Starting a business in Turkey may have more fruitful benefits than you think. With winter fast approaching, many of us are dreading the onset of longer nights, colder mornings and drab wet walks. That combined with changes to our working lives brought about by the COVID-19 pandemic could easily be a recipe for misery. Or alternatively, you could view it as an opportunity to reshape your life into one that makes you happy!
Expats who have moved to Turkey get to enjoy a warmer climate, a way of life that is more focused on outdoor activity, and their money goes further. Surprisingly, it’s also a great location for budding entrepreneurs to launch a new venture.
Surging company launches
Several large and well-known companies are already operating in Turkey and have been for a number of years, including Coca-Cola, Hyundai, Nestle, Microsoft, Hilton and Ericsson. Turkey isn’t only attractive to big companies though. In July, 10,202 new companies were formed in Turkey which is a 42% year-on-year rise. Of those new businesses, 912 were either foreign partnered or foreign-funded.
Benefits
There are good reasons that so many businesses are establishing themselves in Turkey. It has a strategic position in the trading centre of Europe and the Middle East, plus the Turkish government is actively supporting foreign investment.
Some of the benefits of starting a business in Turkey are:
- Lower Operating Costs. The cost of goods and materials purchased in Turkey is generally cheaper than in the UK or the US, while the quality is the same. In addition to this, the cost of living is lower and therefore salaries are lower, meaning that you can employ a qualified workforce without outlying as much capital.
- Consumer Spending. The younger population in Turkey love to spend money, and they have a good level of disposable income. If you can create a product or a service that appeals to them, you will have a strong customer base.
- Local Manufacturers. Business is often done on a more local level, meaning that you can work with a manufacturer who is local to you which means greater visibility of the process. In addition to this, these manufacturers are often smaller than those in the UK or US, which means that you can place smaller orders and therefore not spend as much when you are starting out.
- Government Incentives. If you obtain an incentive certificate, you are eligible for VAT and customs duty exemption, tax deductions, social security premium support, interest rate support, land allocation, VAT refunds and income tax withholding support. If you need help navigating the paperwork it’s worth engaging a consultancy that is an expert on the Turkish market like TYConsultancy, which can also assist you with market analysis, networking and anything else you may need to help make your Turkish business venture a success.
- Foreign investors are able to apply for Turkish citizenship if they have established a business in Turkey that either employs 50 Turkish citizens or makes capital investments of $500,000 or more.
Challenges
If you are considering starting your business in Turkey, it’s a good idea to enlist local help because there are a few challenges that those unfamiliar with the country may face:
- Permits and Paperwork. If you would like to start a business in Turkey, you will need to execute and notarise articles of association, and then deposit a percentage of capital to the account of the Competition Authority before it is then transferred to a bank. You may also need to get construction permits if you are planning to build, or register property if you are planning to occupy an existing building. You may also need to enlist engineers in order to get an electricity connection, which requires getting a permit from the local municipality and the Chamber of Electrical Engineers.
- Getting Credit. Turkey is not as developed as the UK or the US in terms of finance and legal structures, so arranging credit and protecting your investors can be a troublesome task.
- Businesses in Turkey make 15 tax payments per year, and there is also a transaction tax to be paid on checks, stamp duty on contracts and tax on advertising which may be unfamiliar to those who are not used to doing business in Turkey.
- Economic development, investment opportunities, infrastructure and skilled staff are much more readily available in the west of the country than the east so you should take this into consideration when you are choosing where your business will be located.
Have you had experiences of starting a business in Turkey? We’d love to hear your story – share below in the comments section.
Read more about how to establish a company abroad.