Legal side of doing business in Turkey

If you are doing or thinking to start a business in Bodrum Gumbet or Yalikavak this might be good information for you. Istanbul will be holding an important international event next week, the 2nd Turkey-World Trade Bridge, held by the Turkish Confederation of Businessmen and Industrialists (TUSKON). Thousands of businessmen from every corner of the globe will meet in Istanbul in order to seek business opportunities.

In my contribution to the enthusiasm of this event, today I would like to give a concise legal guide for doing business in Turkey. This article will also answer the potential questions of foreign businessmen and foreign companies planning to do business in Turkey.
Turkey, a country fully integrated to the global economic system, is an investor-friendly legal environment for foreign investors. After passing numerous laws, especially in the last 10 years, to comply with the rules and regulations of the EU (acquis communautaire), Turkey has become even more attractive for investors who request safer harbors with relatively higher yields.

The most frequent company types in Turkey are limited and joint stock companies.

A Turkish limited liability company can be founded by two real or legal persons with at least TL 5,000 (equivalent to around $3,000) in capital. Limited companies are usually family-run businesses.

To form a joint stock company, five real or legal persons must put up at least TL 50,000 (around $30,000) in capital. Joint stock companies are usually more public and run by professionals.

For both kinds of companies, only one-fourth of the capital must be paid in the first three months; it is also possible to make a contribution in kind.

For financial institutions such as banks or insurance companies, there are different requirements such as higher minimum capital, licenses to be obtained from the relevant authorities and other capital adequacy ratios stipulated by the Basel Accords.

As the company itself is a separate legal person, the shareholders of the company, either limited liability or joint stock, can only be held liable for the share capital they have subscribed to the company.

Is it a must to have a Turkish shareholder in a Turkish company?

Obviously, there is no need to have a partner who has Turkish citizenship in order to establish a company of any sort in Turkey. Foreign nationals have no disadvantage against Turkish citizens in relation to establishing a company or doing business in Turkey.

Foreign companies can also promote their business by opening liaison offices in Turkey. The main difference between a branch and a liaison office is that the liaison offices cannot carry out any activity through their offices in Turkey to generate revenue. Another difference is that the expenditures of a liaison office must be met entirely from foreign currency brought in from abroad. Liaison office permits are granted for a period of up to three years, and extensions must be applied for at the end of each period or permit.

What about the tax system?

If we look at the major transaction taxes to be paid in Turkey, the most important one is the Value Added Tax (KDV), which varies from 1 to 18 percent. However for most products it is 18 percent. It is possible to deduct the KDV collected on sales from the KDV paid on purchases.

There is also a Special Consumption Tax (ÖDV) on petroleum products, automobiles and other vehicles, tobacco products and luxury products. The ÖDV rate differs for each group of products.

There are also property taxes for buildings and land owned along with stamp tax, which is applied to many kinds of documents such as agreements, financial statements, etc. There are also some taxes that can be classified as withholding taxes, which aim to secure the collection of taxes.

All in all, we believe that the efforts by NGOs such as TUSKON are important to fostering not only trade between nations but also cultural interaction.

Berk Cektir http://www.berkcektir.av.tr/  The information provided here is intended to give basic legal information. You should get legal assistance from a licensed attorney at law while conducting legal transactions and not just rely on the information in this corner. http://www.todayszaman.com info@berkcektirlaw. Photo by photoexpress.com.