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 provides a welcoming environment for investors. Turkey has a developed infrastructure and stable political environment that further supports investment opportunities.
A legal entity must be established before a payroll can be run in Turkey.
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 Turkey 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 such as:
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 that 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.
Further information on the tax and social system in Turkey can be found via the following governmental websites: -
Since 1 June 2016, workplaces employing five or more must pay employees’ wages through banks. Employee wages should be paid at the establishment, or should be deposited into a specially opened bank account.
Transmission of wage payments may be easier if the foreign bank has a branch in Turkey.
Banks are open five days a week, taking Saturday and Sunday as rest days.
Working days in Turkey run from Monday to Friday. Working hours for commercial offices are 0730 or 0830 to 1730 or 1830. Lunch breaks are usually one hour.
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: 81 million (2018, DataAssist)
Major Language: Turkish
Major Religion: Islam
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 $10,410 (World Bank, 2011)
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.
There is no requirement for a third party to be licensed in order to make any tax and/or social security filings on behalf of a client.
Monthly income tax contributions in Turkey are paid on the 23rd of the following month. The penalty for late submission and payment of the tax and social security contribution is calculated as per the following formula:
Number of Employees * 1071 (minimum wage) * 1/10
From July 2018, the reporting process for employee income tax and SSI premium contributions has been streamlined into a single form known as the Withholding Tax and Monthly Premium Service Document. This document is submitted to the tax authority online - by the 23rd of the month following payroll. Workplaces in Kırşehir, Amasya, Bartın and Çankırı Provinces will continue on with a combined declaration.
Monthly social security contributions (E-Declaration) should be submitted on the 23th of the following month and should be paid at the end of the month.
All reporting in Turkey is done monthly. There are no additional quarterly or year-end procedures.
New Social Security Institution (SSI) registration
Declaration of Missing days
E-Declarations (Social Security – 23rd of the month)
Employers in Turkey must notify authorities of new starts immediately by submitting a notice of employment. The registration for a new start in Turkey should be filled online on the SSI registration website. The new employee should be registered one day before their starting day (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:
There is no specific time in which a leaver should receive their termination pay. This should be detailed in the contract (agreement) between the employer and the employee. The employer should forward the employee’s declaration of departure from work to authorities. This has to be done within 10 days after the termination date.
It is possible to substitute payment in lieu of notice: employers may terminate employment contracts by paying in advance wages corresponding to notice periods. Under some circumstances, employers and employees may terminate employment agreements without notice.
The payroll process in Turkey involves certain withholding obligations: essentially, employers must ensure tax and social security contributions are withheld from employee salaries at the end of each pay-cycle.
Income tax in turkey is progressive, and charged at a rate of 15% up to 14,800 TRY, 20% up to 34,000 TRY, 27% up to 120,000 TRY, and 35% for earnings over 120,000 TRY
Residency status is an important factor when calculating income tax: ‘residents’ are charged on both Turkish and worldwide income, while ‘non-residents’ are charged only on income sourced from within Turkey.
Employers in Turkey must provide their employees with a payslip for each pay-cycle - although these may be delivered online (with employee permission). Payroll reports must be maintained for a minimum of 10 years.
Given the complexity of Turkey’s payroll regulations, foreign businesses may wish to engage a payroll service producer to implement a global payroll solution which accommodates their employees in Turkey and other international territories.