Turkey


Turkey has been inhabited since the Paleolithic, including various Ancient Anatolian civilizations and ancient Thracians. The remnants of Bronze Age civilizations such as the Hattians, provide examples of the lives of its citizens and their trade. After the fall of the Hittites, new states such as Phrygia and Lydia appeared on the western coast as Greek civilization began to flourish. The growing Persian kingdom eventually absorbed them. Following the Persian invasion, its expansionism brought it into conflict with the Greek monarch Alexander the Great who successfully expelled the Persians. Although he brought an end to the Persian Empire, his reign was short and his empire broke up on his death. Most of Anatolia eventually fell under the Seleucid Empire, the largest of Alexander's territories, but they were driven back by the Romans by 191 BC. In the 4th century, during the reign of Constantine the Great, at the east part of the Roman empire was established a new capital at Constantinople. Parting from the West empire, the Byzantine Empire succeeded it to flourish for almost a thousand years. Oghuz Turks began migrating into Anatolia in the context of the larger Turkic expansion, forming the Seljuq Empire in the 11th century AD. After the Seljuq victory over forces of the Byzantine Empire in 1071, the process was accelerated. The Seljuq dynasty controlled Turkey until the country was invaded by the Mongols. During the years when the country was under Mongol rule, some small Turkish states were born. One of these states was the Ottoman beylik which quickly controlled Western Anatolia and conquered much of Rumelia. After finally conquering Istanbul, the Ottoman state would become a large empire. Next, the Empire expanded to Eastern Anatolia, the Caucasus, the Middle East, Central Europe and North Africa. Although the Ottoman Empire's power and prestige peaked in the 16th century; it did not fully reach the technological advance in military capabilities of the Western powers in the 19th century. Following World War I in which Turkey was defeated, most of Anatolia and Eastern Thrace was occupied by the Allied powers. In order to resist the occupation, a cadre of young military officers formed a government in Ankara. The elected leader of the Ankara Government, Mustafa Kemal organized a successful war of independence against the Allied powers. After the liberation of Anatolia and East Thrace, the Republic of Turkey was established in 1923 with its capital at Ankara. In 1932 Turkey joined the League of Nations and in 1952 joined NATO.

Service packages

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Service item Express Standard Optimum
Company registration
Legal address per year
Secretarial services for the first year
Fees and duties for the first year
Apostilled bound set of incorporation documents
Compliance fee
Nominee service per year
Bank Account Pre-approval
Price

6 930 USD

6 930 USD

7 430 USD

I want to order «»

Contact method: and / or

Core Services

6 930 USD

— Incorporation

including incorporation tax, state registry fee, including Compliance fee

Included

— Annual government fees

Stamp Duty and Trade Registry incorporation fee

2 000 USD

— Corporate legal services

including registered address and registered agent, NOT including Compliance fee

150 USD

—Delivery of documents by courier mail

DHL or TNT, at cost of a Courier Service

500 USD

— Apostilled set of Statutory documents

Optional services

Nominee Director

Paid-up “nominee director” set includes the following documents

Related services

Tax Certificate

Company’s tax residence certificate for access to double tax treaties network

Tax ID Certificate

Compliance fee

Compliance fee is payable in the cases of: renewal of a company, liquidation of a company, transfer out of a company, issue of a power of attorney to a new attorney, change of director / shareholder / BO (except the change to a nominee director / shareholder)

250 USD

Basic

simple company structure with only 1 physical person

50 USD

For legal entity in structure under GSL administration

additional compliance fee for legal entity in structure under GSL administration (per 1 entity)

100 USD

For legal entity in structure not under GSL administration

additional compliance fee for legal entity in structure NOT under GSL administration (per 1 entity)

350 USD

For client with high risk Status

Cost of incorporation, including first year servicing 6930
Cost of annual service, starting from the second year 2000
Open account in 28693
Incorporation timescale for a turnkey company 2 weeks
Country 26673

General information shortly

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Total area Population Capital Unemployment Corruption perceptions index rank
783.562 sq. km 76.667.864 (2013) Ankara 10.7% (2013) 53 (2013)
Location Southwestern Asia and Southeastern Europe
National currency Turkish lira
Conditional reduction of currency TRY
Against USD 2.06
Climate, average max and min t° Temperate; hot, dry summers with mild, wet winters; harsher in interior; avg. maximum temperature (July) +35°; avg. minimum temperature (January) +5°
Time difference from Moscow - 1 hour
Dialing code +90
State language Turkish
Ethnic groups Turks 70%, Kurds 18%, and others
Literacy rate 88.7%
Credit rating BB
Government type Parliamentary democracy
Executive branch Prime Minister and the Council of Ministers
Legislative branch the Grand National Assembly of Turkey (550 members)
Judicial branch Constitutional Court, Supreme Court, High Court of Appeals, Council of State, High Counting Chamber, High military court of appeal, High military administrative court; courts of second instance: Principal court of criminal offence of special importance, Principal court of ordinary criminal offence, Principal Civil Court; courts of first instance: Magistrate Court divided into criminal and civil courts
GDP per capita rank 65 (2013)

Corporate info

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Shelf companies permitted Legal system Incorporation timescale for a turnkey company Cyrillic alphabet permitted in company name Local registered office
No civil law 2 weeks No Yes
Types of entity Sole proprietorship; Partnership; Limited liability company; Joint-stock company; Commandite company; Cooperative
Incorporation timescale for a new company 2 days
Company suffix Limited Sirket or LS
Sensitive words Turkey, Turkish
Local registered agent No
Information to be kept at the registered office legal and accounting books
Seal required, type of seal not required
Redomiciliation (to, from) permitted permitted

Director and secretary

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Minimum number of directors Residency requirements for directors Corporate directors permitted Disclosure to local agent Disclosure to public
1 No Yes No Yes
Directors’ meetings/frequency/location No requirements
Company secretary required No
Residency requirements for a secretary No
Qualified secretary required No
Corporate secretary permitted No

Shareholder and beneficiary

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Minimum number of shareholders Residency requirements for shareholders Corporate shareholder permitted Disclosure to local agent Disclosure to public
1 No Yes No Yes
Meetings/frequency/location Yes / annually / no requirements
Beneficiary info disclosure to Yes

Shares and share capital

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Minimum authorized share capital Minimum issued share capital Minimum paid share capital Authorized capital payment deadlines Bearer shares permitted
10000 10000 2500 25% before registration, the rest 75% - within 24 months No
Issued capital payment deadlines 25% before registration, the rest 75% - within 24 months
Standard currency Turkish lira
Standard authorized share capital 10000
Standard par value of shares 25
Shares with no par value permitted No

Taxes

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Min. rate for corporate tax Capital gains tax VAT Withholding tax Exchange control
20% Regular rate 18% 15%/20%/0-18% No
Personal tax 15-40%
Corporate tax (in detail) The standard income tax rate is 20% (it has been increased to 22% for the period 2018-2020)
Capital gains tax. Details Capital gains derived by a company are generally taxable as ordinary income
VAT. Details The standard VAT rate is 18%. Reduced rates of 8% and 1% apply to some goods and services
Other taxes Social contributions, Inheritance and gift tax, Property tax
Government fee Yes
Stamp duty from 0.189% to 0.948%

Accounts

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Requirement to file accounts Publicly accessible accounts Audit required Requirement to file Annual Return Publicly accessible Annual Return
Yes No No Yes No
Requirement to prepare accounts Yes
Double tax treaties network 87
Tax Exchange Information Agreement network 5
OECD member Yes
Offshore/onshore status according to the RF laws No

GENERAL INFORMATION

General info

Turkey is a contiguous transcontinental country, located mostly on Anatolia in Western Asia, and on East Thrace in Southeastern Europe.
Total area of Turkey is 783.562 sq. km. Population of Turkey is 76.667.864 (2013). Ethnic groups include Turks (70%), Kurds (18%), and others.
The capital of Turkey is Ankara.
The official language of Turkey is Turkish.
The official currency is Turkish lira (TRY). 1 USD is equal to 2.06 TRY.
The climate of Turkey is temperate; hot, dry summers with mild, wet winters; harsher in interior; avg. maximum temperature (July) +35°; avg. minimum temperature (January) +5°.
Time difference with Moscow is - 1 hour.
Literacy rate is 88,7%.
Calling code of Turkey is +90.

History

Turkey has been inhabited since the Paleolithic, including various Ancient Anatolian civilizations and ancient Thracians. The remnants of Bronze Age civilizations such as the Hattians, provide examples of the lives of its citizens and their trade. After the fall of the Hittites, new states such as Phrygia and Lydia appeared on the western coast as Greek civilization began to flourish.
The growing Persian kingdom eventually absorbed them. Following the Persian invasion, its expansionism brought it into conflict with the Greek monarch Alexander the Great who successfully expelled the Persians. Although he brought an end to the Persian Empire, his reign was short and his empire broke up on his death. Most of Anatolia eventually fell under the Seleucid Empire, the largest of Alexander's territories, but they were driven back by the Romans by 191 BC.
In the 4th century, during the reign of Constantine the Great, at the east part of the Roman empire was established a new capital at Constantinople. Parting from the West empire, the Byzantine Empire succeeded it to flourish for almost a thousand years.
Oghuz Turks began migrating into Anatolia in the context of the larger Turkic expansion, forming the Seljuq Empire in the 11th century AD. After the Seljuq victory over forces of the Byzantine Empire in 1071, the process was accelerated. The Seljuq dynasty controlled Turkey until the country was invaded by the Mongols. During the years when the country was under Mongol rule, some small Turkish states were born. One of these states was the Ottoman beylik which quickly controlled Western Anatolia and conquered much of Rumelia. After finally conquering Istanbul, the Ottoman state would become a large empire. Next, the Empire expanded to Eastern Anatolia, the Caucasus, the Middle East, Central Europe and North Africa. Although the Ottoman Empire's power and prestige peaked in the 16th century; it did not fully reach the technological advance in military capabilities of the Western powers in the 19th century.
Following World War I in which Turkey was defeated, most of Anatolia and Eastern Thrace was occupied by the Allied powers. In order to resist the occupation, a cadre of young military officers formed a government in Ankara. The elected leader of the Ankara Government, Mustafa Kemal organized a successful war of independence against the Allied powers. After the liberation of Anatolia and East Thrace, the Republic of Turkey was established in 1923 with its capital at Ankara. In 1932 Turkey joined the League of Nations and in 1952 joined NATO.

Government Type

Turkey is a parliamentary representative democracy.
The head of state is the President of the Republic. The president is elected for a 5-year term by direct elections. The president has a largely ceremonial role.
Executive power is exercised by the Prime Minister and the Council of Ministers which make up the government. The prime minister is elected by the parliament through a vote of confidence in the government. Although the ministers do not have to be members of the parliament, ministers with parliament membership are common in Turkish politics.
Legislative power is vested in the unicameral parliament, the Grand National Assembly of Turkey, which consists of 550 members, elected for a 4-year term by general direct voting and proportional representation. Minimum threshold for parties is 10%.
Judiciary power includes Constitutional Court, Supreme Court, High Court of Appeals, Council of State, High Counting Chamber, High military court of appeal, High military administrative court; courts of second instance: Principal court of criminal offence of special importance, Principal court of ordinary criminal offence, Principal Civil Court; courts of first instance: Magistrate Court divided into criminal and civil courts.

Economy

Turkey has the world's 15th largest GDP by PPP and 17th largest nominal GDP. The country is among the founding members of the OECD and the G-20 major economies.
Turkey has gradually opened up its markets through economic reforms by reducing government controls on foreign trade and investment and the privatization of publicly owned industries, and the liberalization of many sectors to private and foreign participation has continued amid political debate. The public debt to GDP ratio peaked at 75.9% during the recession of 2001, falling to an estimated 26.9% by 2013.
Tourism in Turkey has experienced rapid growth in the last twenty years, and constitutes an important part of the economy. In 2012, 35.5 million foreign visitors arrived in Turkey, which ranked as the 6th most popular tourism destination in the world; they contributed $25.6 billion to Turkey's revenues.
Turkey has a large automotive industry, which produced over a million motor vehicles in 2012, ranking as the 16th largest producer in the world. Turkish shipbuilding exports were worth US$1.2 billion in 2011. The major export markets are Malta, Marshall Islands, Panama and the United Kingdom.
Turkish brands like Beko and Vestel are among the largest producers of consumer electronics and home appliances in Europe, and invest a substantial amount of funds for research and development in new technologies related to these fields.
Other key sectors of the Turkish economy are banking, construction, home appliances, electronics, textiles, oil refining, petrochemical products, food, mining, iron and steel, and machine industry. In 2010, the agricultural sector accounted for 9% of GDP, while the industrial sector accounted for 26% and the services sector 65%. However, agriculture still accounted for a quarter of employment.
The European Union – Turkey Customs Union, led to an extensive liberalization of tariff rates, and forms the pillar of Turkey's trade policy.

CORPORATE INFORMATION

Legal System

Turkey has a civil law system, which has been wholly integrated with the continental European system. For instance, the Turkish civil law system has been modified by incorporating elements mainly of the Swiss Civil Code, the Code of Obligations and the German Commercial Code. The administrative law bears similarities with the French Counterpart and the penal code with the Italian Counterpart.

Types of Entity

The principal forms of business organization in Turkey are:
  • Sole proprietorship;
  • Partnership;
  • Limited liability company;
  • Joint-stock company;
  • Commandite company;
  • Cooperative.

The most common structure is the limited liability company.

INCORPORATION

Company Name

Every LLC in Turkey must have a name. The requirements for the company name are as follows:
  • The company name must be distinct from the names of all other companies.
  • It shall contain a company type as a suffix:
  • In case the trade name contains the name and last name of an individual, the phrasing that indicates the company type cannot be abbreviated or displayed in symbols.
  • It shall contain wording to indicate the business activity of the company.
  • The company name cannot contain the words such as Turkey or Turkish (only allowed with special permission).
  • The presence of foreign words in the trade name of a company is permitted unless such words do not contradict the law, national and the cultural and historical heritage of Turkey and where the name or brand promoting the goods or services constituting the business activity is in a foreign language or the investment is made by foreign shareholders.

Incorporation

To incorporate a Turkish company, the following steps are required:
1. Execute and notarize company documents – 1 day: According to Article 586 of the new Turkish Commercial Code, the following documents are required:
  • Notarized articles of association (4 copies and 1 original).
  • Notarized signature declarations (1 copy).
  • Notarized copy of the founders' declaration (1 original copy).
  • Notarization of commercial books (6 books), including the resolution of the board of directors or other appropriate corporate body of the legal entity concerning the decision to become a shareholder in the company to be established (1 copy).
  • Notarized copy of a power of attorney authorizing the attorneys who will follow-up the application before the competent Trade Registry and other official authorities in order to proceed with the application (where applicable).

The incorporation documents are exempt from the stamp tax: there are no fees to be paid for the articles of association and the signature declarations. However, fees are still applicable for notary services and for the valuable papers.
2. Deposit a percentage of capital to the account of the Competition Authority – 1 day: To register with the Commercial Registry, founders must obtain the original receipt from Halk Bankas. This receipt shows that 0.04% of the company’s capital has been paid to the Competition Authority at the central bank or a public bank.
3. Deposit at least 25% of the startup capital in a bank and Obtain proof thereof – 1 day: According to Articles 585 and 344 of the new Turkish Commercial Code, 25% of the share capital must be paid in prior to the new company registration. The remaining 75% of the subscribed share capital must be paid within 2 years. Alternatively, the capital can be fully paid prior to registration.
4. Apply for registration at the Trade Registry Office – 2 days: Upon gathering the following documents, founders may apply for registration:
  • Petition requesting registration;
  • 3 copies of an incorporation notification form (kurulus bildirim formu);
  • 4 copies of the notarized articles of association (1 original);
  • Bank deposit receipt with respect to the payment made to the bank account of the Competition Authority (0.04% of the company's share capital);
  • An undertaking (taahhutname) signed by the authorized company representatives. Signature declaration of the directors;
  • For each person authorized to represent the founders of the limited liability company, 2 copies of the signature declarations;
  • Notarized copy of the founders' declaration (1 original);
  • Bank certificate of the paid-in minimum capital deposit (at least 25% of the subscribed capital);
  • Chamber of Commerce registration form;
  • 3 passport-sized photos of the founders.

Following the completion of the registration phase before the Commercial Registry, the Commercial Registry notifies the relevant tax office and the Social Security Administration ex-officio regarding the incorporation of the company. The Commercial Registry arranges for an announcement in the Commercial Registry Gazette within approximately 10 days as of the company registration.
A tax registration certificate must be obtained from the local tax office soon after the Commercial Registry Office notifies the local tax office.
A social security number for the company must be obtained from the relevant Social Security Administration. For the employees, a separate application has to be made following the registration of the company with the Social Security Administration.
5. Certify the legal books by a Notary Public – 1 day (simultaneous with previous procedure): The founders must certify the legal books (6 documents: shareholders' resolution book, share ledger book, board of managers' resolution book, day-book, inventory book and general ledger) the day they register the company with the Commercial Registry. The notary public must notify the Tax Office about the commercial book certification.
6. Follow up with the tax office on the Commercial Registry’s company establishment notification – 1 day: The Commercial Registry Office notifies the Tax Office and the Social Security Administration of the company’s incorporation. In practice, to expedite the registration process, company representatives follow up on whether the notification has been received. A tax officer comes to the company headquarters to prepare a determination report. There must be at least one authorized signature in the determination report. Trade Registry Officers send company establishment form which includes tax number notification to Tax Office.
The procedure for incorporation takes less than 2 (two) weeks.

Tax Registration & Bank Account Opening

For a limited liability company a resident director appointed with powers to represent and bind the company is required for practical reasons. This requirement is generally enforced by tax offices in order to safeguard their filings and tax payments since (for instance) in LTD management and shareholders are also liable with their personal assets against government related debts (tax and social security premiums). Therefore tax offices need submission of resident individuals with Turkish addresses that they can follow up.
This issue is also important for bank account opening. Most of the banks in Turkey have a 'know your client' policy subject to Basel standards. They ask for documents of the company's shareholders and management as well as the company's documents themselves. Therefore a resident director appointment is generally necessary. Even if some banks may ignore such procedure at initiation (during blockade account opening for submission of capital advance), please note that sooner or later a Turkish Citizen ID or a Turkish ID number issued for foreigners will be required by the bank for allowing banking transactional authorities. Such Turkish ID number for foreigners is provided to foreigners only when they are provided a residence permit in Turkey with a term of six (6) month minimum prior to application.

Field of Activity

The company can be active in any business even if it is not stated at its Articles of Association. Unless active in regulated areas where licensing is required (such as banking, telecommunication, energy etc.) the company can carry out any commercial or industrial activity.

Local Registered Office

Every Turkish LLC must have a registered office within Turkey.

Seal

Although there is no legal requirement (use of company title above the signature is sufficient) rubber company stamps are always used to signify the company name to be placed under the representing signatures once the signature circular is issued. Stamps are not issued officially and can be prepared by stationary offices in return of TRL 10.

Redomicile

The redomiciliation of companies to or from Turkey is permitted.

COMPANY STRUCTURE

Directors

A Turkish LLC should at least have one director. One of the shareholders of the company shall become a director. A director can be either legal entity or individual. There are no residency requirements. However, for a limited liability company a resident director appointed with powers to represent and bind the company is required for practical reasons. This requirement is generally enforced by tax offices and local banks.

Secretary

Corporate Secretary is not required.

Shareholders

According to new Turkish Commercial Code which is effected after 1st July, 2012, a limited liability company should have at least one shareholder. Shareholders can be non-resident companies or foreigner individuals. Foreign investors are permitted to own 100% of the company.
Liability of shareholders is limited with the capital commitment amount for commercial liabilities. However, the shareholders (subject to capital contribution ratio) and the management are also liable for amounts owed by the company to government authorities with their own assets for taxes, duties and charges that cannot be collected from the Company (such as taxes, administrative fines and social security premiums).
Shareholders are listed in online trade registry documents.
It is required to hold a shareholders general assembly meeting for closure of previous year's accounts once every year.

Beneficiary

In Turkey beneficiaries’ details do appear on a public profile.

Share Capital and Shares

The minimum capital requirement for LTD companies is TRL 10,000. 25% of capital shall be paid into the company accounts (temporary accounts to be established before Chamber of Commerce filing for incorporation) at commencement (which can be freely used for expenses of the company following establishment) and the remaining could be paid in to the company in 24 months.
Shares with no par and bearer shares are not permitted.

TAXATION

Personal Income Tax

In Turkey residents are taxed on worldwide income; nonresidents are taxed on Turkish-source income only. Individuals who are in Turkey for a continuous period (including temporary absence) of more than 6 months in any calendar year are deemed to be resident for tax purposes. However, foreign individuals who are on assignment in Turkey for a specific business project or mission, or those in Turkey for holiday, health care or educational purposes are not regarded as resident, even if they stay for more than 6 months.
Taxable income is comprised of employment income, business income, income from agricultural activities, professional income, income derived from securities (i.e. dividends and interest), income from immovable property (i.e. rental income from real estate) and other income (capital gains and nonrecurring income).
Individual income tax rates apply on a progressive basis from 15% to a top marginal rate of 35%.
Tax year for individuals is a calendar year or fiscal year. An income tax return must be filed by all individuals that derive business or professional income. For other types of income (e.g. salary, income from securities, income from immovable property, capital gains, etc.), the obligation to file an annual return depends on the type of income, the amount, the exemption limits applicable and whether the income is subject to withholding tax at source.
Individual required to file an annual income tax return must submit the return between the 1st and 25th day of March of the following calendar year. Income tax accrued must be paid in 2 equal installments in March and July.

Corporate Income Tax

A company is resident in Turkey if is legal seat or place of management is in Turkey. Resident companies with unlimited liability are taxed on worldwide income; nonresident companies are subject to tax on Turkish-source income only.
All profits derived from the earning of income are included in taxable income, with the exception of dividends qualifying under the Turkish participation exemption. Expenses incurred in the course of the business are generally deductible.
The standard corporate tax rate is 22%. A reduced rate applies on earnings derived from investments in specified sectors/regions.

Capital Gains Tax

Capital gains derived by a company are generally taxable as ordinary income. However, 75% of capital gains derived from the sale of local participations are exempt from corporation tax if the following conditions are satisfied:
  • the property has been held for at least 2 years;
  • the gains are kept in a special fund account under shareholder equity for 5 years following the year of the sale;
  • the exempt profits are not transferred within the specified period to another account (except the transfers to the capital account by way of a capital injection); and
  • consideration for the sale is collected by the end of second calendar year following the year of the sale.

Capital gains derived from the sale of foreign participation that have been held for at least 2 years by an international holding company resident in Turkey are exempt from corporate income tax.

Dividends

Dividends paid by a resident company to another Turkish company are exempt from corporate income tax in hands of the shareholder. Dividends received from a nonresident company are exempt from corporate tax if:
  • the nonresident payer is a corporation or limited liability company;
  • the Turkish recipient has owned at least 10% of the paid-in capital of the payer for at least one year;
  • the profits out of which the dividends are paid were subject to foreign income tax of at least 15% (20% if the main activity of the payer is the provision of financing, including financial leasing, insurance services or investments in securities); and
  • the dividends are remitted to Turkey by the date the corporate tax return is due.

Losses

Tax losses may be carried forward for 5 years, but may not be carried back except where the company is liquidated.

Tax Year

The tax year is the calendar year or fiscal year. It is also possible to obtain permission from the Ministry of Finance to use a special accounting period.

Withholding Tax

Dividends paid to a nonresident company are subject to a 15% withholding tax, unless the rate is reduced under a tax treaty.
Interest on loans payable to a foreign state, international institution, or foreign bank or foreign corporation that qualifies as a “financial entity” is subject to 0% withholding tax. A 10% rate applies to interest paid on loans from other nonresident entities.
Royalties are subject to a 20% withholding tax, unless the rate is reduced under a tax treaty.
Technical service fees are subject to a 20% withholding tax.
Branch remittance tax is levied at a rate of 15%.

VAT

VAT is imposed on the supply of most goods and the provision of services.
The standard rate is 18%, with reduced rates of 8% applicable to basic foodstuffs, pharmaceutical products and other items, and 1% for journals, newspapers, certain farm products and certain machine/equipment acquired under finance leases. Certain supplies are exempt. Reverse-charge VAT at 18% applies to payments made to nonresidents for professional services, the use of intangibles (e.g. royalties, licenses or know-how) and on the sale of such rights.

VAT Registration

There is no turnover threshold for VAT registration in Turkey. Any person or entity engaged in an activity within the scope of the VAT law must notify the local tax office where its place of business , the same tax office at which the business registered for income/corporation tax purposes.
A foreign business with no establishment in Turkey but that sells goods located in Turkey must appoint a tax representative (agent) to register for VAT. Direct registration is not possible. Such a business must use the reverse charge mechanism for charging VAT.

VAT Tax Period and Returns

VAT payments are due monthly. VAT returns must be filed with the local office by the 24th of the following month and VAT is payable by the 26th day of the month in which the return is submitted.

Stamp Duty

Stamp duty applies at rates ranging from 0.189% to 0.948%, depending on the type of document.

Government Fee

Other Taxes and Duties

Capital duty there is no duty on share capital, but there is a compulsory contribution to the Competition Board equal to 0.04% of the capital amount committed when the company is established, and 0.04% of any subsequent increase in capital.
Payroll tax income withholding tax is levied at source by the employer on salaries at progressive income tax rates ranging from 15% to 35%.
Real property tax levied based on the value of land or buildings at rates of 0.2% for buildings in general, 0.1% for dwellings, 0.1% for land in general and 0.3% for building sites. The rates are increased by 100% for buildings and land located within larger cities.
Transfer tax the registration of a transfer of real estate is subject to real estate transfer tax. The tax is calculated as 4% of the acquisition/transfer value and is split equally between the buyer and the seller.
Social security contribution both the employer and the employee are required to make social security contributions at a rate depending on the risk category of the job. The general rates are 19.5%-25% for the employer and 14% for the employee.

Anti-Avoidance Rules

Transfer pricing: When a transaction between related parties (domestic or foreign) is not carried out on arm’s length terms, profits arising from the transaction will be deemed to be “constructive dividends” subject to both corporate income tax and dividend withholding tax. The transfer pricing rules provide for the comparable uncontrolled price, cost-plus and resale price methods as well as profit-based methods (e.g. profit-split and transactional net margin methods). However, a taxpayer may adopt another method based on its particular circumstances. Taxpayers are required to maintain documentation to support their transfer pricing.
Thin capitalization: Thin capitalization rules apply when loans from shareholders or related parties exceed a 3:1 debt : equity ratio at any time in an accounting period. Related parties for these purposes are defined as shareholders and persons related to shareholders that own, directly or indirectly 10% or more of the shares, voting rights or the right to receive dividends of the company. The amount of equity is determined under the Tax Procedures Code at the beginning of accounting period.
Controlled foreign companies: The CFC rules are triggered where a Turkish resident company controls, directly or indirectly, at least 50% of the share capital, dividends or voting power of a foreign entity, and (1) 25% or more of the gross income of CFC is comprised of passive income, such as dividends, interest, rents, license fees or gains from the sale of securities that are outside the scope of commercial, agricultural or professional income; (2) the CFC is subject to an effective tax rate lower than 10% in its country of residence; and (3) the annual total gross revenue of the CFC exceeds the foreign currency equivalent of TRY 100,000. If these requirements are met, the profits of the CFC are included in the profits of the Turkish company in proportion to the Turkish company’s share in the capital of the CFC, regardless of whether such profits are distributed, and will be taxed currently at the 20% corporation tax rate.
Disclosure requirements: Certain disclosures must be made in the footnotes attached to the statutory financial statements submitted to the tax office, together with the corporate tax return.

Double Tax Agreements

Turkey has exchange of information relationships with 109 jurisdictions through:
  • 87 DTCs: Австралия, Австрия, Азербайджан, Албания, Алжир, Бангладеш, Бахрейн, Беларусь, Бельгия, Болгария, Босния и Герцеговина, Бразилия, Великобритания, Венгрия, Вьетнам, Германия, Греция, Грузия, Дания, Египет, Израиль, Индия, Индонезия, Иордания, Иран, Ирландия, Испания, Италия, Йемен, Казахстан, Канада, Катар, Китай, Косово, Кот дЁИвуар, Кувейт, Кыргызстан, Латвия, Ливан, Литва, Люксембург, Македония, Малайзия, Мальта, Марокко, Мексика, Молдова, Монголия, Нидерланды, Новая Зеландия, Норвегия, ОАЭ, Оман, Пакистан, Польша, Португалия, Республика Корея, Российская Федерация, Румыния, Саудовская Аравия, Сенегал, Сингапур, Сирия, Словакия, Словения, Сомали, Судан, США, Таджикистан, Узбекистан, Украина, Филиппины, Финляндия, Франция, Хорватия, Черногория, Чехия, Швейцария, Швеция, Эстония, Эфиопия, ЮАР, Япония;
  • 5 TIEAs: Bermuda, Gibraltar, Guernsey, Isle of Man, Jersey.

Foreign exchange control

There are no foreign exchange controls in Turkey.

ACCOUNTS

Financial Statements

Turkish companies are obliged to prepare financial statements annually and submit it to the annual shareholders’ meetings. Financial statements shall be kept in accordance with the Turkish Commercial Code and comply with Turkish Accounting Standards.
It is not required to file the statements with the Registry.

Audit

LTD companies exceeding at least two (2) of the three (3) following criteria below for two (2) successive fiscal periods are subject to independent audit:
  • Total Assets: TRL 150 million +
  • Net Sales: TRL 200 million +
  • Employees: 500+

Annual Return

Generally speaking, Annual Return is a short review on the current state of the company, which is prepared by the company secretary annually. As a rule it includes the following information:
  • Incorporation information (registration date, registered address);
  • Information about directors and their resignation;
  • Information about secretaries and their resignation;
  • Information about registered capital, nominal value of shares and amount of issued shares;
  • Information about shareholders and share transfer.

Turkish companies are not required to prepare and file annual return.

Tax Returns

The corporate tax return must be filed between the 1st and 25th day of the month after the end of the company’s accounting period. Corporate income tax is payable by the end of the month in which the tax return is due (i.e.by the end of April for companies using the calendar year). Tax returns are required to be filed even if there was no activity in company.
Delay interest (currently 1.4%) is charged for the period between the date the tax was due and the date of assessment. Procedural penalties are imposed for failure to submit tax return on time, failure to properly keep statutory accounts, failure to comply with statutory accounting principles and failure to have the statutory books notarized on time.

International law relations

Двигайте таблицу
Party to the Hague Convention (Apostille) Legal system Double tax treaties network OECD member Offshore/onshore status according to the RF laws
Yes civil law 87 Yes No

Public authorities and legal acts

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List of laws and regulations
Act name Scope of law
Law 4054 Competition Act 1994 competition
Law for Foundations (1935) foundations
Law on Associations associations
Tax treaties entered Albania, Algeria, Australia, Austria, Azerbaijan, Bahrain, Bangladesh, Belarus, Belgium, Bosnia and Herzegovina, Brazil, Bulgaria, Canada, China, Croatia, Czech Republic, Côte d'Ivoire, Denmark, Egypt, Estonia, Ethiopia, Finland, Former Yugoslav Republic of Macedonia, France, Georgia, Germany, Greece, Hungary, India, Indonesia, Iran, Ireland, Israel, Italy, Japan, Jordan, Kazakhstan, Korea (Republic of), Kosovo, Kuwait, Kyrgyzstan, Latvia, Lebanon, Lithuania, Luxembourg, Malaysia, Malta, Mexico, Moldova (Republic of), Mongolia, Montenegro, Morocco, Netherlands, New Zealand, Norway, Oman, Pakistan, Philippines, Poland, Portugal, Qatar, Romania, Russian Federation, Saudi Arabia, Senegal, Singapore, Slovakia, Slovenia, Somalia, South Africa, Spain, Sudan, Sweden, Switzerland, Syrian Arab Republic, Tajikistan, Thailand, Tunisia, Turkey Republic of Northern Cyprus, Turkmenistan, Ukraine, United Arab Emirates, United Kingdom, United States, Uzbekistan, Viet nam, Yemen
Tax Exchange Information Agreement (TEIA) Bermuda, Gibraltar, Guernsey, Isle of Man, Jersey
List of state regulatory authorities
Ministry of Foreign Affairs http://www.mfa.gov.tr/default.en.mfa
Ministry of Finance http://www.maliye.gov.tr/
Ministry of Industry and Trade http://www.sanayi.gov.tr
Ministry of Justice http://www.justice.gov.tr/
Ministry of Culture and Tourism http://www.kultur.gov.tr/?_dil=2
Investment Support and Promotion Agency http://www.invest.gov.tr/en-US/Pages/Home.aspx
Revenue Administration http://www.gib.gov.tr/en
Banking Regulation and Supervision Agency http://www.bddk.org.tr/WebSitesi/English.aspx
Turkish Trade Registry Gazette http://www.ticaretsicil.gov.tr/english/
Central Bank of the Republic of Turkey http://www.tcmb.gov.tr/wps/wcm/connect/tcmb+en/tcmb+en
International Investors Association http://www.yased.org.tr/en
Turkish Patent Institute http://www.turkpatent.gov.tr/TURKPATENT/?lang=en
Undersecretariat of Treasury http://www.treasury.gov.tr/en-US/MainPage
Ministry of Customs and Trade http://english.gtb.gov.tr/

    Legal Partner of Review:

    OZBEKCPA

    OZBEKCPA is an independent certified public accounting and consulting firm founded in 2002 and based in Istanbul, Turkey. We specialize in providing a wide range of services to small, medium and large sized companies looking to strengthen and expand their presence in Turkey. Our primary services are focused in the following areas: accounting & financial management services, business start-up services; human resources; management consulting services, etc.

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