs and procedures. Accordingly, company establishments are now carried out only in the Trade Registry Directorates, which operate in the Chambers of Commerce and are designed as "one-stop-shops" and can be completed on the same day.
- Company Types and Alternative Structures Under TCC
Within the scope of the TCC, institutonal and non-institutional companies of the following types can be established:
- Institutional structures
- Joint Stock Company (A.Ş.)
- Limited Company (Ltd. Şti.)
- Cooperative Company
Although some financial thresholds (eg minimum capital) and bodies are different from each other, the procedure for establishing a joint stock company or limited liability company is the same.
- non-institutional structures
- Unlimited company
- Limited Partnership
Although companies are established in these five different types, joint stock companies and limited companies are the most preferred types both in the global economy and in the country.
- There is no shareholder.
- It is not an independent legal person. Its duration is limited to the duration of the parent company.
- There is no capital requirement; however, it would be reasonable to allocate a budget for branch activities.
- The branch can only be established for the same purposes as the parent company.
- Repatriation of branch profits to the parent company is allowed. Branch profit transferred to the head office is subject to 15% dividend withholding tax. This tax may be reduced under the Double Taxation Treaties.
For the registration of a branch, a petition must be sent to the relevant Trade Registry Office with the following documents:
- The petition (under the company stamp must be the signature of a signatory officer or his / her proxy; if signed by the proxy, the original or notary copy of the power of attorney must also be attached to the petition.)
- The decision of the competent authority of the parent company to open a branch
- The certified original of the parent company's articles of association
- Certificate of activity of the parent company or any equivalent document showing the parent company's registry and current status
- A power of attorney that has been given full representation and binding power by the parent company in favor of its resident representative
- Five copies of the organization declaration (Relevant fields must be filled and signed by the authorized person.)
- Two copies of the power of attorney indicating the representative in Turkey
- If the branch representative is a Turkish citizen, a notarized copy of the identity card. Otherwise, a notarized Turkish translation of the authorized representative's passport.
- Two copies of the branch representative's statement of signature under the name of the branch
- Letter of commitment (signed by the authorized person)
- A Trade Department Declaration Form from the Trade Registry Directorate (containing photos of branch representatives)
All necessary documents to be issued and signed outside Turkey must be notarized and apostilled or must be approved by the Turkish consulate where they were issued. Official translations of the original documents issued, notarized and apostilled must be carried out and certified by a notary in Turkey.
- Liaison Office
Companies established in accordance with the laws of foreign countries can open liaison offices by obtaining permission from the Ministry of Industry and Technology, provided that they do not engage in commercial activities in Turkey. In order to open a liaison office, it is necessary to apply to the Ministry of Industry and Technology, General Directorate of Incentive Implementation and Foreign Capital with the following documents.
- Application form (can be obtained from the Ministry of Industry and Technology.)
- The declaration containing the scope of the works to be carried out by the liaison office and the commitment that the office will not carry out commercial activities * and a document showing the signature authority of the foreign company official who signed the declaration
- Certificate of activity belonging to a foreign company and certified in accordance with the provisions of the Convention on the Abolition of the Obligation of Approval of Foreign Official Documents prepared by the relevant Turkish Consulate or within the framework of The Hague States Private Law Conference
- Annual report or balance sheet and income statement prepared about the foreign company
- Authorization certificate to be given to the person (s) assigned to carry out the activities of the liaison office
- Power of attorney in case the establishment of the liaison office is carried out through another person
If the original documents are submitted to the General Directorate, a copy of the documents is approved by the General Directorate and the originals are returned to the applicant.
In the first application for liaison offices, the permits are issued within the scope of the declared activity for a maximum of three years. Offices wishing to extend their operating periods must apply to the General Directorate before their operating periods expire. The General Directorate can finalize the time extension requests by evaluating the bureau's past year activities, the foreign company's business plan and targets for the future in Turkey, the current and anticipated expenditure amount and the number of personnel employed. The operating periods of the bureaus that obtain permission for market research or to promote the products or services of the foreign company are not extended.
Applications for establishment and extension of time are concluded within fifteen working days from the date of application, provided that the requested information / documents are complete and complete.
The requests of foreign companies to open a liaison office in order to operate in financial areas with special legislation such as money and capital markets and insurance are evaluated by institutions or organizations such as the Capital Markets Board, Banking Regulation and Supervision Agency authorized under the relevant special legislation. When deemed necessary, the Ministry can finalize the requests of foreign companies in other sectors that require a permit, license or similar authorization to open a liaison office by obtaining the opinions of the institutions or organizations that issue the said permission or license.
The liaison offices are required to send a copy of the tax office registration certificate and the rental agreement to the General Directorate at the latest within one month. Offices must notify the General Directorate of changes to the address, office officer / officials or the title of the foreign company, within one month at the latest from the date of the change, together with the lease agreement showing the new address, the authorization certificate for the newly appointed person or the document / documents regarding the title change of the foreign company.
In the event that the liaison offices cease their activities, they must forward the work cessation-attendance receipt to the General Directorate to be taken from the relevant tax office for the closing process. The offices cannot request a transfer, except for the balance resulting from the closing and liquidation.
- Company Establishment
When establishing a company in Turkey, the following rules and regulations must be followed:
- Submission of minutes and articles of association online to MERSIS
Trade registry transactions must be carried out through MERSİS (Central Registry Registration System) in accordance with the Trade Registry Regulation.
MERSIS is a central information system used for the realization of commercial registry processes and for the regular storage of commercial registry data electronically. A unique number is given to the legal entities actively doing business. With MERSIS, it is possible to establish new companies over the internet, and already established companies can operate through this system after the transfer of their records.
- Preparation of company documents and notarization
The documents required to apply to the relevant Trade Registry Office are as follows:
- Company agreement signed by the authorized personnel of the Trade Registry Office or by all of the founders in the presence of a Notary (one original, four copies)
- If the foreign partner is a real person, the required documents are as follows:
- Two copies of each shareholder's passport
- If the foreign partner is a legal person, the required documents are as follows:
- Certificate of activity of the legal entity registered as a partner, issued by the relevant authority in the country of the investor. The operating certificate must contain information about the current status of the company and signatories.
- The decision(s) of the competent corporate authority showing the approval of the legal entity shareholder(s) for the establishment; If there are any special conditions in the establishment of the company (company name, field of activity, etc.), these conditions should be specified in the decision(s) in order to provide transparency to the decision(s).
- In case a legal person is appointed as a member of the board of directors of the company to be established, the name of the real person to act on behalf of the legal person and the assignment of the legal person must be specified in the same or a different decision in order to ensure transparency.
- In case the process will be followed by proxy, a notarized copy of the power of attorney authorizing the attorneys who will follow the application before the authorized Trade Registry Office and other official authorities (when necessary).
- Notarized signature statements (two copies)
- Notarized identity card of company directors (one copy)
Except for the first article above, all necessary documents to be issued and signed outside of Turkey must be notarized and apostilled or must be approved by the Turkish consulate where they were issued. Official translations of the original documents issued, notarized and apostilled must be carried out and certified by a notary in Turkey.
- Getting the potential tax number
The company must obtain a potential tax number from the relevant tax office for non-Turkish shareholders and non-Turkish board members of the company. This potential tax number is required to open the bank account to which the capital of the company to be established will be deposited.
Documents required by the tax office are as follows:
- Registration request petition
- Articles of association (one original)
- Copy of the rental agreement showing the registered address of the company
- If the process is to be followed by proxy, a power of attorney must be issued authorizing the company to apply to the tax office to obtain a tax number or potential tax number.
- Depositing a certain percentage of the capital to the account of the Competition Authority
0.04% of the company's capital must be paid to the account of the Competition Authority through the Trade Registry Office cash desk.
- Investing at least 25% of the founding capital in a bank and documenting it
25% of the committed capital must be paid before the new company registration, and the remaining 75% within two years. Alternatively, the capital can be paid in full prior to registration.
However, for limited companies, it is not required to pay 25% of the founding capital before the company registration. For limited liability companies, it is sufficient to pay the promised capital within 24 months from the date of establishment of the company.
- Registration application to the Trade Registry Office
Founders can apply for registration after the following documents are provided:
- Registration request petition
- Four copies of the organization declaration form
- Company agreement signed by all of the founders in the presence of the authorized personnel of the Trade Registry Directorate or a Notary (one original, four copies)
- Payment made to the bank account of the Competition Authority (0.04% of the company's capital)
- Two copies of the statement of signature for each person authorized to represent the founders of the limited company
- Declaration of incorporation (one original)
- Chamber of Commerce registration form (two different forms for two different types of partners: real person partner or legal person partner)
- Written declaration of non-shareholder members of the board of directors stating the acceptance of the said post
Bank receipt of the paid minimum capital deposit (at least 25% of the subscribed capital). In case of any capital contribution in kind:
- Expert report on capital in kind
- Registration statement showing that there is no encumbrance on the capital in kind
- A document showing that annotations are made to the relevant offices about the capital in kind
- Written agreements between the founders, other persons and the company regarding the establishment of the company
After the registration phase is completed at the Trade Registry Office, the Trade Registry Office makes an ex officio notification to the relevant tax office and the Social Security Institution about the establishment of the company. The Trade Registry Office ensures that the company's establishment information is announced in the Trade Registry Gazette within approximately 10 days from the company registration. A tax certificate must be obtained from the local tax office shortly after the Trade Registry Office notifies the local tax office.
A social security number for the company must be obtained from the relevant Social Security Institution. For employees, a separate application must be made following the registration of the company with the Social Security Institution.
- Certification of legal books
During the establishment, the approval of the following books will be made by the authorized personnel of the Trade Registry Directorate.
- Journal Book
- Accounting inventory
- Share book
- Management meeting minutes book
- General assembly meeting minutes book
- Following the company establishment declaration of the Trade Registry Office from the tax office
The Trade Registry Office notifies the company establishment to the tax office and the Social Security Institution. The relevant tax officer visits the headquarters of the company to prepare a determination report. There must be at least one authorized signature in the determination report. The Trade Registry Office sends the company establishment document containing the tax number of the company to the tax office.
- Arrangement of signature circular
On the date the company is registered at the Trade Registry Office, the authorized signatories of the company must draw up the signatory circular in the presence of the authorized personnel of the Trade Registry Directorate.
- Receiving Certain Documents in Electronic Media / E-TUYS System
The following documents, which were previously sent to the Incentive Application and Foreign Capital General Directorate by the companies and branches established by international investors in Turkey, have been completed in electronic form:
- Activity Information Form for Foreign Direct Investments
- Capital Information Form for Foreign Direct Investments
- Share Transfer Information Form for Foreign Direct Investments
Through the web-based application called E-TUYS, developed in order to make the data system on foreign direct investments more comprehensive and to provide up-to-date information faster, and managed by the General Directorate of Incentives Implementation and Foreign Capital, the information contained in the said forms will only be received electronically. Thus, the practice of taking the forms in paper environment was terminated.