Doing Business In Türkiye 2025

Welcome to the 2025 edition of "Doing Business in Türkiye," your essential resource for navigating the current investment climate and understanding the key regulations governing investments and commercial activities in Türkiye.

This comprehensive resource covers a wide range of topics to provide you with a thorough understanding of the business environment in Türkiye. Inside, you'll find detailed information on the legal framework affecting businesses, including key laws and regulations. It offers insights into the tax system, corporate taxes, VAT, and other relevant tax obligations. Additionally, it includes information on import and export duties, tariffs, and customs procedures. You'll receive guidance on drafting and enforcing commercial agreements, along with explanations of the rules and regulations that promote fair competition. The guide also provides an overview of the banking sector, financial regulations, and available financial services, as well as insights into the capital markets, stock exchanges, and investment opportunities.

Furthermore, it covers foreign exchange controls and currency regulations, explores the fintech landscape and regulatory environment, and provides guidelines on data privacy laws and regulations. Information on protecting intellectual property rights, different models for foreign investment in Türkiye, and property ownership and leasing regulations are also included. Finally, it addresses labor laws, employment contracts, and workforce regulations.

Designed to be your go-to reference for all aspects of doing business in Türkiye, this guide equips you with the knowledge and tools you need to succeed in this dynamic market.

Establishing a Legal Presence in Türkiye

• Establishing a Company. Most foreign investment requiring a permanent legal presence in Türkiye proceeds through a locally established company. Local legislation allows several forms of companies; however, considering overall advantages and disadvantages, foreign investors generally opt to establish either a joint-stock company (JSC) or a limited liability company (LLC). Foreign investors' choice between these two forms depends on a detailed comparison between JSC and LLC, as described below.
• In practice, US companies mostly prefer establishing LLCs because of the check-the-box legislation rules in the US.
• In terms of the scope of activity, JSCs may be established for any type of activity, which is not prohibited by law, whereas LLCs may not engage in banking, insurance, financial leasing and other activities limited by law.
• In terms of the minimum capital requirement, it is TRY 250,000 for JSCs, whereas it is TRY 50,000 for LLCs.
• In terms of shareholding, local legislation allows single-shareholder JSC and LLC.
• In terms of the payment requirement of initial capital, unless otherwise specifically stated in the relevant regulatory legislation to which the company operating in a regulated industry is subject, at least 25% of the initial capital of a JSC must be paid prior to establishment and the remaining 75% must be paid within 24 months following the establishment date. For the LLCs, there is no requirement to pay a certain amount prior to the establishment and the entire share capital amount can be paid within 24 months following the establishment date.
• In terms of liability, in JSCs shareholders are liable only to the extent of their capital subscription undertakings, and executives are personally liable for the unpaid public debts (e.g., unpaid taxes or social security premiums). On the other hand, the liability regime in LLCs is slightly different.: as a general rule, shareholders are still liable to the extent of their capital subscription undertakings with an exception stating that shareholders may be liable for unpaid public debts on a pro rata basis to their capital contribution, whereas the liability regime of executives in LLCs is similar to that of JSCs.
• In terms of the annual general meeting, it is attended by the shareholders and the general meetings are structured similar in many ways for JSCs and LLCs. Accordingly, the annual general meeting must be held each year within three months following the end of the company's fiscal year, during which the shareholders review relevant financial statements, decide on profit distribution and release the directors. Shareholders' special meetings can be held as necessary according to the operations of the company. Unlike LLCs, a Ministry Representative must attend some general assembly meetings of JSCs, which must be examined in terms of the shareholding structure, general assembly agenda and relevant regulatory legislation to which the company operating in a regulated industry is subject.
• In terms of the board, the board of directors for a JSC and the board of managers for a LLC are entitled to represent and manage the company, and it is a mandatory corporate body for both types of companies. Local legislation allows singlemember boards. In JSCs, members of the board of directors do not necessarily have to be a shareholder of the company, whereas in LLCs, at least one of the members of the board of managers must be a shareholder of the company. Neither the members of the board of directors of a JSC nor the members of the board of managers of a LLC are required to be Turkish citizens or to reside in Türkiye, unless otherwise specifically stated in local legislation to which the company operating in a regulated industry is subject. In JSCs, at least one of the members of the board of directors must have full authority to represent the company without any limitation, whereas in LLCs, all members of the board of managers must have full authority to represent and bind the company solely or jointly without any limitation.
• The establishment process in Türkiye is almost the same for JSCs and LLCs. It involves a relatively significant amount of paperwork and intense communication with the authorities, and it also requires integrated cooperation with institutions such as banks. In addition, establishing companies that will engage in activities specified in the legislation (e.g., banking, financial leasing, factoring) will require authorization from the Ministry of Trade and/or the relevant regulatory authority. The preparation of documents is usually the most timeconsuming and crucial stage. Certain establishment documents executed abroad must be apostilled or legalized by the Turkish Consulate in the relevant jurisdiction.
• The companies having foreign investors are required to make annual submissions regarding the scope of their capital activities to the General Directorate of Incentive Implementation and Foreign Investment each year in May. It is also required for all companies to determine an Ultimate Beneficial Owner (UBO) and submit the UBO information within one month following their establishment and as the attachments to the provisional tax returns and annual corporate tax returns in the following periods.
• Establishing a Branch Office. In addition to establishing a company in Türkiye, foreign investors may also consider establishing a branch office in Türkiye. Branch offices are entirely different structures compared to companies, as described below.
• In terms of the scope of activity, a branch office can only engage in the activities of its parent company. It cannot provide goods and/or services or engage in any commercial activity that is not within the scope of services of the parent company.
• In terms of capital, branch offices have autonomous capital and accounting to carry out commercial transactions with third parties. While there is no minimum capital requirement for a branch, in recent practice, the Trade Registry requires that branch offices allocate a minimum of TRY 50,000 as capital. Branch offices are also required to maintain sufficient capital for their day-to-day operations in practice.
• In terms of representation and management, it is mandatory to appoint at least one branch manager that resides in Türkiye. There is no nationality requirement for branch managers. The branch manager has full power and authority to represent the branch.
• In terms of dependence on the parent company, although branch offices are registered with the relevant Trade Registry as separate legal entities, they are not totally independent from their parent companies. Branch offices are dependent on the parent company in terms of internal management and they are deemed to act on behalf of the parent company. Thus, the loss and/or profit arising from the transactions of the branch office belong to the parent company. The parent company assumes the rights and obligations arising from the acts of the branch office. Likewise, the parent company may be the addressee for any claim to be directed to the branch office.
• Branch offices are required to make annual submissions regarding the scope of their capital activities to the General Directorate of Incentive Implementation and Foreign Investment each year in May. It is also required for Branch offices to determine an Ultimate Beneficial Owner (UBO) and submit the UBO information within one-month following their establishment and as the attachments to the provisional tax returns and annual corporate tax returns during the following periods.
• Establishing a Liaison Office.. If the foreign investor is not planning to perform any commercial activity in Türkiye, establishing a liaison office that does not have a separate legal personality can also be considered. In terms of the scope of activity, liaison offices are not allowed to engage directly in any profitable business. However, they can carry out activities such as gathering information, conducting market research, promotion of the foreign company's products and services, representation and hosting, control and inspection of the suppliers in Türkiye with respect to quality, standards and procurement of local suppliers, technical support visiting clients and describing aspects of the parent company, arranging transfer of documents between clients and the parent company, and entering into contracts to expand the parent company's business opportunities, acting as regional management headquarters, since these are not considered commercial activities.
• The establishment of a liaison office is not registered with the Trade Registry. It is subject to permission by the General Directorate of Incentive Implementation and Foreign Investment. The General Directorate grants activity permits for a limited time period. The activity permit may be extended by the General Directorate upon application if the General Directorate is convinced of the merits of the application. It is General Directorate's discretion to grant activity permits and extend such permits by meticulously evaluating the documents submitted and the parent company's plans for Türkiye. For the extention of the activity permit, the General Directorate may recommend foreign investors to establishing a different structure (a Company or a Branch Office) to conduct commercial activities in Türkiye.
• Liaison offices are required to prepare and submit annual submissions regarding the scope of their activities to the General Directorate each year in May.

Banking

The Turkish financial sector underwent major structural changes because of the financial liberalization program that began in the early 1980s. The abolition of directed credit policies, liberalization of deposit and credit interest rates and liberal exchange rate policies, and the adoption of international best standard banking regulations accelerated the structural transformation of the Turkish banking sector. Since the 1980s, the Turkish banking sector has experienced a significant expansion and development in the number of banks, employment in the sector, diversification of services and technological infrastructure.

• The Turkish money markets and foreign exchange markets stabilized in 2001, in large part due to regulatory reform and other governmental actions (including a three-part audit undertaken in 2001 and 2002). The system's transparency improved along with the establishment of an independent supervisory and regulatory framework and new disclosure requirements. The structural changes undertaken strengthened the banking sector and resulted in a more level playing field for banks.
• The Turkish banking industry has undergone significant consolidation over the past decade. Pursuant to the Turkish banking regulations, three types of banks are allowed to be established to operate in Türkiye: deposit banks, development and investment banks, and participation banks. These banks can be in the form of branchless digital banks. As of January 31, 2025, there are 62 banks (including domestic and foreign banks, and participation banks and digital banks, but excluding the Central Bank) in Türkiye. Thirty-three of these are deposit banks, 20 are development and investment banks, and nine are participation banks, which conduct their business under separate legislation and in accordance with Islamic banking principles. Further, the Savings Deposit Insurance Fund manages one bank. In addition, as of January 31, 2025, the Banking Regulatory and Supervisory Authority (BRSA) has also provided establishment approval for six digital banks, four of which have also been granted operation approval by the BRSA.
• The Banking Law permits deposit-taking banks to engage in all fields of financial activities, including deposit collection, corporate and consumer lending, foreign exchange transactions, capital market activities and securities trading. Typically, major commercial banks have nationwide branch networks and provide a full range of banking services, while smaller commercial banks focus on wholesale banking. The main objectives of development and investment banks are to provide medium- and longterm funding for investment in different sectors.
• Turkish banks (including development and investment banks) and branches of foreign banks in Türkiye are primarily governed by two regulatory authorities in Türkiye, the BRSA and the Central Bank. The BRSA is responsible for all banks operating in Türkiye, including development and investment banks, digital banks, foreign banks, and participation banks.
• Foreign persons and entities may open and operate banks in Türkiye if they fulfill the criteria set out under the Turkish banking regulations. In addition, foreign banks may open branches and representative offices in Türkiye, as long as they obtain the BRSA's approval. Representative offices can only advertise the foreign bank and its services and conduct market research activities.
• The Central Bank was founded in 1930 and performs the traditional functions of a central bank, including issuing bank notes, implementing the government's fiscal and monetary policies, maintaining price stability and continuity, regulating the money supply, managing official gold and foreign exchange reserves, monitoring the financial system and advising the government on financial matters. The Central Bank exercises its powers independently of the government. The Central Bank, in conjunction with the government, is empowered to determine the inflation target and adopt a monetary policy in compliance with this target. The Central Bank is the only institution authorized and responsible for the implementation of this monetary policy.

Compliance/Anti-Bribery/Sanctions

• Several Turkish laws contain provisions on anticorruption and bribery, primarily Turkish Criminal Code No. 5237, Law on Declaration of Property and Combating Bribery and Corruption No. 3628, Law on the Ethics Board for Public Officials No. 5176 and the Civil Servants Ethical Principles and Application Procedures and Principles.
• Although Turkish criminal law does not regulate legal entities' criminal liability, if the legal entity obtained unfair benefits due to committing bribery, security measures may be imposed on the legal entity. Within this scope, these security measures are (i) revocation of their license/permit if (a) a private legal entity abuses its authority arising from a license/ permit granted to it by a public entity and (b) the legal entity's governing bodies or representatives participated in this entity's actions; and (ii) confiscation of property or material interests, if the conditions under the law are satisfied. Individuals engaged in bribery on behalf of a legal entity can be subject to criminal sanctions.
• Moreover, legal entities obtaining benefits from committing bribery may also face administrative fines under Misdemeanor Law No. 5326. Within this scope, administrative fines of up to TRY 50,000,000 may be imposed on a legal entity if bribery is committed for the relevant legal entity's benefit by its bodies or representative or by those who undertake duties for the legal entity within its business operation framework. Administrative fines are subject to revaluation.
• Turkish anti-money laundering laws are primarily regulated under (i) Law No. 5549 on the Prevention of Laundering Proceeds of Crime and (ii) the Regulation on Measures Regarding the Prevention of Laundering Proceeds of Crime and Financing of Terrorism. Anti-money laundering laws impose a number of obligations on obliged parties including customer identification, suspicious transaction reporting, record keeping and due diligence determined by the Turkish anti-money laundering laws to combat money laundering.
• Türkiye adopts sanctions through either passing laws or implementing presidential decrees. However, Türkiye is not obligated to comply with foreign/ international sanctions adopted and enforced by other sovereign states (e.g., the US) or international organizations of which Türkiye is not a member (e.g., the EU). Along these lines, Turkish entities are only obligated to comply with Turkish sanctions. That said, due to the globalization of business operations and the extrajudicial application or enforcement of some foreign/international sanctions, Turkish entities might find themselves in a position where they might need to comply with the foreign/international sanctions. Thus, it is paramount for legal entities operating internationally to assess their transactions from a multijurisdictional perspective to ensure compliance at the highest level. Within this scope, historically, Türkiye often transposed UN sanctions into Turkish law.

Consumer Protection

• In Türkiye, the main piece of legislation on consumer protection is Consumer Protection Law No. 6502 ("Consumer Protection Law")).
• The Consumer Protection Law covers all consumer transactions. A consumer transaction is accepted as any legal transaction concluded between a consumer and persons acting with commercial and professional purposes in the goods and services markets. A consumer, on the other hand, is deemed as persons using or benefiting from goods or services that have no professional or commercial purpose. Therefore, contracts and legal transactions executed with the consumers are subject to the Consumer Protection Law.
• Upon discovering the product's defects, the consumer can (i) rescind the contract for a full refund, (ii) demand that the good be replaced or that the service be performed again, (iii) demand that the price be reduced pro rata the defect or (iv) demand a free repair. The seller must perform the consumer's selected remedy, with certain exceptions.
• The statute of limitations for liability for a defective good or service is two years after the good is delivered to the consumer or the service is performed, even where the defect appears later, unless those liable for the defect have undertaken liability for a longer period. The statute of limitations is five years for real property used for residential and vacation purposes.
• Product manufacturers or importers must establish a minimum number of after-sales service providers or enter into an agreement with already established and working after-sales service providers. The number of these after-sales service providers depends on the type and requirements of the good.
• Under Turkish laws, the contractual provisions prepared by one party in advance, for the purposes of using the same provisions in multiple similar transactions in the future, and presented to the counterparty would constitute the standard terms and conditions. The standard terms and conditions that are to the consumer's disadvantage are null and void unless the consumer is informed that they exist and given the opportunity to learn their content, negotiate and approve them

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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.