Your guide to doing business in Turkey
Between the Black Sea and the Mediterranean Sea, Turkey represents a gateway to Europe and Asia, with no less than 8 international neighbours - including Greece, Bulgaria and Georgia, and Iran, Iraq, and Syria. While a historic political power in the region, Turkey emerged economically in the early 21st century: by 2010 a period of strong growth and modernisation had made it the 16th-largest economy in the world. Turkey’s modern business environment is keen, dynamic and competitive, and the country enjoys a liberal trade relationship with the European Union and other key international partners. Important industries in Turkey include textiles, energy and utilities, construction, tourism, and automotive manufacturing (in fact, the country accounts for over 7% of Europe’s total car production). With strong economic growth over the past decade, and ongoing restructuring of the banking sector, Turkey is emerging as a business hub: it is a charter-member of the UN, a member of NATO, and an associate member of the European Economic Community. In 2018, Turkey was ranked 60 on the World Bank’s Ease of Doing Business Survey.
Why invest in Turkey?
There are plenty of reasons to target Turkey as an investment destination:
The Turkish government welcomes inward investment from foreign multinational corporations. Government policy including low levels of taxation and attractive incentives provide a welcoming environment for investors. Turkey has a developed infrastructure and stable political environment that further supports investment opportunities.es.
The main goal of the New Turkish Commercial Code (TCC) is to develop a corporate governance approach that meets international standards; to foster private equity and public offering activities; to create transparency in managing operations; and to align the Turkish business environment with EU legislation, as well as for the accession process.
A legal entity must be established in Turkey in order to process a payroll.
Turkey's regulatory environment is extremely business-friendly. You can establish a business in Turkey irrespective of nationality or place of residence.
It is possible to establish a company in a single day by applying to the relevant trade registry office with the required documents. The company is established once the founders declare their intent to set up a joint stock company in the articles of association, which have been issued in accordance with the law, and where they, with their notarized signatures, unconditionally acknowledge and undertake to pay the whole capital. The company receives its “legal entity” status upon registration with the trade registry.
Types of Companies
Incorporated companies include:
Joint Stock Company: The Company’s stock capital is divided into shares and the liability of the shareholders is limited to the subscribed capital and paid by the shareholder. At least one shareholder (real person or legal entity) and a minimum capital of TRY 50,000 are mandatory. The mandatory company shall include a general assembly and a board of directors.
Limited Liability Company: It is a company established with at least one shareholder (real person or legal entity) and the liability of the shareholders is limited to the subscribed capital and paid by the shareholder. A minimum capital of TRY 10,000 is mandatory.
Commandite Company: It is the company established to operate a commercial enterprise under a trade name. Whereas the liability of some shareholders is limited to the capital subscribed and paid by the shareholder (commanditer), for some shareholders there is no limitation of liability. Legal entities can only be commanditer. No minimum capital is required. The rights and obligations of the shareholders are determined by the articles of association.
Collective Company: It is the company established to operate a commercial enterprise under a trade name and, the liability of none of the shareholders is limited only to the capital subscribed and paid by the shareholder. No minimum capital is required. It is mandatory that all the shareholders be real persons. The rights and obligations of the shareholders are determined by the articles of association.
Company Establishment Procedures in Turkey
Three copies of articles of association (one copy original) which are notarized are prepared. Following the notarization of articles of association, within 15 days at the latest and application to the relevant trade registry office with the documents set below is needed.
Documents for the Company Establishment
Registration with the Tax Office
Please note, corporate entities require an office address to be registered with the tax office on the same day or before the registration date. A tax registration number is received and legal books are certified by a Public Notary. The rent contract must be certified by the Notary Public as well as the notarised Circular of Signatory which should be submitted to the related Tax Office.
The registrations of the company for payroll purpose with the Tax and Social Security Institute are completed during the legal entity establishment process.
It is worth mentioning that having the “umbrella service” which some payroll provider’s offer can be a solution for processing payroll without a legal entity in Turkey.
Employee salaries must be deposited into employee bank accounts no later than the agreed pay date. If the foreign bank has a branch in Turkey, it will be easier for the transmission of payment.
Banks are open Monday to Friday and closed on weekends.
Employees in Turkey can work a maximum of 45 hours per week, generally spread over six days of the week so as not to exceed seven and a half hours per day. By mutual consent, weekly working time may be divided differently. Sunday is rest day in Turkey, however some workplaces allow employees to work on Sundays with a permit. Lunch breaks are usually one hour. The official work week in Turkey is between Monday-Saturday.
Turkey lies at the south-eastern edge of Europe, bordered by the Mediterranean and Black Seas, and represents a gateway to the Middle East. The territory known as modern-day Turkey was inhabited for thousands of years by the Greek, Assyrian, Roman and Byzantine Empires - until the Ottoman Empire rose to power in the 14th century and ruled until the early 20th century. After the First World War, the Republic of Turkey was formed in 1923, and the country emerged as a political presence on the world stage as a member of NATO, the UN and the OECD (amongst other international organisations). Proximity to the Mediterranean brings warm, rainy summers to Turkey, and cold, rainy winters, while the eastern edge of the country can experience extreme cold and harsh winters. Turkey’s coastline and beach resorts are beautiful and popular holiday spots, and draw millions of tourists each year.
Full Name: Republic of Turkey
Population: 82 million (World Bank, 2019)
Major Language: Turkish
Monetary Unit: Turkish Lira
Main Exports: Clothing and textiles, fruit and vegetables, iron and steel, motor vehicles and machinery, fuels and oils
GNI per Capita: US $9,610, (World Bank, 2019)
Internet Domain: .tr
International Dialling Code: +90
Good morning sabah iyi
Good evening iyi geceler
Do you speak English? İngilizce biliyor musunuz?
Good bye elveda
Thank you teşekkür ederim
See you later sonra görüşürüz
The tax year runs from 1st January to 31st December. While employee cumulative tax bases start from zero at the beginning of the year, social security bases do not.
Monthly income tax contributions are due on the 26th of the following month (the same day the declarations are due). Late payments are subject to penalties.
Tax is withheld from employee gross income (cash or in kind) earned by the employee in return for employment in any given calendar year.
As of 1st July 2020, income tax withheld from employee earnings and the SSI premium contributions will be combined in a single form (WITHHOLDING TAX AND MONTHLY PREMIUM SERVICE DOCUMENT) and submitted online to the tax office by the 26th of the following month. This new process is called the MUHSGK.
Monthly social security contributions (E-Declaration) must be submitted as per above method by the 26th of the following month and premium contribution amounts must be paid by the last day of the following month. SSI contributions are paid to the SSI office.
Late submissions and payments will be penalised.
A government incentive of 5% is given to companies for the continued employment of regular employees under law number 5510. Companies who do not pay their premiums by the due date will lose this incentive for the month of the late payment.
All reporting in Turkey is done monthly. There are no additional quarterly or year-end procedures.
The employer must notify authorities of new starts immediately by submitting a notice of employment. The registration for a new start should be filed online on the SSI (Social Security Institution) registration website. The new employee should be registered one day before their start date (working day) at the latest. The employees cannot be paid legally without registration; it can take up to a month and a half for all of the registrations to be completed.
Expat new-starts are required to provide the following documentation:
All leavers should receive their final pay on their termination dates. Some employers form an agreement with their departing employees to make the final payment on a date other than termination. Whilst this is generally frowned upon, it is a common practice among employers.
Employee terminations must be reported within 10 days by filling in the online form on the SSI portal.
By mutual agreement, both parties can terminate the employment if it is an open-ended employment contract, under the condition that the required notice period is given. The notice period will depend on the number of months the employee has worked for a company.
Notice periods can be substituted by payment in lieu. The employer may terminate the employment contract by paying in advance the wages corresponding to the term of notice. Under certain circumstances, the employer and employee can terminate the employment agreement without notice.
It is legally acceptable in Turkey to provide employees with online payslips upon the receipt of written approval from the employee.
The retention period for payroll data is 10 years.