PERFORM BUSINESS IN FREE TRADE ZONES IN TURKEY
1-Cost of Establishing a Company and Necessary Documents
Costs of establishment are as follows:
- % 00,4 competition premium calculated on capital will be paid to Halk Bank.
- Approximately 4.000 TL establishment cost.
- $ 5.000 operation licence if the company perform business in free trade zone.
Necessary documents to establish a company are listed below.
1.1- Required documents during the establishment of Corporation for foreign legal entities
- Translated apostille or consulate approved Certificate of Activity and notarized translation.
- Translated apostille or consulate approved abstract of record.
- Partnership Decision which shows the lot and capital share of the foreign company and authorized person who represent the Corporation (apostille and consulate approved).
- Apostille approved signatory circular of foreign company manager.
- Notarized translation of passport copy of representative of legal entity abroad (real person appointed in Partnership Decision) who is going to be the shareholder of company established in Turkey if the representative is foreign national.
- If the representative is Turkish citizen, 3 ID copies with photo to be taken from mukhtar (neighborhood executive officer), 3 certificate of residence to be taken from mukhtar or census office.
- Notarized translation of passport copy (Required for foreign shareholders).
1.2- Other required information to be included in the Partnership Deed which is going to be prepared for company establishment is as follows
- A few alternatives for company name.
- Company address which the company will perform its activities and rent contract.
- Primary objectives and subjects of the company.
- Capital, shareholders and proportion of shares of the company.
- Whom will have the authority to represent the company and by how.
- Type of the company (limited or joint stock company).
Procedures in Chamber of Commerce, Commercial Register, Tax Office, Social Security Institution etc. and Preparation of Partnership Deed will be made after these documents are provided.
1.3-Minimum Capital amount on Company Establishment
50.000 TL capital for joint stock companies and 5.000 TL capital for limited companies are needed.
2-Establishment of a Company/Branch in Free Trade Zone
Foreign or domestic natural person or legal entities can operate in free trade zones by obtaining a licence from Undersecretariat of Foreign Trade. Detailed information can be found under separate headings below related to tax and costs of operations in free trade zone.
2.1-Value Added Tax
Entities operating in Turkey pay VAT when they purchase goods and services and collect VAT when they sell goods and services based on the type of goods and services. General VAT rate is %18 of the value of deliveries. Calculated VATs on purchased and sold goods and services are compared on monthly declarations. If collected VAT related to the sales is more than VAT paid related to the purchases, then the difference is paid to tax office. And again, if the VAT paid related to the purchases is higher than collected VAT related to the sales, then the difference is deferred to the following month. %18 VAT is also paid on imported goods.
Services rendered in free trade zones are exempt from VAT according to the Article 17/4-ı of VAT Act. Consequently, entities operating in free trade zones shall not calculate and pay VAT neither on imported goods from abroad to free trade zone nor on deliveries within the borders of free trade zone. However, if a delivery will be made from free trade zone to Turkey, then this delivery procedure would be the same of a company who imports goods from abroad and those who buy the goods in Turkey shall pay %18 VAT.
2.2-Customs Duty
Customs duty is not paid on goods delivered to free trade zone from abroad. Foreign Trade Regulations are applicable to the trade made between free trade zones and other places of Turkey. In other words, goods sold from Turkey to free trade zones are subject to export regulations and goods sold from free trade zones to Turkey are subject to import regulations.
2.3-Corporate Tax
Corporations in Turkey shall pay %20 corporate tax on their earnings.
Earnings of taxpayers from the sales of goods, who are manufacturing goods in free trade zones, are exempt from corporate or income tax until the end of the fiscal year which full membership of Turkey to European Union is approved. In other words, if your company which will operate in free trade zone is going to operate in manufacturing, then the company shall not pay corporate tax on its earnings. However, if the company operate in trading, then the company shall pay %20 corporate tax same as other companies who are operating outside the free trade zone in Turkey.
As you can see, there is not any advantage of operating in free trade zones for the companies who are going to be established recently and operate in trading.
2.4-Exemptions Regarding the Employees
Companies who are operating in free trade zones can employ foreign national managers and qualified personnel. However, during the evaluation of application to employ a foreign national personnel, employment of Turkish personnel which is specified in the Application Form for Free Trade Zone Operating Licence will also be assessed.
Salaries of workers who work in manufacturing activities in free trade zone are exempt from income tax. In order to get advantage of this exemption, at least %85 of FOB amount of goods manufactured in free trade zones must be exported to abroad.
In order to get advantage of this exemption, whether the conditions are met must be approved by a Sworn-in Certified Public Accountant report. If there will not be too many personnel hired, then it is not very important to get benefit from the exemption compared to the amount benefited from exemption and Sworn-in Public Accountant report cost.
2.5-Withholding on Distribution of Profit
If profit will be distributed on earnings gained in free trade zone, then % 15 taxes shall be paid on distributed profit.
2.6-Free Trade Zone Fund
According to Free Trade Zone Law numbered 3218, %0,1 on CIF amount of goods delivered to free trade zone from abroad and %0,9 on FOB amount of goods brought to Turkey from free trade zone charges will be paid in cash.
2.7-General Expenses
Companies who perform business in free trade zone shall pay a fee for general expenses. General expenses differentiate in every free trade zone. General expenses in Istanbul Ataturk Airport Free Trade Zone vary between $ 2,60 and $ 4,10/m²/month.
2.8-Office Rent
Closed area rent is $ 13,31/m²/month and $ 20,00/m²/month in plaza. Outdoor area rent is $ 5,00/m²/year. In addition, other expenses that may arise in free trade zone are also listed below. This information is applicable in Istanbul Ataturk Airport Free Trade Zone and may vary in different free trade zones.
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Loading / Depletion (Goods with flippers)
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$ 7,00 x ton
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Loading / Depletion (Goods in bulk)
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$ 9,00 x ton
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Loading / Depletion (Textile goods with strappy)
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$ 11,00 x ton
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Loading / Depletion with crane
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Crane and other expenses + %10
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Piling – Good Classification (Private Warehouse)
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$ 11,00 x Per worker x Hour
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Forklift Rent
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$ 22,00 x Number of Forklifts x Hour
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Charge up to 15 tons (with crane)
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$ 100 - $ 10,00 for extra one ton
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Charge up to 15 tons (in bulk)
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$ 120 - $ 12,00 for extra one ton
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Transaction Form
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$ 3 per form
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Daily parking fee for trucks and 18 wheels
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$ 20,00
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Annual car entry licence fee
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$ 25,00
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3-Establishing a Company in Turkey (Onshore)
To establish a company in free trade zone is not very advantageous for those who are not going to operate in manufacturing in free trade zones. %20 corporate tax shall be paid on operation profit, if one decides to establish a country in Turkey. Besides, if profit is distributed, %15 tax shall be paid on the distributed profit amount. However, profit distribution is not statutory. As described above, VAT will be paid/collected on sales and purchases and then set off.
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