Turkey

Ease of Doing Business Rank: 47

Overview

 

Geographic location

Turkey is a country positioned partly in Asia and partly in Europe. The Black Sea lies to the north, Greece and the Aegean Sea lie to the west, Syria and Iraq lie to the south and Iran, Armenia and Georgia lie to the east.

Spoken language

The official of Turkey is Turkish, spoken by 84.54% of the population. Other languages include Northern Kurdish (11.97%), Arabic (1.38%) and Zazaki (1.01%), although none are officially recognized.

English is the most commonly spoken foreign language (17%), followed by German (4%) and French (3%).

Population

The 2019 population estimate is 83.43 million.

According to the 2015 census, Istanbul is the largest city (14.02 million), followed by Ankara (4.58 million), Izmir (2.84 million), Bursa (1.85 million) and Adana (1.56 million).

Popular industries

The top industries in Turkey are food processing, textiles, automotive, consumer electronics & appliances, tourism, defense, science & technology, steel & iron production, energy, construction, software and finance.

Education

The Times Higher Education World Rankings ranks eleven Turkish universities in the top 1,000 in the world.

The Legatum Prosperity Index ranks Turkey’s education system 83rd out of 149.

Popular entity types

The most common type of business entities in Turkey are Joint Stock Company and Limited Liability Company.

The overwhelming majority of businesses are in the form of a Limited Liability Company.

Turkish incentives for business

Turkey offers an extensive array of tax benefits and incentives to foreign businesses, including a foreign tax credit to partially offset foreign taxes paid.

Turkish companies with shares in a foreign company may also enjoy a corporate income tax exemption under certain conditions. Profits from construction and repair activities may also be exempt from CIT.

Qualifying companies may also benefit from a 75% to 100% capital gains tax exemption on the sale of shares, real estate and equities listed on the Istanbul Stock Exchange (ISE) or through local Turkish government bonds. Turkish and non-Turkish investment funds and trusts may also qualify.

Turkey also offers investment incentives for R&D, tourism, cultural, educational and transportation. Additionally, the country offers incentives to other industries providing the company meets the investment minimum, regardless of business location. Regional incentives are also available.

The country also prioritizes large-scale strategic investments on a per project basis. Benefits may include reduced corporate tax and exemption from VAT, social contributions for employees and customs duties. Qualifying companies may also use free treasury land for 49 years.

Turkey has 21 free trade zones which offer significant benefits. These include a 100% corporate tax exemption and reduced income tax. Companies operating in a free trade zone do not pay customs duty, VAT or the KKDF, which is normally added to the price of goods entering the zone.

Additionally, companies selling at least 85% of their products abroad are exempt from income tax payable for employees. Goods originating in Turkish free trade zones can freely circulate in the EU Market without taxation. Companies can also freely transfer earnings and profits to other countries.

History & Features

 

Main cities for business

Istanbul is its largest city and considered the commercial capital of Turkey. It is ranked 53rd in the Global Financial Centres Index.

Popular historical & tourist attractions

Turkey has a long, rich history which spans countless generations. The country includes an impressive 19 UNESCO World Heritage sites including historic cities, ancient ruins, magnificent architecture and jaw-dropping natural wonders.

Istanbul strategic location has led to many major political, religious and artistic events for more than 2,000 years. Its crowning glories include the ancient Hippodrome of Constantine, the Hagia Sophia and Süleymaniye Mosque. Topkapi Palace in Istanbul was also the home of the sultans for 400 years.

The City of Bursa and the nearby village of Cumalıkızık include excellent examples of the urban and rural system established by the Ottoman Empire in the early 14th century. This system included commercial districts, mosques and religious schools, as well as public baths and a kitchen for the poor.

Ephesus was once home to the Temple of Artemis, one of the “Seven Wonders of the World.” The city was destroyed by Goths in 263 AD and little remains of the temple, but the colossal ruins that survive are an outstanding example of a Roman Imperial port city, with sea channel and harbor basin.

Turkey also features many natural areas worthy of mention. In the southwest, you’ll find the Pamukkale, or cotton castle. These shimmering, snow-white limestone terraces, formed by calcium-rich springs, cascade down stalactites to form milky pools below.

The country also has many beaches on the Mediterranean, Black, Aegean and Marmara Sea. The most popular lie on the Mediterranean coast, the Turkish Riviera, and the Aegean, because they offer plenty of soft sand and warm waters.

Turkey is also home to the Lycian Way, one of the world’s great long-distance footpaths which spans 540 km. It passes through countless historic areas, including UNESCO World Heritage sites and areas of outstanding natural beauty.

History

The Turks first lived in Central Asia around 2000 BC, but spread to many areas other areas. During the early 11th century, they dominated the westernmost protrusion of Asia, Anatolia, and established the Anatolian Seljuk State.

Mongolian forces invaded the area in 1243. The Anatolian Seljuk state declined and Turcoman principalities formed. One powerful principality formed the Ottoman Beylik and took hold of the northwest corner of the region in 1299.

The Ottoman Beylik built an empire in the fourteenth century. They captured Constantinople in 1453, and by the end of the sixteenth century they ruled Greece, Bulgaria, Yugoslavia, Albania, Romania, all Eastern Mediterranean islands and the Middle East.

However, Europe’s military and economic power grew in the 16th century due to the Industrial Revolution. The Ottoman Empire did not keep pace and their power began to wane.

During the 19th century, nationalist sentiments grew. As well, the Balkan states rebelled, including the European part of the Ottoman Empire. These areas had the support of Europe and Russia, which further weakened the empire.

During World War I, the Allied powers declared war on the Ottoman Empire and were defeated them. The Ottomans signed an armistice that ceded their territories to Britain, France, Russia and Greece, ending the empire.

Meanwhile, national resistance grew and eventually an Ottoman military leader structured disjointed efforts and formed an army. This led to the Turkish National Liberation War between 1919 and 1922. The outcome was a peace treaty with the foreign powers occupying their lands and the recognition of an independent Turkish state in 1923.

A series of political, social, legal, economic and cultural reforms followed, including the creation of a parliamentary democracy. Today, Turkey has a mixed market economy and operates under a democratic presidential republic.

Other relevant facts

The majority of inhabitants identify as Turkish (75%), followed by Kurdish (18%) and other ethnic groups (17%).

According to recent data, most Turkish people are Sunni Islam (80.5%), followed by Shia Islam (16.5%) and Quranist Muslim (1%).

Additional Information for Business

According to Forbes’ 2019 Best Countries for Business, Turkey is the 57th best country in the world for conducting business.

The 2019 Index of Economic Freedom rates Turkey 68th globally and states, “Critical challenges include lack of transparency in government and erosion of the rule of law. The judicial system has been severely disrupted and has become much more susceptible to political influence.”

World Bank’s “Doing Business” rankings rate Turkey 44th for ease of doing business in the world.

Turkey Entity Support Services by Blueback Global

Blueback Global provides a one-stop integrated solution to managing all aspects of your global operations. We can take the burden off you or your company’s internal resources by managing Entity Setup, Local Payroll, Accounting, Tax Reporting, HR Admin and Regulatory Compliance matters associated with operating in a foreign country. Our services are designed to be flexible and customized, so whether you are starting from entity registration, or have already registered but need support in setting payroll or hire employees, we can help at every point of the process.

The common scenarios that may give rise to the need for Blueback Global’s services include the following:

With our integrated approach, you can expect the following experience:

We have an initial complimentary meeting to discuss the scope, objectives and plans for your expansion plan into Turkey. After this meeting, you can expect a follow-up proposal from Blueback Global within 1 to 3 business days, that outlines that the approach, scope of work and expected deliverables and outcome. Thereafter, our implementation team will then work closely with your team to register the local entity, set up payroll, accounting process, employee social security and benefits. We will then develop a mutually agreed timeline and approach for ongoing payroll, accounting, tax reporting and HR support. Blueback Global will set up a compliance calendar so that you know exactly what and when compliance items such as tax reporting and payroll returns are due. We will of course facilitate all of these, so you do not have to keep track of the compliance dates.

Our goal is to make the process as smooth, simple and successful as possible, and remove the anxiety of operating in a foreign location, to deliver a great customer experience.

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