Finding an overseas market with unique business benefits is a smart move for expansion. But it is very hard to conduct market research to select the right country.
If you are intending to start a business in Turkey, that could be a lucrative idea but only if this market is right for you.
In this guide, I’m going to clear all of your questions related to the Turkey market as a business hub, including benefits, limitations, registration, taxation, and more.
Let’s enter the Turkey market.
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Finding an overseas market with unique business benefits is a smart move for expansion. But it is very hard to conduct market research to select the right country.
If you are intending to start a business in Turkey, that could be a lucrative idea but only if this market is right for you.
In this guide, I’m going to clear all of your questions related to the Turkey market as a business hub, including benefits, limitations, registration, taxation, and more.
Let’s enter the Turkey market.
Author
Co-author
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Mr. Stephan Dorn
Managing Partner
Foreigners can do business in Turkey with much ease. The reason is that the Turkish government itself encourages foreigners to work with them. Here’s how:
Turkish business laws that apply to local businesses also apply to foreigners. This means the government treats foreigners as nationals. This is a plus point because many strict rules are automatically removed due to this policy.
Turkey is an open economy that fully allows foreign investors to do business. In fact, the Turkish government has investor-friendly laws to attract potential investors to the country.
The Turkish government has issued a law; FDI Law 4875, that is specifically created for foreigners to start a business. This law is not meant to impose restrictions but to make the investment process easier.
Most business activities are allowed in Turkey for foreigners. They can do any business that a local Turkish citizen can do, but of course, there are some sectors where stricter rules are applied for national and public safety purposes.
These sectors include media, aviation, and maritime industries, as well as certain import and export activities. You may also need permissions and additional licenses for some sectors or products.
In simple words, you can have full ownership of a company, open branches, and your business will be legally recognized.
Foreign investors are treated as local investors in Turkey according to local laws. This is a major advantage because you don’t need a local partner to start a business in the country.
You can retain 100% ownership while following the same tax laws that locals follow. You can also repatriate your assets at any time.
Yes, US companies can do business with Turkey. The United States and Turkey have strong relations and fair trade laws that help improve capital flow between both countries.
The Turkish Commercial Code (TCC) is the legal framework that oversees all business activities inside the country, including foreign business operations and policies. It provides flexible rules for US companies.
In fact, many US companies are already operating in different sectors in Turkey. The two countries provide diplomatic support, facilitate import and export activities, and support economic operations.
Turkey is considered a gateway market due to its location. It connects Europe, Asia, and the Middle East. Because of this strategic position, US companies prefer to do business in Turkey.
Another reason is that Turkey has a very large population, mostly made up of young people. There is growing demand across different industries, and the country also serves as a regional hub.
Although US companies operate in many industries in Turkey, the most common sectors where the US has a strong presence include:
The energy sector and manufacturing are also major industries for US investors.
Yes, overall, doing business in Turkey is worth it due to its strategic location and promising market. However, it also comes with risks that require proper evaluation.
Investors are interested in doing business in Turkey for multiple reasons. The country has a large population and a diverse economy.
In addition, Turkey is a trade hub because it serves as a gateway to multiple countries. It also offers modern infrastructure and facilities for investors, along incentives for certain branches and areas in Turkey.
Every business has its own specific needs, and every investor looks for different benefits in a market. However, the advantages that almost every foreign investor can benefit from in Turkey include, but are not limited to:
Every market comes with its own risks, and the Turkish market is no exception. Turkey faces economic volatility, although the market remains significantly stable for business operations.
Another concern investors may face is GDP instability. The country may also experience regulatory changes, bureaucratic delays, strong competition in certain industries, and cultural differences.
If you want to work in Turkey for commercial purposes, you have to take care of certain things to ensure a smooth workflow. The business culture in Turkey is more focused on relationships, trust, and a personal approach.
The success of a business for a foreigner lies in building good relationships with locals. People prefer face-to-face meetings instead of relying solely on emails or messages. Networking plays an important role in this market.
Creating a local presence is equally important as relationship building. Branding also pays off well. Businesses focus heavily on rapport building for long-term success.
People generally communicate in a polite and formal tone. They prefer indirect communication to avoid confrontation. Titles such as Mr. (first name + Bey) or Ms. (first name + Hanim) are commonly used.
Body language and gestures carry meaning, and respecting hierarchy is important. Turkish people are also well known for their hospitality.
Decision-making can take longer due to several factors. Senior approval is often required for many business matters.
There is a strong culture of face-to-face negotiations, which can be beneficial for businesses. You can work with flexible terms if you focus on building strong trust.
The cost of starting a business in Turkey depends on multiple factors. These include registration fees, initial business investment, and ongoing expenses.
If you want to register an LLC in Turkey, the minimum capital requirement is currently 50,000 Turkish Lira (TRY). However, if you want to register a joint-stock company, which is suitable for larger businesses, the required capital increases to 250,000 TRY. The benefit is that you can pay the capital 24 months after the company registration (only for stock companies you have to pay 25% of the capital in advance.
In addition to company registration costs, you may also need to spend on:
For registration and notary costs in Turkey you can calculate approximately $500 to $1,000 whereas the upfront consulting costs can range between $1,000 (basic support in Turkish) and $7,000 (comprehensive all inclusive consulting support). This does not include the required capital payments during company formation.
There are also several recurring expenses that you may have to bear from the first month, including:
If you operate the business online, you may save on office rent and utilities. However, you will still need to pay for a registered or virtual business address.
Now, let’s say you have decided to start a business in Turkey as a foreigner. Then let’s see how the real process looks, where to start, and what steps are involved.
Depending on your business needs, you will select the right type of legal business entity:
Liability varies depending on the chosen structure.
The company registration process starts with notarizing the required documents and applying for tax ID numbers for all shareholders. You then need to submit your business documents to the Turkish Trade Registry, which is the official business record database in Turkey.
After registration, you must also register with the Tax Office. Depending on the
nature of your business, you may also need to obtain specific licenses or permits after the company registration.
When registering a business as a foreigner, you may need the following documents:
You only need a power of attorney if you want someone else to handle the entire process on your behalf.
After company registration, you need to present your rental agreement and
companies’ signature circular to the tax office.
To open a business bank account in Turkey, the following steps and requirements usually apply:
If you want to hire employees in Turkey, you need to register with the Social Security Institution (SGK). You must prepare employment contracts and agreements in compliance with local labor laws.
It is also essential to follow social security and employment regulations. In special cases, you may also need to obtain a work permit.
OR
You can partner with an Employer of Record (EOR). In this case, there is no need to register a company or manage the steps mentioned above, as the EOR handles employment, compliance, and payroll on your behalf.
FMC Group started as a market entry expert in Turkey 27 years ago. So far, they have provided company formation services to over 100 international clients.
They are not only experts in Turkey market research and company formation but also provide professional account management services in Turkey. Feel free to reach out, and we will help you do business in Turkey.
Yes, the United States and Turkey have a double taxation treaty. This treaty helps businesses and individuals avoid paying tax twice on the same income.
You must register with SGK to hire employees and comply with all Turkish labor laws. Alternatively, you can partner with an EOR service provider and hire employees without registering a company.
Starting a business in Turkey typically takes around two to four weeks. However, if you work with FMC Group for market research and company formation, the process can be completed more quickly.
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