According to the Free Zones Law, Free Zone Company Establishment is aimed at promoting export-oriented investment and production, accelerating foreign direct investment and technology entry, directing businesses toward exports, and enhancing international trade. The establishment and operation of free zones by public institutions and organizations, as well as by domestic or foreign individuals or legal entities, is decided by the President. Therefore, since there is no capital restriction for those operating in the free zone, there will be no distinction between domestic and foreign capital in terms of the advantages provided by this region (such as incentives and tax exemptions).<\/p>\n\n\n\n
In Turkey, free zones are set apart from other parts of the country and have been granted broader advantages to increase commercial activities and production. The customs, finance, or foreign trade regulations of the countries where these zones are located are either partially applied or not applied at all.<\/p>\n\n\n\n
In our country, free zones have become a popular practice for companies that meet the required conditions, due to their ability to create an environment conducive to technological development and capital growth, facilitate quick and sufficient access to raw materials and intermediate goods needed in industry, and lower production costs through recognized advantages and incentives. They also serve as a step that accelerates and simplifies the export of goods. In this article, as Fidelis Law Office, we will discuss the advantages of establishing a company in a free zone and the important considerations for company formation.<\/p>\n\n\n\n
Advantages of Free Zone Company Establishment<\/strong><\/p>\n\n\n\n One of the opportunities provided by the free zone is the various exemptions related to taxation. Users engaged in production activities in the free zone are not required to pay corporate tax or income tax on the profits they earn in this area.<\/p>\n\n\n\n At the same time, the user will be exempt from paying income and corporate tax, provided that at least 85% of the FOB (free on board) value of the products produced in the free zone is exported abroad, with respect to the wages paid to employees employed in the free zone.<\/p>\n\n\n\n Similarly, users engaged in production activities will be exempt from stamp duty and fees for the transactions required for the commencement and continuity of activities in the free zone.<\/p>\n\n\n\n In terms of double taxation, organizations operating in the free zone will be able to benefit from the provisions of Double Taxation Avoidance Agreements.<\/p>\n\n\n\n In addition, there are certain exemptions regarding customs duties that vary based on whether the goods come from Turkey or other countries and whether they are in free circulation.<\/p>\n\n\n\n Secondly, free zones are considered part of the Turkish customs territory for the application of fundamental provisions, but they are deemed to be outside the Turkish customs territory for customs procedures. Therefore, trade between Turkey and the free zone is subject to export (sales from Turkey to the free zone) and import (sales from the free zone to Turkey) regulations. However, foreign trade regulations do not apply to transactions between the free zone and other countries. As a result of the free zones not being considered part of the Turkish customs territory, some Turkish laws specified in the Free Zone Law will not be applicable in these areas.<\/p>\n\n\n\n The laws specified in the article titled \"Provisions Not Applicable\" are:<\/p>\n\n\n\n It is listed as follows.<\/p>\n\n\n\n Thirdly, some advantages provided to users by the free zone for the ease of money transfers and trade can be mentioned. In the free zone, users will be able to transfer their earnings easily without the need for permission from the relevant authorities, as there are no legal obstacles in their way.<\/p>\n\n\n\n Additionally, Turkish-origin goods with a value not exceeding 5,000 USD or the equivalent in Turkish lira can be brought into the free zone without being subject to export procedures, in order to facilitate the procurement of consumables.<\/p>\n\n\n\n As a result of the application of import and export regulations between the free zone and Turkey, free zone users will also be able to purchase goods and services from Turkey without VAT.<\/p>\n\n\n\n ACTIVITY LICENSE IN THE FREE ZONE<\/strong><\/p>\n\n\n\n To establish a company in the free zone and engage in activities there, it is first necessary to obtain an activity license. This license must be obtained from the General Directorate of Free Zones, Overseas Investments, and Services of the Ministry of Trade. Examples of areas of activity that require licenses to be a user in the free zone include production licenses, trading licenses, storage licenses, assembly and disassembly licenses, maintenance and repair licenses, leasing licenses, and licenses for sectors such as services, banking, and insurance.<\/p>\n\n\n\n To apply for an activity license, an application form must first be filled out, and a fee of 5,000 USD must be deposited into the Special Account for Free Zones at the Central Bank of the Republic of Turkey. The application form, along with its attachments and the payment receipt, should be submitted to the Free Zone Directorate. The application can be sent both directly and by registered mail. After obtaining the opinion of the governing body of the free zone, the Free Zone Directorate will forward the application to the General Directorate of Free Zones, including its own opinion. If the General Directorate of Free Zones provides a negative response to the applicant, the application fee will be refunded. If the activity permit is deemed appropriate, the applicant must submit a sample contract and necessary documents for the establishment of the workplace where they will operate within 30 days. If these are not submitted, the right to obtain the license will be forfeited, and the application fee will be recorded as revenue by the relevant authority.<\/p>\n\n\n\n Applicants who receive a positive response must consider the following when choosing their workplace in the free zone:<\/p>\n\n\n\n Applicants will be able to choose one of the options. Those proceeding with the first option must sign a lease agreement with an organization that has a rental license in the free zone within 30 days. For the second option, the applicant will need to enter into a sales contract with the operating organization in the free zone within the same timeframe. A copy of the approved contract related to the provision of the workplace must be submitted to the Free Zone Directorate, and an activity report will be prepared on behalf of the companies that entered into the contract.<\/p>\n\n\n\n COMPANY ESTABLISHMENT IN THE FREE ZONE<\/strong><\/p>\n\n\n\n The establishment of a company in the free zone can involve creating companies with their headquarters located in that area, as well as establishing branches. Real or legal persons, whether domestic or foreign, wishing to conduct commercial activities in the free zone must draft their articles of association in accordance with the Circular No. 1998\/4:<\/p>\n\n\n\n They are obligated to pay attention to such matters.<\/p>\n\n\n\n The draft of the articles of association, along with the Activity License Application Form mentioned above and the required documents to be added to the form, must be submitted to the Free Zone Directorate. Finally, upon approval of the application by the relevant authority, it is necessary to apply to the trade registry with the other documents required for company establishment. In this way, the company wishing to operate in the free zone will be registered in the trade registry and will be able to officially commence its activities.<\/p>\n\n\n\n You can contact us for your search for a lawyer for the establishment of a company in the Istanbul Free Zone.<\/strong><\/p>\n\n\n\n\n
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