Free Zone Company Set Up in Turkey ; Free zones can be defined as areas physically located within the political boundaries of a country but considered outside the customs line in terms of foreign trade, tax, and customs regulations, with the aim of increasing investment, production, exports, encouraging foreign investors, and accelerating foreign currency inflow into the country. Free zones are explicitly defined in Article 6 of Law No. 3218 on Free Zones.
According to this definition, free zones are considered as parts of Turkey’s Customs Territory; however, their locations and boundaries are determined by the President. These zones are places where goods that are not in free circulation are placed without being subject to any customs regime and without being released for free circulation, provided that they are not used or consumed except in cases prescribed by customs regulations.
They are also recognized as areas outside Turkey’s Customs Territory in terms of the application of import duties, trade policy measures, and foreign exchange regulations.
Additionally, they are places where goods in free circulation normally benefit from opportunities related to exports due to the placement of such goods into a free zone. Turkey has many free zones in various cities such as Istanbul, Adana, and Antalya. In Istanbul, there are Istanbul Ataturk Airport Free Zone, Istanbul Industrial and Commercial Free Zone, and Istanbul Thrace Free Zone. Within this essay we will provide to our client candidates an overview on free zone company set up in Turkey.
How to set up a free zone company in Turkey
Applications for operating in free zones will be evaluated within the framework of the principles set forth in Circular No. 1998/4 titled ‘Evaluation of Activity License Applications, Branch, Branch-Addressed Company.
There are certain aspects that companies intending to establish a free zone should pay attention to. The Articles of Association of the company intending to operate in the free zone must be prepared in accordance with Circular No. 1998/4. For instance, as the transactions of goods carried out by free zone companies are not considered as imports and exports under Article 6 of the Free Zones Law, these goods are regarded as items brought into the zone and taken out of the zone.
In this context, the provisions under the headings of “Title, Purpose and Subject,” and other relevant headings in the Articles of Association to be prepared by a company to be established in the free zone should use the terms “purchase-sale” instead of import and export. Furthermore, when listing the company’s business areas under the heading “Purpose and Subject” of the Articles of Association, it should not include the trade of goods prohibited from being brought into the free zone.
Moreover, the article titled “Company Headquarters” within the Articles of Association should be formed as specified in Circular No. 1998/4. The company’s duration should be arranged to be at least equal to the duration of the Certificate of Good Standing (activity license).
Finally, a clause should be added to the Articles of Association stating that, for any changes the company intends to make under the headings of title, purpose and subject, headquarters, and duration on the main contract, after the decisions are made by the company’s authorized body, the approval of the Free Zones Directorate must be obtained before registering these changes in the trade registry.
In accordance with Article 11 of the Free Zones Implementation Regulation, individuals or legal entities who wish to operate in the free zone must submit the ‘Activity License Application Form’ along with the draft main contract to the relevant Free Zone Directorate to obtain the ‘Activity License.’ The application is considered complete upon filling out and submitting the ‘Activity License Application Form’ and depositing the Activity License application fee into the Special Account of Free Zones at the Central Bank of the Republic of Turkey.
The Zone Directorate sends the ‘Activity License Application Form’ to the General Directorate. Those deemed suitable for the issuance of the ‘Activity License’ as a result of the evaluation of the application by the General Directorate are notified in writing, and they are given a 30-day period to submit to the General Directorate a copy of the contract for the operation of the workplace where they will continue their activities, along with other necessary documents related to the procurement of the workplace.
After the transfer of these documents, the General Directorate issues the Activity License. If the documents are not submitted within the specified period, the right to obtain the ‘Activity License’ is forfeited, and the relevant file is closed. Following the issuance of the license, the company must apply to the relevant Chamber of Commerce for physical establishment of the free zone company along with other relevant documents for the establishment of the company.
After obtaining the license, accounting books that must be kept according to the Tax Procedure Law should be obtained, notarized, and reported to the tax office. Additionally, the free zone inventory book should be printed and approved by the relevant Free Zone Directorate and the relevant Free Zone Customs Directorate. In this book, the items entering and leaving the Free Zone will be recorded in chronological order.
For How Many Years is an Activity License Granted to Companies Established in Free Zones in Turkey?
Activity licenses are granted for a period of 20 years to tenant companies that will engage in production activities in the free zone, while for companies operating in other activity areas, licenses are granted for a period of 15 years. Investor companies can be granted activity licenses for a period of 45 years for production activities and 30 years for other activities.
How Much Does It Cost To Set Up A Free Zone Company With One Partner?
According to Circular No. 2009/3 titled “Activity License Durations and Application Fees,” the application fee for an activity license is 5,000 United States Dollars. If the application is deemed unsuitable, the activity license application fee will be refunded. However, if the application is approved, the fee will be credited to the Special Account for Free Zones.
How Many Free Trade Zones Are In Turkey?
For free zone company set up in Turkey, you will have many options since there are 18 free zone areas in Turkey. These are Adana-Yumurtalik Free Zone Directorate, Antalya Free Zone Directorate, European Free Zone Directorate, Bursa Free Zone Directorate, Denizli Free Zone Directorate, Aegean Free Zone Directorate, Gaziantep Free Zone Directorate, Istanbul Atatürk Airport Free Zone Directorate, Istanbul Industrial and Commercial Free Zone Directorate, Istanbul Thrace Free Zone Directorate, Izmir Free Zone Directorate, Kayseri Free Zone Directorate, Kocaeli Free Zone Directorate, Mersin Free Zone Directorate, Rize Free Zone Directorate, Samsun Free Zone Directorate, Trabzon Free Zone Directorate, and TÜBİTAK Marmara Research Center Technology Free Zone Directorate.
Free Trade Zone Company Operating License
As mentioned above, in accordance with Article 11 of the Free Zones Implementation Regulation, individuals or legal entities wishing to operate in the free zone must submit the “Activity License Application Form” along with the draft Articles of Association and other relevant documents to the relevant Free Zone Directorate to apply for an activity license (Certificate of Good Standing).
If the application is being made on behalf of a new company or in other words the free zone company is not established yet, the following documents should be included in the application dossier for obtaining the activity license:
• Activity license application form.
• An introductory information letter about the activities that the applicant company will engage in.
• Original and photocopy of the bank receipt showing the payment of the activity license application fee.
• Draft of the company’s main contract (Articles of Association). • Photocopies of the ID cards of the company’s partners.
• If the company has foreign partners, notarized original and copies of the passport translations of these foreign partners.
• Authorization certificate and signature circular of the signatory (if applicable), as well as the authorization certificate and signature statement of the company representative (if applicable).
According to Article 8 of the Free Zones Implementation Regulation, those deemed suitable for the issuance of the activity license enter into lease or sale contracts with the Operator or the Zone Founder and Operator within 30 days. After the approval of this lease or sales contract by the Zone Directorate, the General Directorate issues the activity license.
After obtaining the activity license, the investor can begin investment activities in the free zone. Following the acquisition of the activity license, the investor applies to the Zone Directorate to obtain a Construction Permit for implementing the construction project. After the construction work is completed, a Habitation Permit shall be obtained, allowing commercial activities to commence. Users who intend to build buildings or facilities on the leased or purchased land shall apply to the Zone Directorate for an “Habitation Permit” after preparing their projects and fulfilling their superstructure commitments.
With the issuance of the Habitation Permit, the investment phase is completed, and the operational phase begins. The project and construction mentioned in the activity license application form must be completed within the specified timeframes. These timeframes are added to the operating period specified in the activity license.
However, in cases where the project and construction cannot be completed within the specified timeframe for compelling reasons, an extension may be granted in accordance with Article 54. Users can obtain a “Temporary Habitation Permit” from the Zone Directorate before the construction of the building or facility to be constructed on the leased or purchased land is completed (before obtaining the Habitation Permit). This allows the company to start commercial activities in its buildings or in another leased business premises.
The Advantages of Investing in a Free Zone in Turkey
Tax Incentives: Free zone companies established Turkey benefit from exemptions on customs duties, value added tax (VAT), and corporate income tax for certain periods.
Simplified Procedures: Administrative procedures for imports, exports, and other business activities are streamlined within free zone areas in Turkey, reducing bureaucracy and red tape.
Access to a Skilled Workforce: Turkey’s free zones often have access to a well-trained and educated workforce, particularly in technology and manufacturing sectors.
Strategic Location: Turkey’s geographic location provides easy access to European, Middle Eastern, and Asian markets, making it an ideal hub for international trade.
Free Trade Zone Tax Incentives
• Setting up a free zone in Turkey will provide the company 100% exemption from customs duties and similar taxes.
• Setting up a free zone in Turkey will provide the company 100% exemption from corporate tax for manufacturing companies.
• Companies operating in free zones can benefit from the provisions of the Double Taxation Avoidance Agreement to which Turkey is a party.
• Setting up a free zone in Turkey will provide the company 100% exemption from Value Added Tax (VAT) and Special Consumption Tax.
• Setting up a free zone in Turkey will provide the company 100% exemption from stamp duty applied to the documents to be prepared.
• Setting up a free zone in Turkey will provide the company 100% exemption from property tax.
• Setting up a free zone in Turkey will provide the company 100% income and corporate tax exemption for specific logistics services provided from Free Zones, as long as they are entirely destined for foreign countries.
• Setting up a free zone in Turkey will provide the company 100% exemption from income tax on employee salaries (for companies exporting at least 85% of the FOB value of the products they produce in free zones).
• Goods can be kept in free zones without any time limit.
• Setting up a free zone in Turkey will provide the company exemption from title deed fees in real estate buying and selling.
• Setting up a free zone in Turkey will provide the company VAT exemption during construction, project, permitting, and approval processes.
• Ready infrastructure exempt from VAT and other taxes.
• Permission for the import of second-hand/used machinery.
• Profits and incomes obtained from free zone activities can be freely transferred abroad or within Turkey without any permits.
Free Zone Company Set Up Roadmap in Turkey
- Firstly select the most suitable free zone based on your business’s requirements, industry, and location preferences.
- Prepare the application documents required for operating certificate, including the Articles of Association and apply for preliminary approval from the Free Zones Directorate by submitting the business plan including detailed information about your companies areas of activity.
- Register the company in Turkey before the relevant Trade Registry Office, after safe receipt of the preliminary approval. This process involves submitting required documents and paying registration fees.
- Obtain the necessary licenses and permits from the relevant authorities, including the Ministry of Trade, Ministry of Industry and Technology, and the free zone management company.
- Open a bank account in Turkey for your free zone company.
- Secure a suitable location for your business within the free zone. You can lease or purchase land or facilities as per your business needs.
- Recruit and train your workforce, benefiting from Turkey’s skilled labor pool.
- Understand and adhere to customs regulations for imports and exports in the free zone.
How Long Will Free Zone Company Set Up in Turkey Will Take?
It is estimated that a free zone company set up in Turkey will be finalized within 5 to 8 weeks however the timeline will depend on your areas of activity and efficiency of the authority that is processing your application.
Reach Us For A Free Zone Company Set Up in Turkey
One size does not fit all when it comes to setting up a free zone company in Turkey. Mesci Law Firm as a law firm specialized in company set up in Turkey, recognizes this and provides tailored legal solutions that align with each client’s unique business goals and requirements.
Whether it’s choosing the right free zone, structuring the company, or complying with industry-specific regulations, our law firm in Turkey ensures that every aspect of the process is carefully customized. For over a decade now, our law firm has been providing company formation services in Istanbul, Turkey to our foreigner and local clients.
Our corporate lawyers in Turkey are prepared to assist your free zone company set up in Turkey. We can complete your free zone company set up remotely through the Chamber of Commerce, but we suggest our clients to be present in Turkey during inhabitance permit, construction permit and signing of lease or sales contract transactions and procedures. Should you require further information, please don’t hesitate to contact us for a free zone company set up in Turkey through our contact page.
