Turkey’s business friendly regulations draw foreigners
Turkey offers a dynamic business environment in a rapidly changing marketplace.
Turkey’s growing economy, fairly developed infrastructure and its modern industry and commerce continue to attract foreign companies in a diverse assortment of sectors, ranging from tourism to technology and energy. Turkey’s movement toward membership in the EU is creating momentum for adopting European business regulations and standards, thereby making it easier to run businesses in the country.
What about the opportunities for foreigners interested in investing and setting up a business in Turkey and establishing their own businesses? Is it to hard to set up a business in Turkey? Is it worth it? Considering its population -- above 70 million -- and its unique location, Turkey is definitely worth investment, as indicated by the increasing number of foreigners interested in doing business here. Furthermore, thanks to the Foreign Direct Investment (FDI) Law (No. 4875), which was enacted in 2003, the procedures for establishing a business are now much easier compared to previous years.
Legal framework concerning foreign investment
The FDI law sets the legal framework for a liberal investment environment in Turkey. This law entitles foreign companies to the same rights and responsibilities as Turkish companies and grants foreign investors comprehensive investor rights. According to the law, all companies that are established with foreign capital contribution and set up in line with the regulations of the Turkish Commercial Code will receive equal treatment with Turkish companies both in terms of rights and responsibilities. The new FDI law also states that there is no obligation requiring Turkish participation in the management of such a company. A company may be established with 100 percent foreign capital, and almost all business sectors are open to foreigners. The formation of a company by a foreign investor no longer requires permission from the Treasury’s Foreign Investment General Directorate. Applications for the establishment of a company must be filed with the Ministry of Industry and Trade or with a provincial trade registration office. Articles of incorporation -- detailing the company’s structure and management -- are required and should be notarized. The exact amount of time it takes to complete these procedures will vary for each company. However, an average of two weeks should be expected. An application is then submitted to the Ministry of Industry and Trade.
The transfer of foreign funds has also been simplified in recent years.
Only activities related to the petroleum and oil industry are restricted for foreigners. Some industries, such as education and defense, require special authorization. However, incentives for establishing businesses in underdeveloped regions are equally available to Turkish and foreign investors.
What kind of companies can foreigners establish?
The law does not impose any restrictions on foreign capital and enables foreign investors to invest in Turkey by either establishing a new company or branch or by acquiring the shares of an already operating Turkish company without being subject to any kind of pre-authorization generally required for foreign investment.
Applications made by foreign companies to establish liaison offices to operate in certain sectors, such as insurance, are subject to special legislation. The cost of establishing such companies varies depending on the capital involved and the number of shareholders.
All business enterprises must have an accounting system adapted to the needs of the business in accordance with Turkish accounting standards. Any entity or individual can obtain a simple import or export license for any product that is not prohibited by law. Imports from other countries are subject to customs duty at various rates. You should note that all company employees -- including the general manager or managers -- who are not Turkish citizens should obtain both residence and work permits.
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Document checklist for setting up a business
* Application form
* Notarized articles of incorporation
* Notarized copies of board resolution identifying company's founding partners
* Notarized copies of passports of founding partners
* Photos of founding members
* Leasing contract
* Tax numbers of founding members
What must a foreigner do during the establishment process?
After the drafting and notarization of the articles of incorporation one may notify the relevant authorities and apply to the respective chamber of commerce or industry for the company's registration with a trade registry. It is a must to prepare the articles of association in written form and to provide the signatures of all the founders in the agreement. However, unless a foreign firm's interests are strong enough to warrant opening an office in Turkey, the best way of selling in the country is through reliable and qualified local representatives. The Investment Support and Promotion Agency of Turkey aims to assist foreign investors in their business ventures in Turkey. It also provides data and information on the business climate in Turkey. Those planning considerable investment in Turkey should get in touch with the agency. For details, visit www.invest.gov.tr.
