Turkey: A Strategic Jurisdiction for Company Establishment

Turkey, a country straddling both Europe and Asia, has grown into a significant regional economic player. With a population ofover 85 million people, its dynamic economy, cultural richness, and strategic location between key markets in Europe, the Middle East, and Central Asia make it an attractive jurisdiction for foreign investors seeking to establish acompany.

Tax Rates in Turkey

Turkey offers a competitive corporate tax regime. The standard corporate income tax rate in Turkey is 25% for 2023. However, this rate is expected to revert to 20% in the future, as part of Turkey's ongoing tax reforms.

Additionally, Turkey has numerous double tax treaties with over 80countries, allowing businesses to benefit from reduced tax rates or exemptions on dividends, royalties, and interest payments made to foreign entities. Value Added Tax (VAT) in Turkey ranges from 1% to 18%, with the general VAT rate set at 18%. Reduced VAT rates apply to certain goods and services, such as basic food items, health services, and education.

For businesses operating in certain industries or regions, Turkey also provides incentives such as free trade zones (with tax exemptions), and R&D incentives for technology companies.

Banks for Account Opening

Turkey has a well-developed and stable banking sector with a blend of local and international banks. Opening a corporate bank account is an important step when establishing a business in the country. Some of the major banks that offer corporate banking services include: Türkiye İş Bankası (Isbank), Garanti BBVA, Ziraat Bankası, Akbank, Halkbank.

To open a business account, companies are required to provide standard documentation, such as the certificate of incorporation, details of company shareholders and directors, proof of registered address, and other relevant documents. Turkish banks also offer services in multiple currencies, facilitating international transactions.

Other Advantages of Turkey as a Jurisdiction for Company Establishment

1. Strategic Location: Turkey’s position between Europe and Asia offers unparalleled access to key markets. Istanbul, the country’s largest city, is a major global hub for trade and logistics, making Turkey an excellent gateway for businesses seeking to expand into both European and Middle Eastern markets.
2. Growing Economy: Turkey has one of the largest economies in the world, with strong growth potential in key sectors such as construction, manufacturing, tourism, agriculture, and technology. In recent years, Turkey has invested heavily in infrastructure and development projects, further enhancing its business environment.
3. Ease of Company Incorporation: The process of setting up a company in Turkey is relatively straightforward. The primary type of company formed by foreign investors is the Limited Liability Company (LLC), which requires at least one shareholder and one director. The incorporation process can usually be completed in 5 to 7 business days.
4. Skilled Workforce: Turkey has a large, young, and educated workforce. With numerous universities and vocational institutions producing a constant stream of qualified professionals, businesses have access to a pool of skilled labour across various industries.
5. Government Support & Incentives: The Turkish government offers a wide range of incentives to attract foreign investment. These include tax breaks, customs duty exemptions, and cash grants for investments in certain sectors such as manufacturing, technology, and renewable energy. Companies established in Turkey’s Free Trade Zones (FTZs) benefit from full tax exemptions on corporate income and VAT.
6. Legal Framework: Turkey has a well-established legal framework based on civil law principles. The country has also implemented numerous reforms to make its business environment more transparent and investor-friendly. In addition, Turkey has extensive legal protections for intellectual property and enforces global standards for corporate governance.

In conclusion, Turkey is a strategic and dynamic jurisdiction for company establishment, offering businesses a combination of competitive tax rates, a stable and developed banking system, and a highly skilled workforce. Its geopolitical location and favourable trade agreements provide companies with opportunities to expand into multiple regions, including Europe, the Middle East, and Central Asia.

With a streamlined incorporation process, government-backed incentives, and a growing economy, Turkey is a solid choice for entrepreneur sand investors looking to establish a foothold in an emerging market. Whether you are looking to invest in manufacturing, technology, or any other sector, Turkey offers a supportive environment for business growth.