A Guide For Foreign Entrepreneurs : Starting a Business in Turkey
Doing business in Türkiye offers a unique set of opportunities and challenges due to its strategic location between Europe and Asia, its large consumer market, and its diverse economy. However, there are some legal, cultural, and market-specific considerations to keep in mind. Here’s an overview of the key points for businesses looking to operate in Turkey:
1.Business Environment
Market Size: Turkey has a population of over 80 million people, with a growing middle class, making it an attractive market for both local and international companies.
Strategic Location: It serves as a bridge between Europe, Asia, and the Middle East, which is valuable for trade and logistics. This makes Turkey a key transit point for goods, especially between the European Union and countries in Asia.
Economic Diversity: The Turkish economy spans a variety of sectors, including manufacturing, agriculture, textiles, tourism, electronics, automotive, and services.
2.Legal and Regulatory Environment
Company Formation: Foreigners can establish businesses through different legal structures, such as joint-stock companies (A.Ş.) or limited liability companies (Ltd. Şti.). The process is relatively straightforward, with the requirement of registering with the Turkish Trade Registry.
Foreign Investment: Turkey encourages foreign investment and has made efforts to streamline the process. Foreign investors enjoy the same rights as local investors in most sectors.
Taxation: Turkey has a corporate tax rate of 25 %, and value-added tax (VAT) is typically 20 %. Tax incentives are available in certain sectors and regions, such as in Free Trade Zones.
Labor Laws: The workforce is competitive and skilled, but businesses need to be mindful of labor laws, such as those regarding working hours, wages, and benefits. Social security and health insurance are mandatory.
3.Cultural Considerations
Business Etiquette: Building personal relationships is key in business culture. Networking, trust-building, and face-to-face meetings are highly valued.
Communication: While many Turkish professionals speak English, especially in larger cities and multinational companies, it’s helpful to learn a few phrases in Turkish. Business discussions are often formal initially, but can become more relaxed over time.
Punctuality: Being on time is appreciated, but a slight delay is often tolerated in business settings. However, it’s still important to respect deadlines and meeting times.
4.Market Opportunities
Tourism: As one of the world’s top tourist destinations, Turkey offers significant opportunities in the hospitality, travel, and leisure sectors.
Agriculture: Turkey is a major producer of agricultural goods such as fruits, vegetables, textiles (cotton), and nuts (hazelnuts, pistachios).
Technology and Startups: There is a growing startup ecosystem, particularly in cities like Istanbul, which is becoming a tech hub. The government also provides incentives for tech and R&D companies.
Construction and Real Estate: Due to rapid urbanization and infrastructure development, there are considerable opportunities in the construction and real estate sectors.
Energy: Turkey has made significant investments in renewable energy and energy efficiency projects, presenting opportunities for companies in these fields.
5.Challenges
Economic Fluctuations: Turkey’s economy can be volatile due to factors like inflation, currency fluctuations, and geopolitical tensions. Businesses should be prepared for potential economic instability.
Bureaucracy: While Turkey has made improvements, there can still be some bureaucratic red tape in terms of permits, licenses, and regulations. Patience and local knowledge are important when navigating these systems.
Geopolitical Risks: The geopolitical situation in the region can sometimes affect business conditions. Companies need to stay informed about regional politics, especially regarding trade relations with neighboring countries.
6.Tips
Establish Local Partnerships: Having a local partner can ease the process of understanding the market, culture, and regulations.
Legal Advice: Consult with local legal professionals to navigate the complexities of business law, tax, and regulations in Turkey.
Market Research: Thorough research into consumer behavior and local market trends is crucial for success. Understanding local preferences and needs will help tailor your offerings.
Adapt to Local Culture: Respecting cultural norms and building relationships is key to successful business dealings.
Overall, doing business in Türkiye presents both a rewarding opportunity and a complex landscape for businesses. Whether expanding into the market or partnering with Turkish firms, understanding the local environment will be crucial for long-term success. Please feel free to contact us for more information and further inquiries about our unique services. You can also subscribe to Tacirsoft Hukuk Bilgi Sistemi, that is Turkey’s only Corporate Law and Organized Industrial Zones Law database.
