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Investment in Turkeyfor US investors*
www.pwc.com/trwww.pwc.com/trwww.vergiportali.com/englishwww.vergiportali.com/english
Burcu CanpolatBurcu CanpolatSeniorSenior ManagerManager, SMMM, SMMM
FFebruaryebruary 20072007
*connectedthinking
Page 2PricewaterhouseCoopers
Source: The Central Bank of the Republic of Turkey
Section
1
-
General
Outlook
• Canpolat is graduated from Department of ManagementEngineering at Istanbul Technical University.
• Currently a tax senior manager in Technology, Information andCommunication (TICE) and International Tax Structuring teams.
• Mainly specialized in the international tax structuring andmerger & acquisition as well as the application of tax treatiesand taxation of companies with foreign shareholders.
• Worked for numerous companies in banking & capital market,insurance and energy sectors.
• Has extensive experience in providing overseas taxconsultancy services to multinational companies in cooperationwith the other PwC offices.
• Gained lots of experiences by working in Procter & GambleTürkiye as tax manager for 9 months and in PwC WashingtonDC office for 6 months.
• Member of the Union of Chamber of Certified PublicAccountants (SMMM) and speaks English fluently.
Burcu Canpolat, Senior ManagerDirect Phone: (212) 326 64 52Direct Fax: (212) 326 64 53E-Mail:[email protected]
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Table of Contents
Customs and Foreign Trade4
Relations between Turkey and the United StatesPwC Sources
Annex Comparison of Taxable Entities in Turkey
1011
Treaties of Turkey9
Investment Incentives5
Real Estate Investments8
Accounting and Taxation3
Related Party Transactions6Exit Route-Capital gains7
Incorporation of Companies and Branches in Turkey2General Outlook1
Section 1
General Outlook
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General Outlook• Exceptionally high levels of real GDP growth: last two years average of 7.3%
per annum
• Inflation is at its lowest level since 1970`s
• Due to recent market volatility and the depreciation of YTL, expectations aremore conservative for the near future.
• FDI reached US$ 9.6 bn in 2005
• Strong alliances with international organizations:
Section 1 – General OutlookSection
1
-
General
Outlook
UN (1946)
NATO (1952)
OECD (1961)
WTO (1995)
EU customs union (1996)
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General Outlook• Candidate for membership of the EU and harmonized tax policies are expected
to be
• EU Countries have a very important part in increasing FDI
Section 1 – General OutlookSection
1
-
General
Outlook
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2002 2003 2004 2005 2006
Years
FDI A
mou
nts
(mn
$)
ItalyEnglandHollandFranceGermany
SectionSection 22
Incorporation of CompaniesIncorporation of Companiesand Branches in Turkeyand Branches in Turkey
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Incorporation for Foreign InvestorsSection 2 - Incorporation of Companiesand Branches in Turkey
• Type of presence• Joint Stock Companies (A.Ş.)• Limited Liability Companies (Ltd.)• Branches• Partnerships
• A liaison office can also be established, where:• It cannot engage in any commercial activity or partnerships with other
companies; activities are limited to preparatory and auxiliary functions• Its employees are exempt from income tax and stamp tax on salaries
• Fund levy of 0.04% over capital (“Contribution to Competition Authority”)
• Incorporation procedures take 2-3 weeks
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Foreign Investment RegulationsSection 2 - Incorporation of Companiesand Branches in Turkey
• No approval requirement for foreign investment – just notification tothe Treasury
• Availability to establish a corporation of 100% foreign investment.
• No additional capital requirement or any restriction on shareholdingratio for foreign investors
• No approval/notification requirement to a governmental authority formanagement services, technical assistance or royalty agreementssigned with foreign companies
• Liberal foreign exchange regulations in Turkey, where;• companies can have deposits both in Turkey and abroad• cash movements (except extending loans) to abroad are freely
realized
Section 3
Accounting and TaxationAccounting and Taxation
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Bookkeeping
• Bookkeeping is:• in Turkish and• in New Turkish Lira (YTL) and New Kurus (YKr) terms.
• Bookkeeping in functional foreign currency may be allowed, providedthat:
• there is a minimum paid-up capital equivalent of US$100 million,• at least 40% of the shares of the company is held by non-
residents• the Council of Ministers grants permission
Section 3 - Accounting and Taxation
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Bookkeeping
• Accounting records are maintained and statutory financial statementsare prepared in accordance with the Turkish Commercial Code, taxlegislation and the Uniform Chart of Accounts (CoA) issued by theMinistry of Finance
• Public companies, financial institutions and insurance companiesreport their financial statements in line with accounting rules andprinciples issued by the Capital Markets Board, which is quite similarto IFRS
• Harmonization with Basel 2 standards is envisaged
Section 3 - Accounting and Taxation
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Audit Requirements
• There is no independent audit requirement in Turkey, except forpublic companies, banks, financial institutions and insurancecompanies
• Statutory audits under the current Turkish Commercial Code arecarried out by legal auditors and are different to independent auditstandards
• In practice, many taxpayers prefer to obtain tax certificationservices, a sort of tax audit, to ensure accuracy of their taxcalculations
Section 3 - Accounting and Taxation
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Taxation of CorporationsCorporate Income Tax (CIT)
• CIT rate is 20%
• Business expenses are tax deductible in general
• There is a tax competition between countries in the World especially inEast-European so the CIT is in a diminishing trend to inflowinvestment expenditures
Section 3 - Accounting and Taxation
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Taxation of CorporationsSection 3 - Accounting and Taxation
CorporateIncome Tax
Rate Fund Calculated
over CIT Regional
TaxDividend WHT
Paid Abroad
Paid WHT overBranch
RevenuesGermany 25% 5,5% 12 - 20% 20% 0%Bulgaria 15% 0% 10% 15% 15%Czech Republic 26% 0% 0% 15% 0%France 33,33% 3% 0% 25% 25%South Cyprus 20-25% 0% 0% 20% 0%Netherlands 34.5 -29% 0% 0% 25% 0%England 30% 0% 0% 0% 0%Ireland 12,5 - 25% 15 - 20% 0% 20% 0%Spain 35% 0% 0% 18% 25%Israel 36% 0% 0% 25% 0%Italy 36% 0% 4,25% 27% 27%Corea 15-27% 10% 0% 25% 25%Luxembourg 22% 4% 7.5 - 9.09% 20% 20%Hungary 18% 0% 2% 20% 20%Malaysia 28% 0% 0% 0% 0%Poland 22% 0% 0% 20% 20%Portugal 30% 10% 0% 25 - 30% 0%Singapore 24,5% 0% 0% 0% 0%Turkey 20% 0% 0% 15% 15%Greece 35% 0% 0% 0% 0%Russia 24% 0% 2.20% 15% 15%
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Taxation of CorporationsDividend Withholding Tax
• Payable upon profit distribution to foreign shareholders
• Dividend withholding tax rate is 15%
• Total corporate tax burden is 32% for foreign investors upon dividenddistribution
• If certain conditions are fulfilled, the dividend withholding tax rate canbe reduced to 7.5% for intermediary holding companies; making theeffective rate 26%
Section 3 - Accounting and Taxation
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Taxation of Corporations
Participation Exemption• Dividend income of Turkish resident corporations received from;
• Turkish resident corporations is exempt from CIT• Foreign subsidiaries or branches is also CIT exempt, if certain
conditions are fulfilled• Capital gains of intermediary holding companies from foreign
subsidiaries are also CIT exempt (if certain conditions are realized)
Section 3 - Accounting and Taxation
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Taxation of Corporations
Controlled Foreign Corporation (CFC)• Corporations established abroad and controlled directly or indirectly by
tax resident companies by participation of a minimum 50% to thecapital thereto are considered as CFC, provided that the foreignsubsidiary’s:• gross revenue (minimum 25%) composed of passive income;• effective income tax rate is lower than 10% in its home country; and• gross revenue exceeds the equivalent of YTL100,000 in foreign
currency terms• If a foreign subsidiary is considered as CFC, its profit will be included in
the CIT base of the Turkish resident corporation at the rate of theshares controlled, irrespective of whether it is distributed or not.
• This profit will not be subject to additional taxation in Turkey, if it isdistributed to the Turkish resident in the future.
Section 3 - Accounting and Taxation
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Taxation of Corporations
Cost Allocation
• Costs of the parent company allocated to its Turkish branch isdeductible in the determination of the taxable income of the non-resident corporation generated from its branch in Turkey
• The cost allocation of general administration expenses from theheadquarters is subject to the conditions below;
- The expenses concerned must be related to thegeneration and maintenance of income in Turkey; and,
- The portion of the costs to be allocated to the Turkishbranch must be calculated in line with the cost allocationkeys determined in compliance with the arm’s lengthprinciple
Section 3 - Accounting and Taxation
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Taxation of CorporationsSection 3 - Accounting and Taxation
Value Added Tax (VAT)• Deliveries of goods and services are subject to VAT• Rates vary from 1% to 18% - General rate is 18%• Offset mechanism is available in Turkey
Stamp Tax• Applicable to a wide range of documents, such as agreements,
financial statements and payrolls.• Rates range from 0.15% to 0.75% over the highest calculable
monetary value of the document• Maximum tax amount is YTL 946,915.20 (approximately
USD671,000) per document
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Taxation of Employees
Income Withholding Tax
• Taxed through withholding
• At progressive rates ranging from 15-35%
• Payroll taxes are the final tax for employment income taxed via asingle local payroll
Stamp Tax on Payroll
• Rate of 0.6% over gross salaries
Social Security and Unemployment Insurance Premiums
• 33.5% for office-based employees over gross salaries up to a ceilingof YTL3,656.40 (approximately USD2,593) (YTL 3,802.50 from01.07.2007 onwards)
• Total unemployment insurance premium rate is 3% (Government alsocontributes 1%) over the above-cited ceiling
Section 3 - Accounting and Taxation
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Taxation of Expatriates
• There is no special tax regime for expatriates
• If the foreign national is considered as:• Resident, then Turkish tax will apply to worldwide income• Non-resident, then merely the Turkish income source will be
taxed in Turkey
• Generally expatriates will be liable for tax on work done in Turkey
• In order for a foreign national to be legally eligible to work in Turkeythe following need to be obtained;• work permit• working visa• residence permit
Section 3 - Accounting and Taxation
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Taxation of Other Payments
Withholding Tax• Royalty payments – 20% (may be reduced to 10% by virtue of tax
treaties)• Independent professional services – 20%• Interest – 10% (applied as 0% if interests are paid to a bank or a
financial institution)Reverse Charge VAT• Applied on payments to foreign companies• VAT is calculated and paid by the Turkish company, treats this VAT
as input VAT and offsets against output VAT• No tax burden on both parties but may have a cash flow effect for
the Turkish company
Section 3 - Accounting and Taxation
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Tax Credit Mechanism
• A tax credit for foreign taxes paid in foreign countries againstTurkish taxes is available under certain conditions
• In the event of a foreign subsidiary being held by at least 25% by aTurkish resident joint stock company, income tax or CIT paidabroad by the foreign subsidiary over the profit out of whichdividends are distributed to the Turkish resident can be offsetagainst the taxes payable in Turkey
• Tax credits are also available for taxes paid abroad by the CFCs
• The foreign tax amount in excess of the Turkish taxes payablewhich cannot thus be offset in the relevant year can be carriedforward for three years
• Tax credits can also be made in advance corporate income taxperiods
Section 3 - Accounting and Taxation
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Tax Administration
• A self-assessment system is used in Turkey
• Taxpayers can file their tax returns with reservation, and appeal tocourt without the risk of penalty
• Courts of First Degree: Tax Courts (cases last for approximately 9months)
• Court of Appeal: Tax Supreme Court (cases are finalized withinapproximately 2 years)
• The statute of limitations is five years
• Tax authorities have the right to exercise tax audits within thestatute of limitations. This right is exercised without warning and isrealized on a random basis
Section 3 - Accounting and Taxation
Section 4
Customs andCustoms andForeign TradeForeign Trade
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• Turkey signed a ‘Customs Union Agreement’ with the E.U(European Union) on 01.01.1996 and has amended its customscode and legislation in line with those of the E.U customs code
• According to the Customs Union Agreement, with the exception ofcertain goods such as agricultural products, no customs tax isincurred on trade between Turkey and the E.U.
Section 4 - Customs and Foreign Trade
Customs Union
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Customs Regimes with Economic Impact
1. Customs Warehousing Regime2. Inward Processing Regime3. Outward Processing Regime4. Processing Under Customs Control Regime5. Temporary Importation Regime
Section 4 - Customs and Foreign Trade
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Cross-border Toll Manufacturing
• In the ideal form, a toll manufacturer produces finished goods uponthe order and specifications of the principal using raw materialsowned by the Principal
• Thus, the toll manufacturer bears minimal risks or responsibilities andcharges a fee for the conversion process
• A cross-border toll manufacturing structure in the ideal form cannot beemployed in Turkey, since VAT and customs issues would arise oncethe importer of the goods has no Turkish residency
• A PE issue should also be considered for cross-border tollmanufacturing
• Such a structure may be realized through the inward processingregime, but should be analyzed in detail
Section 4 - Customs and Foreign Trade
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Free Trade Zones
Section 4 - Customs and Foreign Trade
- No VAT- No CIT over the sales of manufactured goods for production
companies until full membership to the EU- No customs duties- No personal income tax for salaries till 31.12.2008 (or until the date
of expiry of the license, if earlier) for the licenses obtained before06.02.2004
- No tax, duty, fee on operations for the licenses obtained before06.02.2004
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Free Trade Agreements
EFTAISRAELHUNGARYROMANIACZECH REP.SLOVAK REP.LATVIALITHUANIAESTONIASLOVENIABULGARIA
Section 4 - Customs and Foreign Trade
POLANDMACEDONIACROATIABOSNIA AND HERZEGOVINAMOROCCOPALESTINESYRIATUNISIAEGYPT
Turkey has Free Trade Agreements with the following countries;
Section 5
InvestmentInvestmentIncentivesIncentives
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Investment Incentives
1. State Aids- Investment allowance is newly abolished but tax holidays for
significant investments are currently under discussion- Customs Duty Exemption (in the scope of an Investment
Incentives Certificate)- VAT Exemption (in the scope of an Investment Incentives
Certificate)- Resource Utilization Support Fund (in the scope of an Investment
Incentives Certificate)
Section 5 - Investment Incentives
Page 34PricewaterhouseCoopers
Investment Incentives
2. Incentives regarding priority and less industrialized regions- Regions with a maximum USD1,500 per capital- Income withholding tax and social security premium reductions,
energy support incentives and free land allocation3. Incentives for R&D activities in Technology Development Zones
- Income tax exemption- Corporate income tax exemption- VAT exemption- Income tax exemption on wages
Section 5 - Investment Incentives
Page 35PricewaterhouseCoopers
Investment Incentives
Section 5 - Investment Incentives
4. Other Incentives
• Support on R&D activities• Support on domestic specialization fairs with international attributes• Incentives for fairs and exhibitions• Support on store establishment, management and brand publicity• Support on brand awareness of Turkish products abroad• Employment aids
Section 6
Related PartyRelated PartyTransactionsTransactions
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Treatment of Group Companies
• No tax consolidation for group companies
Section 6 - Related Party Transactions
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Thin Capitalization
• For intra-group borrowings:• Debt to equity ratio is 3:1 for ordinary related party borrowings• Rate is 6:1 for borrowings from banks and financial institutions within
the group (but not serving only within the group)
• Borrowings not deemed as thin cap are regulated as:• Non-cash guarantees of related parties to the third party lender• Loans obtained by related parties from banks and other finance
institutions that are wholly or partially on-lent with the sameconditions
• Interest expenses, fx losses and other financial expensescorresponding to the thin cap cannot be tax deductible
• In addition, interest expenses and other financial expenses on thethin cap are re-classified as distributed dividends and taxedaccordingly as at year-ends
Section 6 - Related Party Transactions
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Transfer Pricing (TP)
• With the new CIT Law, TP regulations are in line with OECDguidelines
• Prescribed methods:• Comparable Uncontrolled Price Method• Cost-Plus Method• Resale Price Method
• If the arm’s length principle is violated for related party transactions,then the related earnings would, partially or entirely, be deemed asa disguised distribution
• Profit distributed in a disguised manner is not tax deductible• In addition, such profits will be reclassified as dividends distributed
and necessary adjustments on taxes will be made at the hands ofthe party receiving the deemed dividends
Section 6 - Related Party Transactions
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Foreign Exchange Regulations and Debt Financing
• Foreign exchange regulations are quite liberal:• No restriction on money transfers to abroad through banks• Opening deposits in foreign banks is allowed
• No limitations are for third party loans
• Internal loans are also available provided that provisions of thincapitalization and transfer pricing are respected
• One-way cash pooling is possible, since Turkish companies are notallowed to grant loans abroad
Section 6 - Related Party Transactions
SectionSection 77
Exit RouteExit Route --Capital GainsCapital Gains
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Share Disposals• Capital gains from sales of shares in a Turkish company are, in
principle, taxable• No separate capital gains taxation in Turkey• Share sales between non-residents differ based on the legal
status of the local company:• Limited company shares - subject to tax in Turkey through the
filing of a special tax return• Joint stock company shares - not taxed in Turkey
• In principle, share sales by a non-resident to a Turkish residentare subject to taxation in Turkey
• Taxation may be avoided by virtue of double tax treaties, on thecondition that the holding period exceeds one year
• For disposal of shares obtained through the Turkish StockExchange after 01.01.2006 by foreign investors, no Turkish taxarises
Section 7 - Exit Route - Capital Gains
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Asset Disposals
• Taxable as part of the commercial income of the seller
• Subject to VAT
• Real estate transfer tax burden for real estate disposals
• Stamp tax burden over the asset transfer agreement and thetransferred contracts, if any
• Resident sellers, fulfilling certain conditions, may benefit from aspecial exemption, where sales proceeds would be:• exempt from CIT, limited to 75% of the gains• exempt from VAT• exempt from stamp tax
Section 7 - Exit Route - Capital Gains
Section 8
Real EstateReal EstateInvestmentsInvestments
Page 45PricewaterhouseCoopers
Real Estate Investments
Legal Background for Real Estate Acquisitions in Turkey:
• Non-resident;- Individuals can directly acquire real estate in Turkey up to 2.5
hectares based on the reciprocity principle- Corporations can directly acquire real estate in Turkey if their
direct investment falls into the scope of “Petroleum Law”,“Tourism Law” or “Foreign Direct Investment Law”
• For non-residents it is always possible to establish a 100% foreignowned Turkish company and acquire real estate via this companywith the same conditions as the Turkish residents
Section 8 - Real Estate Investments
Page 46PricewaterhouseCoopers
Real Estate Investments
• Transfer of the legal title of real estate is subject to 1.5% real estatetax (title deed charge) over the purchase price, which is appliedseparately for the purchaser and the seller
• In principle real estate transfers in Turkey are subject to VAT at therate of 18% (some exemptions may apply)
• Annual real estate tax rate is;- 0.3% for vacant land allocated for construction purposes and- 0.1% for other land and buildings
over the market value of these assets. These rates are applied twicefor property located in the metropolitan municipality areas
Section 8 - Real Estate Investments
Section 9
Treaties of Turkey
Page 48PricewaterhouseCoopers
Section 9 - Treaties of Turkey
Double Tax Treaties (DTT) of Turkey• Turkey has DTTs with 64 countries
IndonesiaIndiaHungaryGreeceGermanyFranceFinlandEstoniaEgyptDenmarkCzech RepublicCroatiaChina, P.R.BulgariaBelgiumBelarusBangladeshAzerbaijanAustriaAlgeriaAlbania
NorwayNorthern CyprusThe NetherlandsMoroccoMongoliaMoldovaMalaysiaMacedoniaLuxemburgLithuaniaLebanonLatviaKyrgyzstanKuwaitKorea, Rep. ofKazakhstanJordanJapanItalyIsraelIran
UzbekistanUnited StatesUnited KingdomUnited Arab EmiratesUkraineTurkmenistanTunisiaThailandTajikistanSyriaSwedenSudanSpainSouth AfricaSloveniaSlovakiaSingaporeSaudi ArabiaRussiaRomaniaPolandPakistan
Page 49PricewaterhouseCoopers
Social Security Agreements
• Turkey is a party to the European Social Security Convention andhas social security agreements with 21 countries listed below:
Current Social Security Agreements of Turkey
Section 9 - Treaties of Turkey
NORWAYTURKISH REPUBLIC OF NORTHERN CYPRUSMACEDONIAROMANIAAZERBAIJANGEORGIABOSNIA HERZEGOVINACANADAQUABECKCZECH REPUBLICALBANIA
UKGERMANYNETHERLANDSBELGIUMAUSTRIASWITZERLANDFRANCELIBYADENMARKSWEDEN
Section 10
Relations between Turkey and the United States
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Foreign Direct Investment Amount Sourced by the USin Turkey
Source: Undersecretaries of Treasury
Section 10 – Relations between Turkey and the United StatesSection
10
-
Relations
between
Turkey
and
the
United
Kingdom
•2006 Data is available for the months between January and November
US
252 36
88
578
-
100
200
300
400
500
600
700
2002 2003 2004 2005 2006*
Years
USD
ml
Page 52PricewaterhouseCoopers
Double Tax Treaty with the United StatesSection 10 - Relations between Turkey and the United States
• Signed on 28/03/1996 and entered into force on 19.12.1997• Dividends:
• Rates offered in the treaty:- 15% (if minimum holding of 10%);- Otherwise 20%
• Applicable rate: 15%, based on the local legislation• Royalty payments;
• 5% for the use of industrial, commercial, scientificequipment;
• Otherwise 10%
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Double Tax Treaty with the United StatesSection 10 - Relations between Turkey and the United States
• Interests:• Rate offered in the treaty:
- 10% for payments to banks and financial institutions- 15% for other non-resident entities
• Applicable rates based on the local legislation:- 0% for payments to banks or financial institutions,- 10% for other non-resident entities
• Technical assistance; 20%, if :• services are provided in Turkey,• fixed base is regularly available• present in Turkey to perform services for 183 days or
more in any continuous period of 12 months
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Social Security Agreement with the United States
• Turkey does not have a social security agreement with the UnitedStates
Section 10 - Relations between Turkey and the United States
Section 11
PwC Sources
Page 56PricewaterhouseCoopers
PwC Turkey Publications
• Individual Labour Law
• A General Tax Guide for Foreign Investors
• Foreign Nationals Working in Turkey
• A Guide for Customs and Foreign Trade
• Transition to New Turkish Lira
• Doing Business and Investing in Turkey
• Taxation of Construction and Repair Works InTurkey
http://www.vergiportali.com/english
http://www.pwc.com/tr
Section 11 - PwC Sources
• Turkey, Special Expense Allowance Guide
• Turkey, A VAT Guide
• Turkey, Private Pension System
• Turkey, Transaction Taxes on Banking & Capital Markets
• Acquisition of Intellectual and Industrial Property Rightsin Turkey
• Turkey, Investment Incentives
• Mergers and Acquisitions
• Investment Funds in Turkey
Page 57PricewaterhouseCoopers
Comparison of Taxable Entities in Turkey
Section 11 - PwC Sources
Not applicable unless profits are distributedto individual and foreign corporateshareholders
Not applicable unless profits are distributed toindividual and foreign corporate shareholders
Not applicable unless the profit is transferredto the parent companyDIVIDEND WITHHOLDING TAX
Corporate income tax at 20%Corporate income tax at 20%Corporate income tax at 20%CORPORATE INCOME TAX
meetingto branch managerGeneral assembly of the shareholdersPartners assembly meetingPower of attorneyCONTROL
Minimum total capital requirement isYTL50,000 (approximately US$32,250 at thecurrent foreign exchange rate)
Minimum total capital requirement is YTL5,000(approximately US$3,225 at the current foreignexchange rate)
Min Ykr.1 (i.e. YTL0.01) per shareholderregardless of tax residency status
Min YTL25 per partner regardless of tax residencystatusNo minimum capital requirementEQUITY
foreigners allowed(no board)
Board of min. 3 members/Director(s)Branch managerMANAGEMENT
Five persons (min)Two persons (min)/Fifty persons (max)Not applicableSHAREHOLDERS
allowedAllowedAllowedRepatriation of branch profit isDIVIDENDS
share capitalexcept for tax liabilitiescompany’s liabilitySHAREHOLDERS
Limited with theLimited with the share capitalLiability limited with motherLIABILITY OF
Joint Stock Company (A.S./SA)Limited Company (LC)Branch
Page 58PricewaterhouseCoopersOUTSIDE TURKEY
AllowedAllowedNot applicableTRANSFER OF SHARES INSIDE/
YesYesAvailable, but difficult in practiceAVAILABILITY OF INCENTIVES
AllowedAllowedAllowedDEPOSIT ACCOUNT INTURKEY/ABROAD
AllowedAllowedAllowedFOREIGN CURRENCY USAGE
Independent (considered as a Turkishcompany)
Independent (considered as a Turkishcompany)Part of a foreign entityLEGAL
Indexation of YTL amount on theinvoice to foreign currency is possible
Indexation of YTL amount on the invoiceto foreign currency is possible
Indexation of YTL amount on the invoice toforeign currency is possible
Turkish entities is not allowedTurkish entities is not allowedTurkish entities is not allowed
Billing in foreign currency toBilling in foreign currency toBilling in foreign currency toBILLING
(tax resident)(tax resident)worldwide income.worldwide income.over Turkish sourced income
(non-resident for tax purposes)
Liability to taxation onLiability to taxation onLiability to taxation onlyTAXABLE STATUS
FIXED ASSETSInflation accountingInflation accountingInflation accountingREVALUATION OF
ACCOUNTING
Applicable on non-monetary items inthe case of certain conditions beingrealized simultaneously
Applicable on non-monetary items in thecase of certain conditions being realizedsimultaneously
Applicable on non-monetary items in the caseof certain conditions being realizedsimultaneously
INFLATION
Joint Stock Company (A.S./SA)Limited Company (LC)Branch
Comparison of Taxable Entities in Turkey
Section 11 - PwC Sources