Business in Turkey | Advantage and Disadvantages | HauzBiz

Advantage and Disadvantages of Business in Turkey

Advantage

Find the advantages of business in Turkey

1. Incorporating a foreign business in Turkey is simple as:

  • The Limited Liability Company in Turkey can be incorporated within a short span of two weeks. Any foreign business that wants to incorporate its company in Turkey just needs at least 1 shareholder and 1 director of any nationality.
  • The company established in Turkey can be fully owned by a foreign company.
  • There is no major requirement for share capital but the company for incorporation should have at least €1,850. Clients intending to establish company need not be personally present in Turkey for the incorporation.

2. The foreign company established in Turkey are exempted from all taxes as it is offering Free Zone:

  • A company incorporated in Turkey under the Free Zone act need not make any payment for the Corporate Tax, Value Added Tax or Customs Duty;
  • Foreign companies registered under the free zone can return the profits freely to the parent company.

3. In the entire Europe region, Turkey has the potential to be the fastest growing economy:

  • Within a short span of 10 years (2002-2012) Turkey has turned into one of the fastest growing economies in the world with threefold GDP.
  • From 2012-2017, Turkey’s economy is expected to grow further in Europe. With the help of an organized investment plan of Foreign Direct Investment (FDI) Turkey is expected to get €91 billion of investment. As per the FDI Confidence chart, Turkey ranks at the 13th position for the most attractive location for foreign investment.

4. Turkey offers simple import/export of goods as:

  • It has huge railway routes to European and Asian regions as well as a direct route to China which is under planning in the next decade;
  • Turkey located between the two major continents, i.e. Asia and Europe, which ultimately reduces transport costs of the companies registered in Turkey;
  • Turkey also has the best cost-effective sea route and operational infrastructure which enables faster shipment of goods across Europe region.

5. With several benefits and advantages for foreign investors, Turkey offers lucrative platforms as;

  • With around 27 million population of Turkey below the age of 25, foreign companies intending to invest in Turkey have huge potential to choose highly skilled and unskilled labor for their business.
  • Every year around 600K of fresh graduates pass out from the Turkish Universities enabling foreign companies to choose fresh talents and groom them as per the business requirements.
  • As per the recent study by an international organization namely ‘Doing Business Study By International Finance Corporation’ has rated Turkey at the 20th rank in the world for offering a protective environment for the foreign investors.
  • The country is listed above the average of OECD in almost every facet that offers stringed protection to the investors and upgraded business policies have made Turkey a much more safe zone investment;
  • The organized legal system in Turkey has a better average than other countries in Europe by resolving disputes and contracts settlements within 4 months quicker than the European average and enforces property rights throughout the country;
  • Turkish company registration policy does not require entrepreneurs to provide their personal information to be showcased in public records allowing a higher level of privacy;
  • Turkey is comparatively an economic country in Europe. The rental charges for entire office space or apartment in Turkey is almost 1/6th of the total cost London.

Disadvantages

Find the disadvantages of business in Turkey
  • The rate of corruption in Turkey is pretty high and it has been listed at 66th position in the world as per the ‘Corruptions Perception Index by Transparency International’ in the year 2015;
  • Every foreign company incorporating in Turkey requires a local bank account and it can be cumbersome process due to the majority of businesses open their branch/headquarters in Turkey to leverage the benefits. So not all company bank account applications are approved by the banks (Normal on all the world). However, due to a strong relationship with the bank and regular business dealings, AbroadBiz has professional connection and experience with several banks in Turkey. We can support you in every process to get a bank account opened without any hassles.
  • Choosing to opt for the legal system of Turkish to resolve contract disputes can be a costly affair compared to other European countries.
  • Turkey holds a very low rank of 50 with regards to the English proficiency index. Business owners incorporating a business in Turkey will have to communicate in local Turkish language or hire professional translators so that they can manage their business.
  • Construction business can be an annoying segment in Turkey as it requires a variety of prior permits. Business owners who are planning to incorporate or invest in construction business should be prepared to follow long processes, permissions, approvals, costs, and permits.
  • Turkey has a bad reputation when it comes to resolving insolvency of the company as it has one of the most difficult and challenging processes. The average time taken is around 3.3 years which is double the time taken as per the OECD average. The rate of insolvency (22 cents/dollar) is also pathetic in Turkey compared to other countries in the world;
  • The country also has bad standing with the FATF and it has been listed as the high-risk country.

Why Invest in Turkey

Find the disadvantages of investing in Turkey

Choosing to establish a foreign company in Turkey is a great platform to save global profits by reducing international tax liabilities as:

  • All income on the dividends from various sources are completely exempted from tax;
  • Income received from selling the shares of a foreign company established in Turkey is exempted from tax;
  • The import and export duties implied is 0% as per the free trade agreements signed by Turkey with 22 countries;
  • Companies established in Turkey are exempted from the capital gains tax based on the terms and conditions that the assets had been held for a minimum of 2 years;
  • Companies can enjoy the benefit of withholding tax in Turkey as it has signed treaties with more than 76 international double tax.
  • Many companies establish their headquarters in Turkey to get an exemption from tax for the funds extracted from European subsidiary companies as royalties, dividends or management fees.
  • Any foreign company that is established in Turkey with at least €250,000 share capital can gain tax advantages along with:
  • Company registered in turkey can be eligible for partial exemptions on corporate tax and up to 50% on the rates;
    For starting 10 years from the company incorporation, Turkey allows an exemption on withholding tax.

The country of Turkey offers a great platform for investment to companies from various business segments which includes:

  • offers a rapidly growing business segment with a growth rate of 325% from 2002. Companies investing in Turkey can expect best quality infrastructure and simple procedures for growing their reach
  • Offers a booming $350 billion agriculture market;
  • Offers constantly growing steel industry across Europe region which is now charted at the 10th position in the world;
  • Offers strong business segments like Transportation, Energy, and Telecommunication which is at par with several developed countries and ready investments from Turkey government

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