Company Types in Turkey:

The Foreign Direct Investors Law No. 4875 authorizes foreigners to establish businesses in Turkey. Foreign investors are given the same rights and obligations as domestic parties under Law No. 4875. This law permits foreign investors to set up any type of company that is defined by the Turkish Commercial Code as well as any type of regular company listed in the Turkish Code of Obligations. So, the companies that foreign nationals may form in Turkey include the following.

Sole Proprietorships: Collective Company, Limited Company, Ordinary Company, and Cooperative Company

Capital Companies: Joint Stock Company, Limited Liability Company, Limited Partnership divided into shares.

When establishing companies and engaging in commercial operations, foreigners must abide by the laws of Turkey, including Law No. 4875, Turkish Commercial Code No. 6102, and Turkish Code of Obligations No. 6098. A rule on the application of Law No. 4875 is also included. Finally, there are provisions that apply to foreign investors according to Law No. 4817 on Work Permits for Foreigners.

Additionally, foreign investors can set up branches or representatives in Turkey. Opening these types of structures enables foreign firms to do business in Turkey, as opposed to founding a corporation from scratch in Turkey.

STAGES OF FOREIGN NATURAL AND LEGAL INDIVIDUALS INSTALLING CAPITAL COMPANIES

1. Preliminary Preparation Phase:

Preparing in advance before the official application procedure is essential. It is initially required to decide which form of company is suitable for the foreigner to establish during this preliminary planning procedure. A business plan of the company should be created once this has been decided. The targets, aims, and ambitions of the company should be included in this business plan. Important matters like the legal procedure to be followed, how the company will be formed, its name, its intended purpose, its location, its manager or representative, its capital and share count, and its shareholding structure should all be decided upon and planned in this context.

2. Writing the Articles of Association for the Company and other papers needed to form the Company:

The required paperwork for company’s formation must be prepared after the initial planning stage. The company’s articles of association are the most crucial document to draft out of all of these. For this reason, it is crucial to draft the company’s articles in accordance with the business’s activities and goals. The company’s potential future circumstances with respect to its articles of organization must also be considered.

The company’s articles of organization, the paperwork needed to register with the local trade registry office, and investors’ identification documents are also necessary, with the company’s articles of association. A list of the documents that will be required from abroad in this regard should also be prepared. A list of the paperwork that will be needed from abroad in this regard should also be ready. All establishment procedures can be completed with just a notarized copy of the passport translation and tax identification number if the company’s partner is a real person, but more documentation is required if the partner is a legal person.

3. Deposit of a portion of the capital into the Competition Authority’s bank account:

When a company is established, foreigners must further make a deposit into the Competition Authority’s account. The corporation must pay the Competition Authority’s account 0.04% of its entire capital by using the office of the Trade Registry Office.

4. Documentation and a minimum deposit of 25% of the capital for incorporation:

A minimum of 25% of the money pledged in the company’s articles of association must be paid during the registration process, and the remaining amount must be paid within two years of the company’s authorization. In this case, limited liability firms are an exception. It is not necessary for the capital to be put in a bank account at the beginning of the process for foreigners to form a limited liability company. Paying the starting capital within two years of the limited liability company’s registration is both adequate and required.

5. Getting the Company a Potential Tax Identification Number:

Foreigner shareholders and foreign people of the company’s board of directors must have a potential tax number. To get a foreign tax number in this case, a foreigner only needs to submit their personal information into the interactive tax office. The foreign real person is required to enter there dwelling location into the tax office to receive a possible tax number.

When granting a prospective tax number, the tax office demands several documents. The following are the documents: Petition for Registration Request

Articles of Association: The original contract is required to be produced.

leasing Agreement: The place of leasing must be specified as the company’s registered address.

A power of attorney allowing the business to submit the following applications to the tax office: If a proxy will be used to carry out the process, then this is necessary.

6. Establishment of MERSIS Number:

Real and legal individuals, as well as foreign legal person representatives, must be registered in the MERSIS System. given MERSIS numbers prior to beginning the business establishment procedures.

7. Requesting Registration Procedures from the Trade Registry Office:

Required Documents:

-Petition (It should be signed by the board of directors of the company, or the members authorized to act on their behalf if signed by proxy; it should also include the accompanying document and be accompanied by the original or certified copy of the power of attorney.)

-A replica of the Establishment Notification Form if there is a foreign partner

-Translations, notarized copies of foreign partners’ passports, a tax number or foreigner identity number that must be obtained from the tax office, and a notarized residence permit if resident in Turkey. The partners must be present in the designated unit at the appointed time in order for them to sign the primary contract created using MERSIS. It suffices for the person to physically visit the power of attorney if the contract is to be signed by proxy.

-If there is a person who is authorized in addition to the partners, they must be present at the appointed time at the pertinent unit. The company title will be present when the signing statement is provided.

-In the event that a cash commitment in whole or part of the company’s capital is made, a bank letter containing the name, surname, and title of the partners of the company that deposited money to the bank account opened must also indicate that the minimum amount required by law or the articles of association was met. At least one-fourth of the nominal value of the shares must be paid prior to registration, and the remaining amount must be paid within twenty-four months of the company’s registration.)An independent receipt is not recognized.

-Statement of Chamber Registration

-The court-appointed expert’s original or certified copies of the expert’s report to court and expert’s appointment letter to the court, both of which concern the valuation of the businesses and goods that will be acquired during the establishment with the capital in kind invested in the company.

-the original document proving that the registries where the intellectual property rights of the real estate used as capital in kind have been noted.

-Contracts pertaining to the establishment, including those pertaining to the takeover of the month and businesses, with the firm being founded, the founders, and other parties.

-The original copy of the letter of permission or approval stating that non-shareholder board members would assume their duties; notarized document with signatures.

-If a foreign legal person selected by someone other than the partners serves on the board of directors, the document containing the legal person’s most recent registry data must be provided.

-The articles of organization must include the tax number if there is a foreign legal partner or legal authority.

-The decision to name a trustee from the court for the underage partner depends on whether the underage company partner’s parents or any of the parents are partners in the business. For partners and authorized managers in customs processes hired from outside, notarized customs consultancy permit documents are required to be supplied.

a copy of the Council of Ministers Decision permitting the involvement of municipalities, other local administrations, and their unions, if they are among the founders of the firm to be founded.

8. Validation of Specific Legal Books Concerning the Company

Commercial enterprises have to keep a number of books in Turkey. The Trade Registry Directorate personnel perform the certification of these books during the establishment process.

9. Asking the Tax Office for the Company Establishment Notice:

The Trade Registry Directorate notifies the pertinent tax office and the Social Security Institution that the company has been constituted after obtaining all the paperwork necessary for its formation and completing the registration phase. The tax certificate must be obtained from the tax office soon after this notification.

10. Uploading Specific Company-Related Documents to the e-TUYS System:

This database keeps track of foreign investors’ operations in Turkey. Three forms are filled out and electronically submitted to this system: the operation info form for foreign direct investments, the financial data form for foreign direct investments, and the transfer of shares documentation format for foreign direct investments.

TAXATION OF FOREIGN INVESTORS IN TURKEY

Companies owned and operated by foreign investors are subject to tax in Turkey. Turkey’s tax system consists of many taxes, including value added tax (VAT), corporation tax, and income tax. Companies owned by foreign investors operating in Turkey are subject to Turkish corporation tax in this regard. Depending on the company’s income and the industry it works in, the corporation tax rate may change. Companies with offices in Turkey must also make an annual statement and disclose their financial information.

Additionally, employers must contribute to social security for their employees. All businesses doing business in Turkey are required to pay social security payments based on employee remuneration.

Double taxation avoidance agreements (DTAs) between Turkey and a few other nations have been struck. These agreements are intended to stop foreign investors from being subjected to domestic taxation. DTAs are crucial in resolving concerns with double taxation in connection with Turkey’s taxation of foreign investors.

CONLUSION:

The procedure for forming a corporation and the prerequisites for foreigners to do so in Turkey are typically addressed in this article. As previously pointed out, Turkish law has a number of economic and legal laws that give comfort to outside investors. However, it is crucial that you correctly set up the company’s legal basis in order to take advantage of these assurances. Foreign investors are able to successfully conduct business in Turkey and enjoy a number of benefits and privileges by working in line with Turkish tax regulations and the Turkish Commercial Code.

It is best for forgein investers to optaion proper legal guideness in the process.