Can Foreigners Establish A Company In Turkey?
Is There Any Difference Between Foreigners and Turkish Citizens with Establishing Company in Turkey?The answer is “No”. According to “Foreign Direct Investment Law” numbered 4875 in Turkey, in line with the principle of equal treatment, foreign investors have the same rights as the local investors. This law stipulates that foreign investors may establish all types of companies stipulated in the Turkish Commercial Code, same as the Turkish investors.
TRADE REGISTRY PROCEDURES[email protected]).
TAX OFFICE TRANSACTIONSAfter the company is registered to the Chamber of Commerce, a certificate of approval obtained from the Chamber of Commerce must be certified by the notary public. The person to apply to the notary must be the Chairman of the Board of Directors authorized to carry out the transactions of the company and, if there are any, the other members of the Board of Directors. After these procedures are finalized, the Tax Office to which the company is attached will send a government officer to the address specified in the company’s articles of association in order to verify the existence of the company. The documents to be checked by this officer must include: if the proxy is present during the inspection, their power of attorney and the “Trade Registry Certification” issued by the Chamber of Commerce indicating the establishment of the company. Following this inspection made by the Tax Office, the legal existence of the company is accomplished.
- Joint stock companies can be established with one person.
- Members of the Board of Directors can be recruited from outside.
- It is possible for the company to go public.
- Joint stock companies are more prestigious in terms of organization and corporate identity.
|Joint Stock Company||Limited Liability Company|
|Minimum Capital||It is established with a minimum capital of 50,000 TL||It is established with a minimum capital of 10,000 TL.|
|Number of Partners||It can be established with one person. There is no limit on the number of partners.||It can be established with one person. The number of partners cannot exceed 50.|
|Nominal Value of The Share||The nominal value of each share is at least 1 kuruş.||The nominal value of each share is at least 25 TL.|
|Registered Capital||It is possible to switch to this system at the company establishment or later.||The registered capital system is not applicable.|
|Going Public||It is possible to make the company public.||It is not possible to make the company public.|
|Bond Issuance||Can issue bonds||Cannot issue bonds|
|Management Right and Representation Authority||It is not mandatory for the company partners to be on the board of directors.||At least one partner must be a manager.|
|Attendance of the Ministry Representative to the General Assembly Meetings||The attendance of the ministry representative to the general assembly meetings is obligatory in case of decision on the following matters: – At all general assembly meetings of companies whose establishment and articles of association amendments are subject to the permission of the Ministry, In other companies, – increasing or decreasing the capital, – transition to the registered capital system and exit from the registered capital system, increasing the registered capital ceiling – amendment of the articles of association regarding the change of the subject of activity – merger, division or change of species||Ministry representative do not attend the general assembly meetings.|
|Issuance of Shares||It is mandatory to print share certificates (Provisional certificates may be issued until the printing of shares).||Registered share certificates may only be issued only for the purpose of proving the partnership. They do not provide for tax advantages as in joint stock companies.|
|Transfer of Shares||– Bearer share certificates, only by delivery (with the transfer of possession); – Registered share certificates or provisional share certificates are transferred by endorsement and delivery. There are no obligations of transfer before notary public, approval of the general assembly and registration in the trade registry.||It is obligatory that the share transfer is completed via a notarized transfer agreement, that the general assembly approved the transfer and that the transfer is registered to the trade registry.|
|Taxation in Share Transfer for Natural Persons||Earnings arising from the sale of shares held for more than two years after this period are not subject to income tax. In addition, the cost value in the sale of shares is determined by increasing the rate of increase in the wholesale price index. In order to make this indexing, the rate of increase must be 10% or more.||Regardless of the time limit, the income from the share transfer is subject to income tax in any case. In addition, the cost value in the sale of shares is determined by increasing the rate of increase in the wholesale price index. In order to make this indexing, the rate of increase must be 10% or more.|
|Taxation in Share Transfer for Legal Entities||VAT does not arise in the share transfer, provided that there is a provisional certificate or a share certificate. 75% of the profit to be obtained in the sale of the shares held for at least two years will be exempted and 25% will be taxed.||VAT is not levied on the sale of shares held for at least two years. 75% of the profit to be obtained in the sale of the shares held for at least two years will be exempted and 25% will be taxed.|
|Responsibility for Public Debt||The shareholders of the company are not liable for the public debts that cannot be collected from the company. However, if the shareholder is also on the board of directors, he has unlimited responsibility. Legal representatives (if the authority of representation has not been given to third parties as a managing member or manager, the board of directors; if the authority of representation has been given to third parties, these persons) are responsible for all the public debts with their public assets. The shareholder who is not a member of the board of directors is not liable for tax and social security premiums (4 / a) that cannot be collected from the company. For this, the entire capital must have been paid. The chairman of the board of directors can be appointed externally, there is no obligation for the chairman to be a shareholder. In this way, this is a possibility to be not held personally liable which is especially important in tax offenses that require smuggling penalties.||The shareholders are held liable for the public receivables that cannot be collected from the company in proportion to their capital share contributions. Legal representatives (shareholder / shareholders or third parties who act as managers) are liable with their personal assets. Shareholders are responsible for the company’s tax and social security (4 / a) premium debts that cannot be collected from the company and the manager with all of their personal assets. Company shareholders are responsible not only with the amount of capital they contributed, but also for the rate of capital. For example, if the company’s capital is 10 thousand but its tax debt is 100; the responsibility of the shareholder with 50% of the shares is 50 thousand. If this is a shareholder manager, he is responsible for the entire debt.|
|Meeting and Resolution Quorum in Articles of Association Amendments||Where shareholders holding half of the company capital are present at the meeting, majority of votes is required for a resolution.||Decision of the shareholders representing two thirds of the company is required.|
|Bookkeeping||Mandatory ledgers: journal, general ledger, inventory, company stock ledger, general assembly meeting and negotiation book, board of directors resolution ledger.||Mandatory ledgers: journal, general ledger, inventory, company stock ledger, general assembly meeting and negotiation ledger. The decisions of the Board of Directors / Managers can be recorded in the general assembly meeting and negotiation ledger, or in a separate ledger of board of directors.|
- Since the transfer of shares will be a “transfer of shares” of the joint stock company, the transfer is not subject to stamp duty and fees.
- The transfer is not required to be made before a notary public.
- In terms of income tax, if the limited liability company is converted into a joint stock company and a “share certificate” or a “provisional certificate” is printed immediately afterwards, the acquisition date of the share certificate or the provisional certificate is accepted as the “date of establishment of the limited liability company.” In addition, there is no income tax two years after the acquisition date.