SUBSIDIARIES

Foreign investors interested in expanding their business in Turkey may open a subsidiary of the parent company abroad. The subsidiary is separated from the parent company and can be established as a new company incorporated in Turkey. The subsidiary is subject to and must comply with all the taxation laws in Turkey. Here are a few advantageous ways of incorporating subsidiaries in Turkey;

Under normal circumstances subsidiaries are subject to corporate tax, income tax, value-added tax and other type of taxes that may be applied depending on the industry.

Turkey Investment Incentives Zones and Tax Discounts & Advantages, (Mostly Eastern Turkey)

Turkey is separated into six regions based on the development level of the districts/cities in these regions. The first three zones represent more developed regions, respectively, whereas the last three show relatively less developed zones in Turkey. The investment areas that are listed in the Investment Incentive Regime are determined based on the economic and industrial conditions of the regions. The investments in these regions and in the specified areas can be entitled to the incentives granted for the investments in these regions. The qualification of investments for such incentives should be evaluated on an investment basis before application to Ministry of Industry and Technology for an Investment Incentive Certificate. Software is one of the prioritized investments. This applies for “Software and information goods production investments in specialized free trade zones”        

These incentives include;

• 100% exemption from customs duties and other assorted duties.
• 100% exemption from corporate income tax for manufacturing companies.
• 100% exemption from value-added tax (VAT) and special consumption tax.
• 100% exemption from stamp duty for applicable documents.
• 100% exemption from the real estate tax.
• 100% income and corporate tax exemption for certain logistics services to be offered at the FZs, provided that they are export oriented.
• 100% exemption from income tax on employees’ wages (for companies that export at least 85% of the FOB value of the goods they produce in the FZs.
• Goods may remain in FZs for an unlimited period.
• Companies are free to transfer profits from FZs to abroad as well as to Turkey, without restrictions.
• Exemption from title deed fees when acquiring and selling a property.
• VAT exemption during construction, design, settlement, and approval processes.
• Ready infrastructure exempts from VAT and other taxes.
• Import permit for second-hand, used machinery.​

Technological Development Zones

Technology Development Zones (TDZ) are areas designed to support R&D activities and attract investments in high-technology fields. There are 84 TDZs, of which 63 are operational and 21 have been approved and are currently under construction. ​

 ADVANTAGES OF TDZ’s

• Profits derived from software development, R&D, and design activities are exempt from income and corporate taxes until December 31, 2028.
• Sales of application software produced exclusively in TDZs are exempt from VAT until December 31, 2028. Examples include software for system management, data management, business applications, different business domains, the internet, mobile phones and military command and control systems.
• Remuneration for R&D, design and support personnel employed in the zone is exempt from all taxes until December 31, 2028. The number of support personnel covered by the exemption may not exceed 10 percent of the total number of those involved in R&D, though.
• Investments for the production of technological products developed based on the outcome of R&D projects conducted in the TDZ may be made in the TDZ if deemed suitable by the operator company and allowed by the Ministry of Industry and Technology.
• 50 percent of the employer’s share of the social security premium will be paid by the government until December 31, 2028.
• Customs duty exemption for imported products and stamp duty exemption for applicable documents within the scope of R&D, design, and software development projects.

A LIAISON OFFICE

Any company incorporated under the laws of a foreign country may establish a liaison office (representative office) in Turkey upon obtaining a license from the Ministry of Industry and Technology, provided that the company does not engage in any commercial activities in Turkey.

A Liaison office is allowed to carry out activities such as;

• Market research,
• Promotion of the goods and services of the parent company,
• Representation and hosting,  
• Control of the suppliers in Turkey in terms of quality and standard, their supervision, and supplier procurement,  
• Technical support,
• Communication and information transfer,
• Regional management center,
• Other similar activities, 

There are also tax advantages present for liaison offices such as;

• As liaison offices are not in the commercial enterprise status and do not gain any revenue or profit, they are not subject to VAT (Value added Tax) and corporate tax.  
• Personnel of liaison offices that paid by foreign based company with foreign currency brought from abroad are exempt from income tax.
• And also, no stamp tax deduction shall be made.