The Republic of Turkey is a democratic, secular and social state governed by the rule of law (Constitution Art. 2). Turkish laws are made by the Turkish Grand National Assembly. Turkey adapted many western laws such as civic code from Switzerland in 1926. Therefore, generally Turkish laws are familiar to western laws. Turkish government provides equal treatment for domestic and foreign companies. Foreign investors dispute settlement either in local courts or international arbitration bodies.
Foreign Exchange Legislation
According to legislation, foreigner can carry out commercial activities in Turkey. Different legally possible business forms under the Turkish Commercial Code are listed below.
The Legal Forms
According to legislation, foreign can make commercial activities in Turkey. Different business forms are possible to Turkish Commercial Code these are below.
Merchants: Single Proprietorship
Commercial Partnership: Joint Stock Company: The Company’s stock capital is divided into shares and the liability of the shareholders is restricted with the capital subscribed by the shareholder. At least 5 shareholders (real person or legal entity) and minimum capital of 50.000 TL is mandatory. Limited Company: Participation of minimum 2 and maximum 50 real person or legal entities. The liability of the shareholders is restricted only to the capital subscribed by the shareholder. However, limited company partners are responsible for tax debts of the company in some situations. Minimum capital of 5000 TL is mandatory. Unlike Joint stock companies no stock certificate is issued. Collective Company: This is an association which has been established with the purpose of engaging in commercial activities under a common trade name. Its most important characteristic is the unlimited liability of the partners for the debt of the association. No minimum capital is required It is mandatory that all shareholders should be real person. Commandite Company: In this form of business company, some of the partners are liable for the association’s debts in the amount of capital which they contributed, while the other partners have unlimited liability. Those partners with unlimited liability are called active partners (commandite) and those with limited liability silent partners (commanditer). Legal entities can only be commandite. No minimum capital is required
Co-operative Association: This is a business association established by persons who want to jointly supply various needs connected with their professions, crafts and livelihoods. Such an association is based on the principle of mutual help and surety ship. Arrangements related to co-operative associations are governed by the Co-operatives Law. Foreign owned Turkish companies are treated as Turkish companies.
Branch: Also foreigners can open a branch to make commercial activities in Turkey. No minimum capital is required for branches. Branch manager is responsible for taxation activities. Mother company is also responsible for branch activities. Branches are accepted as a part of foreign entity.
Liaison (representative) office: a foreigner can open a liaisons office inside Turkey. Liaison office cannot conduct commercial activities. Also they cannot be a partner of Turkish companies. Their functions are to do market research, purchasing agreements, monitoring dispatch etc. To open liaison office, permission is necessary from Undersecretariat of Treasury. Employees who work in liaisons offices have tax exemption for salaries that they get outside of Turkey (ITC article 23/14). However employers have to pay their social security taxes for employees.