General Conditions For Foreigners To Work In Turkey, especially for Tech Start-ups and the Benefit of Technopark for Foreign Start-ups

Introduction

Are you trying to launch your start-up globally? Turkey, how about it? But do you understand how a start-up is established in Turkey?

Regardless of the industry, they operate in, Turkey encourages foreigners to come and work under specific conditions in the nation. Let’s discuss the establishment of foreign start-ups in Turkey, particularly tech start-ups and the advantages Technopark offers them in luring foreign start-ups to the country.

Turkish Digital Transformation Support and the Start-up Ecosystem

The 2020s specifically marked a critical period for Turkey, considering its fast-advancing entrepreneurial ecosystem. While the global venture investment last year totalled $643 billion, compared to $335 billion in 2020, a similar growth took place in Turkey, considering there was not a single unicorn present in the country before 2020. 

Today, there are 6 unicorns present in the country, namely Peak Games, Getir, Dream Games, Hepsiburada, Trendyol and Insider. Considering this fast-developing investment ecosystem, Turkey has become the 10th country to attract the most investment among European countries over two years. Currently, the national target of Turkey is to host 10 unicorns by 2023, considering that in 2023, the country shall celebrate its 100th anniversary as a Republic. 

The development of Turkey’s entrepreneurship ecosystem has happened through intent rather than luck since Turkey aims to develop an innovative ecosystem of emerging technologies through its Industry and Technology Strategy Plan for 2023. Additionally, the country has established a mega technology corridor starting from Istanbul, Kocaeli to Izmir where there is a nationwide network for entrepreneurs, start-ups, academic research centres and development institutes.

The Turkish Technology Team Foundation and the Ministry of Industry and Technology also set up Teknofest. The event holds technology competitions covering 99 different categories, attracting more than 1 million visitors annually, including 150,000 teams and 600,000 participants from high schools, universities and entrepreneurs from 108 countries.

What are the general conditions for foreigners to work in Turkey?

1. Turkey is a hub for trade, business, and tourism. As a result, the nation provides considerable employment chances to foreign nationals. 
2. Within the bounds of international law, foreigners are entitled to employment in Turkey. Foreigners are restricted from enjoying certain fundamental rights guaranteed by the Turkish Constitution in conformity with international law. 
3. International Labor Law No. 6735 establishes general guidelines for the recruitment of foreigners in Turkey. This law stipulates that to employ foreign nationals in Turkey, a work permit must be obtained from the Ministry of Family, Labor, and Social Security, which is the appropriate authority. 
4. If the required work permit is not obtained, employment of foreign nationals is prohibited and punishable by administrative fines.

• The job for which the work permit is sought must have at least five Turkish nationals employed there.
• The condition for the employment of five Turkish citizens is requested for the final six months of the one-year work permit that the Ministry will provide if the foreigner who requests a work visa is a shareholder of the company.
• If more than one foreign worker needs a work permit at the same company, five Turkish citizens must be engaged for each subsequent foreign worker once the initial foreign worker’s work permit is approved.

5. To work in Turkey and make use of social security benefits associated with the right to work, a person must either get a work permit or be excluded from the requirement by law. In several industries and professions, foreigners are not permitted to work.

If you are considering working in Turkey, then it is essential that you have your profile reviewed by an immigration expert, who can explain your chances and what you need based on your country of origin and the company you are applying to. You can get the best immigration help right here at LegaMart. With 2000+ lawyers, you are the liberty to choose the lawyer based on your requirements. Get in touch with a LegaMart lawyer now!

Immigration opens up new paths for the immigrants. Uncover the steps and procedures for immigration to different nations, with a focus on Turkey to Norway and US to Portugal, in Legamart’s insightful articles.

Start-up Laws in Turkey

1. Young business owners and sole proprietorships just starting out can find heaven in Turkey. The most obvious path for new ideas is start-ups when factors like pervasive internet connectivity, special motivation for aspiring entrepreneurs, cost reduction opportunities on streamlined bureaucratic procedures like company establishment, and ease of access to the global market from Turkey are considered.
2. Although Startup Law does not yet have its unique legal framework in Turkey, it is nonetheless involved in broad legal fields, including Intellectual Property Law, Labor Law, Commercial Law, Tax Law and Law of Obligations. 
3. Start-ups should be assessed not only in terms of these general legal requirements but also in terms of special legal requirements such as IT Law, Investment Law, Personal Data Protection Law, Competition Law, Banking and Finance Law, Consumer Law and Capital Markets Law within the context of their activities, as well as in terms of legal areas with the supervisory authorities. 
4. Along with start-ups, new legal disciplines have emerged in recent years, including those pertaining to e-commerce, e-sports, blockchain technology and artificial intelligence.

Tech startup in Turkey

One of the different sorts of start-ups is the “tech start-up,” which refers to start-up enterprises in the tech and internet industries founded by a small number of entrepreneurs with very little money. Some concentrate on infrastructure projects, while others invest in portals, e-commerce, and digital marketing services. 

A company must meet the following criteria to be considered a tech start-up: 

1. It must have been founded with little funding and be unaffiliated with major corporations;
2. It must have brought innovation to the technology and service industries; and
3. It must have created a unique but sound business model.

What are the requirements for setting up a tech start-up in Turkey?

Foreign tech business owners who wish to launch a venture in Turkey must first meet a set of requirements before they can begin operations. The steps are as follows: 

Find a reliable business consultant to set up your business

The presence of a professional consultant is vital to achieving a timely and seamless establishment of your business in Turkey. Ensure that you pick up a trustworthy company that shall stand by you in the long term on behalf of the company. The role of the consultant begins with the initial business setup procedures. After that, through a partnership with their legal team, they proceed with other tasks, including preparing the master agreement, application for trade registry, preparation of tax office documents, and preparation of a power of attorney on behalf of your business.

It is possible to face extreme problems in conducting the tasks yourself, especially considering that certain areas might particularly pose problems for foreigners. Therefore, ensure you get the assistance needed as the business setup progresses. 

Acquire a potential tax number

The required procedures shall then require you to present a potential tax number. The best way to acquire the tax number is through an online application available to non-citizens. After visiting the official website of the Interactive Tax Office at İnteraktif Vergi Dairesi (gib.gov.tr), you need to click on the Application for Non-Citizens Potential Tax Number at the bottom of the page. You need to completely fill out the form, after which the system shall provide you with a Tax ID number once the form has been submitted. 

This number shall be your foreign identification number when you officially register your business. It is similar to the Foreigner ID Number issued to non-citizens who live, work, or do business in Turkey. The Foreign ID Number is provided by the General Directorate of Civil Registration and Nationality for foreigners who have resided in Turkey for more than six months. This number is provided to you immediately after you have received the residence permit, and the number starts with ‘99’ on your card. 

Decide on a company structure 

The most common types of companies that ex-pats operate in Turkey are Joint Stock Companies (JSC) and Limited Liability Companies (LLC). While JSCs are more useful for large companies, LLCs are suitable for small and medium enterprises. Being a new entrant in Turkey’s workforce, setting up an LLC would be the best option for the business. The process is affordable, fast, and easy, and further comes with other benefits for foreign investors. 

Determine the name of the company 

Starting a profitable business without having the necessary touch to attract potential customers can affect your business proceeds. Therefore, you must begin your brand image by choosing the best name for your business by the nature of the services provided. The name must appeal to the customers and not contradict Turkish business and customs laws. Further, it should not be used by locals or foreigners in the country at that time. 

Considering the evolving nature of artificial intelligence, AI-powered business name generators may be used to develop a good brand name. Namelix, BusinessNameGuide, DomainWheel, NameSnack, Zyro, etc., are great examples of AI-powered business name generator software. You can use any of them to generate catchy business names that suit your company.

Decide the best location for your company 

Your business must have either a virtual or physical location in Turkey. The same is required to be confirmed as the legal address of your company. You are required to present your potential tax number to rent any office space. Further, when making payments for the rent, ensure you pay from your company’s bank account, not a personal bank account.

The prices for the various membership packages for coworking spaces in Istanbul start from 860 Turkish Lira per month. This depends largely on the available amenities. Some great coworking spaces with affordable prices are e-Ofis in Pera, DAIRE Coworking in Besiktas, Ofis Voyvoda in Karaköy, Galata Business Center, etc.

Legally register your business 

The required documents prepared by your lawyer shall be filed with the trade registry and other related offices. Usually, the process takes a few working days, post which the due processes shall follow to register your business eventually. 

For the establishment of a limited liability company in Turkey, it will cost you an average and minimum cost of $370 – $420. However, the cost may vary depending on the volume of your business, the number of partners and your fluency in Turkish. If your business requires a certification to operate, be ready to spend extra money for your business registration.

Open a business account in Turkey

Due to the high demand in Turkish banks, it is preferable to seek the advice of your attorney before opening a bank account for your business. Opening a bank account early will help you carry out all the necessary financial processes for starting and operating a profitable business.

What are the requirements for setting up a tech start-up in Turkey?

Foreign tech business owners who wish to launch a venture in Turkey must first meet a set of requirements before they can begin operations. The steps are as follows: 

1. Completing and notarizing the necessary paperwork in compliance with the Companies Act; creating a bank account for the business and depositing the necessary share capital; 
2. Designating the company’s directors or management in accordance with the law; 
3. Sending the incorporation paperwork to the Trade Register together with the names of the shareholders and management; and
4. Register for social security with the tax office and obtain tax and VAT numbers.

Is there any visa for foreign tech start-ups in Tukey?

No, there aren’t any particular visas that would allow for extended business stays. When someone enters the nation to engage in certain business activity, they are awarded a business visa. The visa has a three- to six-month maximum validity period and cannot be extended without a solid justification. You cannot extend your business visa; instead, if you wish to remain in Turkey for a period longer than 90 days, you must obtain a residence permit.

What benefits does technopark in Turkey provide to foreign start-ups?

Technological expertise initiatives are moving forward at full speed in Turkey, and collaboration between the public sector, the business community, and academic institutions is fostering the growth of domestic innovations. 

1. Technopark Istanbul, a technological development hub intended to support local and foreign companies ability to develop technology in Turkey, represents the innovation hub for the country’s military industry. 
2. Technopark Istanbul combines the research resources of nearby and in-city universities, a skilled labour pool, and the expertise of the local business community, particularly in the military sector. 
3. In Technopark Istanbul, more than 300 national and international businesses are working on R&D projects for cutting-edge technological advancements.
4. Law Amending Laws and Statutory Decrees For The Development of Industry and Support of Production (the “Law”) was released in the Official Gazette on July 1, 2017, with the number 30111. 
5. The law updates a wide variety of legal provisions governing industrial production, as well as R&D activities, in Turkey. The law amended the Technology Development Zones Law by adding a new clause as one of the benefits offered (known as “Technopark Law”).

There are many benefits of the Technopark Law that attracts foreign start-ups to Turkey:

1. Support from the state: Financial assistance will be given by the Ministry if a Technology Development Zone’s administration company is unable to pay for: 
2. Incubation programmes that must be run or completed by the Technopark administration company to support R&D, innovation, and design activities; 
3. Technology transfer office services and programmes for technology cooperation; and

The building of infrastructure and administrative structures for Technopark.

1. Technopark production: If the Technopark administration company deems it appropriate and the Ministry approves, the technological product that has been researched and developed within the Technopark area may also be produced within the Technopark zone and benefit from the incentives offered for the production.
2. Start-up businesses will be exempt from paying taxes on the following items: 

• Stamp duty taxes and other fees for documents prepared in connection with the implementation of the Technopark Law; 
• Real estate taxes for properties owned within the Zone; 
• Custom duties, stamp duty taxes and any other fees for properties imported for use in R&D, innovation, and design projects; and 
• Income and corporate tax exemption until December 31, 2028, for revenues from R&D.

How foreign startups can get accepted in Technopark, and its the benefits?

A science and technology park in Turkey called Technopark offers incubation and acceleration services to entrepreneurs in the technology sector. The Turkish incubation and acceleration programmes offered by Technopark are open to applicants from abroad. Please be aware, though, that in order for companies to be admitted into Technopark’s programmes, they must first achieve a number of strict eligibility requirements. 

Before submitting an application, it is crucial to review these requirements and confirm that your startup satisfies them. Technopark generally seeks out entrepreneurs with creative business models, solid teams, and the ability to grow and succeed. In order to apply to Technopark, you should have a good chance of success if you are a foreigner with a technology-based business that satisfies these requirements.

How to get accepted into Technopark?

The following procedures must be undertaken in order to be approved into Technopark:

1. Examine the requirements: Technopark has specific requirements that startups must achieve in order to participate in their incubation or acceleration programmes. Check to see if your startup satisfies these requirements before applying.
2. Create a compelling application; Technopark receives a lot of them from entrepreneurs, so you need to make sure that it sticks out. Information about your team, your good or service, and your company plan should be included.
3. Sending in your application: You can use the Technopark website to submit your application online. Include all supporting documentation and data asked in the application form.
4. Awaiting a reply: Technopark will analyse your application after you submit it and determine whether to accept it or reject it. You will receive an invitation to join their incubation or acceleration programme if your application is approved.

In order to begin operations in Technopark, is it required to relocate the corporate headquarters there?

The location of the company’s headquarters is not required to be in the area. But in accordance with the Turkish Commercial Code, the R&D and software office in the area must be a “workplace.” Companies that do not have their corporate headquarters located inside the province of Technopark must treat their regional offices as branches in order to meet this requirement.

Benefits of working in Technopark

1. Exemption from Corporate Tax for Businesses and Entrepreneurs
2. Income Tax Exemption for Software Personnel Support for Basic Sciences, R&D, and Design Graduates: Till the end of 2028, software and R&D profits are not subject to income tax for individuals or corporations. Researchers, software developers, and R&D specialists employed in the region won’t be required to pay any taxes on their earnings until the end of 2028.
3. Exempt from VAT (For Software): Local software is exempt from VAT until the end of 2019.
4. Insurance Support from the Employer: R&D and support employees are exempt from paying half of the employer’s insurance payment until December 31, 2028.
5. Support Staff Are Exempt From Pay Taxes
6. Out-of-Region Work Permit
7. Technological Product Investment Permit Support
8. Customs Duty Exemption: Businesses conducting research on R&D, innovation, and design projects covered by Law No. 4691 and located in R&D and Design Centers and Technology Development Zones are exempt from paying customs fees.
9. Work rights refer to the ability to work full- or part-time with consent from the organisations for which they are employed.
10. The academics will be able to launch their own business, join forces with an existing business, or assist in managing these businesses in order to profit financially from their study.

Issues that a foreign entity may encounter when trying to get accepted into the Technopark

1. Technoparks welcome businesses that carry out R&D or those that develop the technology. Acceptance into one may be challenging for a foreign organisation. 
2. Despite this, living in a technopark is not a good option if you want to relocate individuals from your region to Turkey because it makes hiring foreigners more difficult. 
3. In order to relocate, I would advise creating a corporation where the individuals to be moved will be shareholders and board members, which may allow them to relocate. One needs to delve even further into this concept.

Conclusion

The term “start-up” is one of the most frequently used in the ecosystem of entrepreneurship, which describes the companies establishing a new enterprise, and is also the latest global trend in Turkey. The method being developed in Turkey aims to guarantee that creative ideas are encouraged in a more competitive setting. As we’ve already seen, starting a business in Turkey is simple, but if you’re a foreign company, there may be a few challenges that pose hurdles for you.