Turkey

Economic and Legal Climate

Turkey, located at the crossroads of Europe and Asia, offers a dynamic and rapidly growing business environment characterized by a diverse economy, strategic location, and a young, skilled labor force. The country has strengths in sectors such as manufacturing, textiles, automotive, electronics, tourism, and agriculture. Turkey’s legal system is based on civil law, and the government has been implementing various reforms to create a more business-friendly environment and attract foreign investment.

Official Languages

The official language of Turkey is Turkish. While English is widely spoken in business circles, especially in larger cities and among the educated population, proficiency levels can vary. Engaging local legal and business experts who are fluent in Turkish is advisable for international investors.

Banking System

Turkey has a well-developed and regulated banking system overseen by the Banking Regulation and Supervision Agency (BRSA) and the Central Bank of the Republic of Turkey (CBRT). The country hosts a variety of local and international banks offering comprehensive financial services. The banking sector is known for its stability, innovation, and strong regulatory standards, supporting both domestic and international business operations.

Maintenance Costs

Maintenance costs for companies in Turkey are moderate. Annual compliance requirements include renewing business licenses, filing tax returns, conducting audits, and maintaining proper accounting records. These processes are relatively straightforward but can involve some administrative efforts and costs, generally manageable with the assistance of local professionals.

Setting Up Costs

Setting up a company in Turkey involves several costs, including incorporation fees, legal fees, and registration with the Turkish Trade Registry. The process includes drafting the company’s articles of association, obtaining a tax identification number, and registering for VAT if applicable. The incorporation process is efficient and can typically be completed within a few weeks if all documentation is in order.

Corporate Tax Rate

Turkey offers a competitive corporate tax regime with a standard corporate tax rate of 23% on taxable profits, which is set to decrease to 20% in the coming years. Additionally, the country provides various tax incentives and deductions for investments in specific sectors, particularly in technology, renewable energy, and R&D, enhancing tax efficiency for businesses.

Territorial or Non-Territorial Principles

Turkey operates a worldwide tax system, meaning resident companies are taxed on their global income. However, extensive double taxation treaties and incentives are available to help mitigate the impact of double taxation and enhance tax efficiency for foreign investors.

Currency Regulation

Turkey imposes some regulations on foreign exchange transactions to maintain economic stability. The currency used is the Turkish Lira (TRY). While the regulatory framework supports international trade and investment, engaging local experts can help navigate any specific currency regulations.

Advantages of Setting Up a Company in Turkey

1. Strategic Location: Turkey’s location provides access to markets in Europe, Asia, and the Middle East.
2. Diverse Economy: A wide range of sectors with significant business opportunities, including manufacturing, textiles, automotive, and tourism.
3. Competitive Labor Costs: Access to a cost-effective and skilled labor force, particularly in sectors such as manufacturing and technology.
4. Government Incentives: Various tax incentives and support programs for investments in priority sectors and economically disadvantaged regions.
5. Growing Market: Emerging market with significant potential for growth in various sectors.

Disadvantages of Setting Up a Company in Turkey

1. Bureaucratic Complexity: Navigating Turkey’s regulatory and bureaucratic landscape can be challenging and time-consuming.
2. Economic Volatility: The Turkish economy has experienced fluctuations in recent years, which may present risks for some investors.
3. Language Barrier: While English is widely spoken, proficiency in Turkish is essential for many legal and administrative matters, necessitating local expertise.
4. Political and Economic Stability: While improving, Turkey has faced political and economic challenges, which may present risks for some investors.

Conclusion

Turkey offers a unique environment for setting up a company, with its strategic location, diverse economy, and competitive labor costs. Despite challenges such as bureaucratic complexity and economic volatility, the overall advantages make Turkey a compelling choice for international investors. Global Expand can assist you in navigating the complexities of setting up a company in Turkey, ensuring a smooth and successful entry into this dynamic and rapidly evolving market.