Foreign investors are treated equally with Turkish citizens and have superior rights at some points. In accordance with Article 3 of the Direct Foreign Investors Law;
• Expropriation or nationalization of foreign direct investments is limited.
• They also have the assurance of being able to freely transfer abroad the profits and some other income they earn in Turkey.
• However, foreigners who establish a company in Turkey have the opportunity to apply for national or international arbitration and other dispute resolution methods due to possible legal problems.
• Work permit facilities are also provided to these companies in terms of employment of foreign personnel.
• Reports of international value institutions are taken as basis in determining non-cash capital.
• As we mentioned above, there are also opportunities to open a liaison office and branch.
• Apart from this, there are some tax advantages, which we will talk about below.
• Finally, Turkey is a party to many international agreements that protect the rights of foreign investors.
As can be seen, foreign investors have many legal and commercial guarantees. However, if a company's legal infrastructure is not properly established, these advantages will be meaningless. Therefore, company establishment procedures for foreigners should be carried out by experienced lawyers.
Tax and SSI Transactions of Foreign Partnership Companies
Tax office procedures for companies with foreign partners are exactly the same as for Turkish companies. However, in the 7th article of the Tax Offices Transaction Directive titled "Documents to be required for starting work"; It states that "Foreign nationals authorized to represent the company must obtain a residence permit, residence permit or work permit."
In addition, once the company is active, tax transactions must be carried out within certain periods and on certain dates.
Likewise, companies with foreign partners, the Social Security Institution business processes are the same as in Turkish companies.
Tax Liability of Foreigners
In Turkey, companies are obliged to pay corporate tax (22 percent). In addition, individuals are liable for income tax (15, 22, 35, 40 with progressive rates) due to the earnings and revenues they earn during the year. We can also say that individuals residing in Turkey or companies headquartered in Turkey are taxed on the income they earn from abroad.
In addition to these, there will be value added tax (VAT), special consumption tax (SCT) and stamp tax, which vary depending on the concrete case.
Of course, apart from these, there are international agreements and domestic legislation to prevent double taxation.
What are the Incentives Provided to Foreign Investors?
Incentives and supports to be given to foreign investors are regulated by different laws and regulations. Some of these are those:
1. Decision on State Aids in Investments No. 2012/3305 published in the Official Gazette No. 28328 dated 06.2012,
2. Communiqué on the Implementation of the Decision on State Aids in Investments No. 2012/1,
3. Decision No. 2016/9495 on Providing Project-Based State Aid for Investments, published in the Official Gazette No. 29900 dated 11.2016,
4. Decision on Supporting Investments within the Scope of Attraction Centers Program No. 2018/11201,
5. Technology Development Zones Law No. 4691
In addition to the investment incentive system, project-based investment incentive applications, attraction centers and technology development zones applications and the incentives and supports provided by these applications, VAT exemption, customs duty exemption, tax reduction and R&D incentives are some of the facilities provided to foreign investors. These incentives and supports differ according to many criteria.
What Procedure is Followed for Establishing a Company by Foreigners?
Before the official application process, preliminary preparations should be made regarding the establishment of a company by foreigners. The type of company must be determined, the articles of association must be prepared depending on what the activity will be, and the physical needs must be met.
STAGES OF COMPANY ESTABLISHMENT BY FOREIGNERS:
1. Meeting with the client and duly preparing the company's articles of association
2. Sending the articles of association via MERSİS
3. Preparation of documents and approval by the notary office
4. Company's potential acquisition of tax number
5. Depositing a certain part of the capital to the Competition Authority bank account
6. Depositing and documenting a certain part of the capital into the company bank account
7. Application to the Trade Registry Office for registration procedures
8. Certification of some legal books related to the company
9. Requesting the company establishment notification from the tax office
10. Organizing a signature circular
11. Transferring some company-related documents to the e-TUYS system
12. Other things to do according to company type and purpose of activity
Frequently Asked Questions and Short Answers
How Long Does It Take for Foreigners to Establish a Company in Turkey?
It generally takes between 2-7 days for foreigners to establish a company in Turkey. Factors such as the type of company, preparation of the articles of association, status of notary and registration procedures, and the process of obtaining permission from the ministry, if necessary, may extend or shorten this period.
Is it possible for foreigners to open a company without coming to Turkey?
Yes. The foreign person can carry out all establishment procedures by giving a power of attorney containing the necessary powers to a lawyer who is specialized in corporate law and preferably speaks English.
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