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Can you establish or buy a company in Turkey?
Under the Foreign Direct Investment Law, unless
otherwise stipulated by
international agreements or other specific
laws:
*Foreign investors are free to make Foreign Direct Investments in
Turkey,
*Foreign investors shall be subject to equal treatment with
domestic investors.
The Law defines Foreign
Direct Investments as either
the establishment of a
new company or branch of a foreign company; or share acquisitions,
where the foreign investor owns 10 percent or more of the shares or
voting power, by means of:
i) Assets acquired from abroad by the foreign investor:
Capital in
cash in the form of convertible currency bought and sold by the
Central Bank of Turkey, stocks and bonds of foreign companies
(excluding government bonds), machinery and equipment, industrial
and intellectual property rights.
ii) Assets acquired from Turkey: Re-invested earnings, revenues,
financial claims, or any other investment-related rights of
financial value, commercial rights for the exploration and
extraction of natural resources.
According to the Law, Foreign
Direct Investments shall not be
expropriated or nationalized, except for a public purpose and upon
compensation in accordance with due process of law.
Foreign investors can freely transfer abroad the following:
profits, dividends, proceeds from the sale or liquidation of all or
any part of an investment, amounts arising from licence,
management and similar agreements, and reimbursements and interest
payments arising from foreign loans through banks or
private financial
institutions.
For the settlement of disputes arising from investment agreements
subject to private law and disputes arising from conditions and
contracts made with the administration and under which concessions
concerning public services are granted, foreign investors can apply
either to the authorized local courts, or to national or
international arbitration or other means of dispute settlement,
provided that the conditions in the related regulations are
fulfilled and the parties agree thereon.
Legalities
Turkish Commerce Law No. 6762 determines the basic
criteria for the
establishment of companies and other commercial issues such as
definition of company types, capital requirements, registry etc.
In addition, self-employed people and
employees have to register with
the relevant social insurance scheme. SSK Law No. 506 arranges
social insurance issues regarding employees, whereas Law Nos. 1479
and 2926 make social insurance compulsory for the self-employed and
farmers, respectively.
Labour market arrangements such as labour
contracts, trial and notification periods, employment notices,
awards, minimum wage, fringe benefits, net and gross wages,
vacations, and other workers’ rights are
governed by the Labour Law.
The Unemployment Insurance
Scheme is covered by Law No. 4447.
Unions are established on an industrial basis in line with the
Unions Act No. 2821. Being a member of any union is voluntary and
there is no obligation to make a collective bargaining agreement
for any business or work place.
Collective bargaining agreements are contained
in the Collective Bargaining Agreements, Strikes, and Lock Outs Act
No. 2822. These agreements can be signed between one or more
authorized representatives who can be either an employee’s union
representative or
an employee not registered by any union.
Only a worker who is a member of a union can be covered by collective bargaining
agreements. A labour union can be authorized to negotiate a
collective bargaining agreement if it covers at least half of the
workers in a workplace and least 10 per cent of the workers employed
in that sector are registered to this trade union.
Tax Procedures and Principals Act No. 213 and Law No. 6183
define the general tax principles
applicable in Turkey. The former incorporates
areas such as tax liability, types of
taxation, bookkeeping and valuation methods, liabilities and
contributions, etc. whereas the latter
contains provisions relating to the payment of taxes, late payment penalties and interest to be charged.
Issues regarding the Tax
Courts are covered by the
Administrative Judiciary Procedures Act.
Finally, tax liabilities are determined with respect to the
Corporate Tax Law, Income Tax Law, Stamp Tax Law, VAT
(KDV) Tax Law and
Special Consumption Tax Law.
How to establish a company
Establishing a company in Turkey takes only one day. Please call
020 7580 7272 for advice and help.
What type of companies can be established?
Incorporated companies (joint stock companies, limited companies,
limited partnership companies, collective
companies) and unincorporated companies (joint-venture, business
associations, consortia)
can be established in line with the Turkish Commerce Code.
Joint stock company
The company’s stock capital is divided into shares and the
liability of the shareholders is proportionate
to the capital
subscribed and paid by the shareholder. At least 5 shareholders
(real persons or legal entities) and minimum capital of YTL
50,000 (about £19,000) are necessary.
A general assembly, board of directors and supervisory board
must be formed within the company.
Limited company
This type of company is established by at least 2 and at most 50
real persons (or legal entities) and the liability of the
shareholders is restricted only to the capital subscribed and paid
by the shareholders. Minimum capital of YTL 5,000 (about £1,900) is
required. No stock certificate is issued.
Limited Partnership (Commandite) company
This is a company established to operate a commercial enterprise
under a trade name. The liability of some shareholders is
restricted only to the capital subscribed and paid by the
shareholder (commanditer), other
shareholders are not restricted to the capital subscribed and paid
by the shareholder. Only legal entities
can be commanditers. No minimum capital
is required. The relationship between the shareholders is
designated in the articles of free
association.
Collective company
This is a company established to operate
a commercial enterprise under a trade name.
The liability of none of shareholders is
restricted 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
relationship between the shareholders is designated in the articles
of free association.
Some companies subject to authorisation
However, some types of companies with special legislation such as
-banks
-private finance institutions
-insurance companies
-financial leasing companies
-factoring companies
-holding companies
-companies operating foreign currency exchange offices
-companies dealing with public warehousing
-publicly held companies subject to the Capital Markets Law
-companies that are founders and operators of free zones
-electricity, gas, petroleum generation, trading and distribution
companies
-telecom companies
are subject to authorisation from the relevant authorities.
Are you allowed to work in Turkey?
You can work in Turkey provided that you obtain
a work permit. Work permits for foreigners are issued by
the Ministry of Labour and
Social Security.
However, foreigners
are prohibited from or subject to special
permission for some
occupations, according to current
legislation.
The jobs defined in the following laws cannot be carried out by
non-Turkish residents unless there is an exemption according to
bilateral reciprocity agreements:
Law No. 815 (sailors), 2920 (aero-transportation within Turkish
borders), 3213 (mining rights), 5680 (executive officer in
periodicals companies), 2821 (establishing trade unions), 1618
(executive officer in travel agencies) , 4458 (customs counsellor
or advisor), 1163 (initial member of board of a co-operative), 1219
(nurse, dentist, doctor), 6197 (pharmacist), 3958 (optician), 6343
(veterinary), 2219 (executive officer in private hospitals), 2802
(judge, attorney in the courts), 1136 (solicitor), 1512
(notary-public), 2495 (security guard).
Work permits with limited duration
According to Law 4817, when taking into account the current state of the
labour market, the economic
situation, the duration of the residence
permit and the duration of the work
contract, a work permit can be issued for a period up to 1 year. If
the foreign national wishes to continue working
in the same workplace, the permit can be
extended for 2 more years. After a 3 year working period, the work
permit can be extended up to 6 years at most.
If the children or spouse of the permit holder
lives with them in Turkey for at least 5 years without a
break, they can also be eligible for work permits.
Work permits with unlimited duration
If a foreigner has been resident in
Turkey for at least 8 years
continuously and has had a work permit
for 6 years, then s/he
is entitled to a work permit with no time limitation. The
factors considered in issuing the work
permit with limited duration are not taken into account
at this point.
For further information, please contact the Office of the Labour
Attaché on +44 20 7591 6918.
Is social insurance (SSK) coverage compulsory for foreigners?
Short-term risk coverage (maternity, health, occupational
illnesses) by the associated scheme is
compulsory for all foreign nationals working in Turkey.
In addition, foreign citizens can
voluntarily register with social
insurance institutions for
long-term risk coverage (invalidity, old-age, mortality).
However, citizens of countries with which reciprocity agreements in
the power of law have been made, must be
covered by the relevant social insurance scheme. These
countries are: the UK, Germany,
the Netherlands, Belgium, Austria,
Switzerland, France, Sweden, Libya, Denmark, Norway, and
the Turkish
Republic of Northern Cyprus.
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