Doing Business in Türkiye: Tax and Legal Insights for Foreign Investors (2024-2025)

Türkiye continues to be an attractive destination for foreign entrepreneurs and investors. With its strategic location and investor-friendly policies, the country offers numerous opportunities for setting up businesses. This article outlines the tax regulations, establishment procedures, and incentives applicable to foreign-invested companies in Türkiye for 2024-2025.

Tax Regulations for Foreign-Invested Companies

Foreign-invested companies in Türkiye are considered entities established under Turkish legal provisions but are partially or wholly funded by foreign capital. They are subject to the same tax regulations as domestic companies:

1. Corporate Tax (Kurumlar Vergisi)

• Foreign-invested companies are subject to a corporate tax rate of 20% in 2025.
• A revaluation rate of 43.93% has been announced for the same period.

2. Value-Added Tax (Katma Değer Vergisi – KDV)

• These companies must comply with VAT regulations. The VAT rates for 2025 are outlined in the December 30, 2024, edition of the official Resmî Gazete.

3. Other Applicable Taxes

Foreign-invested companies in Türkiye are also subject to the following taxes:

• Motor vehicle tax
• Special communication tax
• Environmental cleaning tax
• Stamp duties
• Inheritance and transfer taxes

Capital and Establishment Process

1. Minimum Capital Requirements

• For joint-stock companies (anonim şirket – A.Ş.), the minimum capital requirement is 50,000 TL.
• For limited liability companies (limited şirket – Ltd. Şti.), the minimum capital is 10,000 TL.
• There are no specific minimum capital requirements for collective or commandite companies.

2. Establishment Procedure

To establish a foreign-invested company in Türkiye, entrepreneurs must follow these steps:

• Prepare the company’s articles of association.
• Submit registration documents through the MERSİS system.
• Provide required documentation, such as activity certificates and details of authorized signatories.

Incentives and Advantages for Foreign Investors

Türkiye provides several incentives and advantages for foreign investors:

1. Government Incentives

• Foreign investors are eligible for state aids and incentives.

2. Legal Protections

• The rights of foreign investors are safeguarded under the Foreign Direct Investment Law No. 4875.

3. Work Permits

• Foreign-invested companies benefit from streamlined processes for obtaining work permits for foreign personnel.

Reporting Obligations

Foreign-invested companies have specific reporting duties to comply with:

• These include periodic reporting and fulfilling their tax plate obligations by May each year.

International Considerations

Non-Cash Capital Contributions

Contributions made in non-cash forms, such as securities from foreign companies, are valued according to the Turkish Commercial Code. Evaluations by authorized institutions or experts from the country of origin, or international rating agencies, are generally accepted.

Guidelines for the 2025 Tax Framework

The 2025 tax framework, released through the official Resmî Gazete on December 30, 2024, includes updates for corporate tax, VAT, motor vehicle tax, and other levies. Entrepreneurs can refer to this publication for the latest tax regulations applicable in Türkiye.

Conclusion

Türkiye offers a comprehensive legal and tax framework for foreign investors, making it a welcoming environment for building and expanding businesses. By understanding the applicable regulations and incentives, international entrepreneurs can optimize their operations and thrive in the Turkish market.