When Turkey first acquianted with franchising system, it was
1991. From that day to this, Turkey's economic perspective was
entirely amended and currently ranked as the world's
17th largest economy regarding GDP all over the world
and converted into an integrated emerging market with a growing
Based upon the new legislation raised by The Undersecretariat of
Treasury, Turkey is projected to be regional destination with
investment incentives and tax benefits. In parallel with these
regulations, small businesses are expected to be in the spotlight
of angel investors.
The fundamental purpose of this law is fostering new ventures
and increase accessibility of financial sources for small
enterprises. In the scope of this law, business angels are targeted
to embark on joint ventures or start-ups. Apart from venture
capitalists, business angels do not have to wait for handing over
their funds for months that drives angel investors to cross-border
Incentives for Business Angels
As of June 2012, providing that Turkish company shares are held
at least two year by angel investors, 75% corporate tax deduction
can be applied regarding annual income. However,this deduction can
not exceed 1,000,000 TRY in the same calendar month. Required
investment amount for benefiting from tax relief is minimum 20,000
TRY per investment. Additionally, if a business angel invests in a
Turkish venture company that undertakes a project supported by
'Scientific and Technological Research Council of Turkey'
during the past five years, tax incentive rate will be 100%. Angel
investors have an opportunity to invest in 20 different Turkish
venture companies that enables to constitute a well diversified
portfolio consisting of severe industries.Furthermore, they have
opportunity to get into a partnership as co-investors.
How angel investors benefit from tax deductions?
Angel Investors are required to obtain a certificate called
'Angel Investors License' for taking advantages of tax
deductions. Main criterias for being an accredited angel investor
can be categorized as:
High Income or wealth: Investors who
gain minimum 200,000 TRY annually within last two years or;
Potential investor whose total assets amount is at least
1,000,000 TRY at the stage of angel investors license
Nevertheless, The types of assets below are not accepted as a
Residential house or house which is acquired with
Llife Insurance Payments.
Rights arising out of insurance contracts.
Experienced Professionals: Investors
are able to prove their expertise in Banking or Financial
Institutions as a portfolio manager fund manager or etc.
If you have already worked as a general manager or similar role
in a company with 50,000,000 TRY annual gross profit, you become
entitled to be a qualified angel investor.Another competitive edge
in Turkey is the Angel Investor License is valid for 5 years. After
the five year period, angel investors are able to renew their
license for the following five year periods.
Requirements for Turkish Companies
Turkish Government aimed to augment funds with the object of
bolstering small entities on early stages and start-up companies
with this new legal framework. Thus, If an angel investor decides
to make an investment in Turkey, the requirements below should be
met by Turkish private venture company in order to be
Projected Turkish company must be a joint stock company under
the Turkish Commercial Code.
Maximum 50 employees can be placed in this company.
Initial Public Offering transaction must not been
This joint stock company, must not be under the control of
Company to be invested in must generate maximum 5,000,000 TRY
in last two fiscal years.
Investment must be undertaken in one of the activities or
industries that Turkish Treasury determined in advance.
In accordance with the new regulations, business angels can not
hold more than 50% shares of company that they invest in Turkey.
Altough this might seem as a venture restriction, it can be stated
that this limitation will be significantly beneficial in the long
run for effective risk management either of investor or invested
company. Additionally, angel investors can not assign more than 50
% of board members or participate in administrative function.Thus
and so, an agency problem between corporate management and
shareholders can be averted on decision making process.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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