Setting Up a Company and Investing in a Free Zone in Türkiye: Establishment, Activity Licence and Tax Advantages

In Türkiye, the legal structure of a company set up in a free zone, the activity licence issued by the Ministry of Trade and the workplace in the zone should be planned together. A Turkish or foreign investor may set up a new company, or may consider the appropriate branch model for an existing business. However, obtaining an address in a free zone does not mean that all income and transactions are exempt from tax. The scope of the advantage is determined by the activity, the production, the direction of sales, the date of the licence and the documentation conditions.

This article explains the main legal issues from company establishment through the operating period to exit from the zone, within the regulations in force as of 13 October 2026. In particular, the production earnings exemption, which was extended in 2026, and the export condition on wages of employees are assessed separately.

What is a free zone and for what purpose is it established?

A free zone is an area within the political borders of Türkiye where special provisions apply in respect of customs, foreign trade and certain taxes. It is not independent of Turkish law. The obligations under company law, labour law, social security, contracts, environmental law and the protection of personal data apply together with the relevant special provisions.

The purpose of Law No. 3218 on Free Zones is to promote export-oriented investment and production, to accelerate foreign investment and the inflow of technology, to direct businesses towards exports and to develop international trade. The special position recognized in customs status does not mean that every good is treated as being of foreign origin or can be brought into Türkiye tax-free. Origin and customs status are different concepts. (S1, S2, S16)

Where are the free zones in Türkiye?

According to the general introduction published by the Ministry of Trade, there are 19 operating free zones. In the Mediterranean region: Mersin, Antalya and Adana-Yumurtalık; in the Aegean: Ege, Denizli, İzmir and Batı Anadolu; in the Marmara region: İstanbul Specialised, İstanbul Industry and Trade, İstanbul Thrace, Avrupa, Kocaeli, TÜBİTAK-MAM Technology and Bursa; in the Black Sea region: Trabzon, Rize and Samsun; and in other regions: Gaziantep and Kayseri. A zone that has been decided upon and a zone that is actually operating may not be at the same stage. (S26)

In choosing a zone, the acceptability of the product and service, port and transport links, energy and infrastructure capacity, the labour force, a suitable workplace, the operator's tariff and the market where the customer is located should be examined together. For a business to be set up in Antalya, too, the activity and the technical suitability of the location should be investigated first, before entering into an investment and rent commitment.

Which business model suits a free zone?

A free zone may be suitable for export-oriented production, international procurement, storage, certain logistics activities and permitted services. By contrast, for a business whose sales are concentrated in the part of Türkiye outside the zone, imports and earnings outside the exemption may change the investment account.

Production, trading, maintenance and repair, assembly, storage or software activities do not produce the same licence and tax result. In assessing an application, the export orientation of the activity, its employment effect, its economic nature, its effects on human and public health, sensitive products and the physical facilities of the zone are considered. A business plan should be based on real customer, product, investment, financing and staffing data. (S1, S4)

Free zones, organized industrial zones and technopark models should not be used interchangeably. For an investment based on R&D or a software project, setting up a company in a technopark may also be compared. The decision should be taken not only on the basis of the tax rate but on the total cost of establishment and operation.

How should a new company, a Turkish branch or a foreign company's branch be chosen?

A new company headquartered in a free zone, a free-zone branch of an existing Turkish company and a branch in Türkiye of a foreign company are different legal structures. A subsidiary set up by a foreign investor under Turkish law acquires a separate legal personality; a branch of a foreign company is not a separate legal person from its head office.

Under Circular No. 1998/4, the free-zone activity of a business continuing its activity in the part of Türkiye outside the zone is carried out through a branch. The transfer of the head office into the zone is assessed by the termination of the activities outside and by the conditions of the permit; it cannot be treated as an ordinary change of address.

The limitations in the Circular are important where a new company with a free-zone address operates under the same trade name in the part of Türkiye outside the zone and opens a branch. Opening a branch in other free zones or abroad is also assessed under the relevant permit conditions. When choosing between a branch and a new company, contracts, financing, the liability of the partners and the future investment plan should be considered together. (S3, S6)

Should a limited company or a joint-stock company be set up?

The minimum capital of a new limited company is 50,000 TL and that of a joint-stock company is 250,000 TL. In a joint-stock company that is not publicly traded and adopts the registered capital system, the initial capital must be at least 500,000 TL. These are the minimum amounts under company law; they are not the total budget of a free-zone investment or the equivalent of the financial capacity required for a licence. A uniform capital requirement of 50,000 or 100,000 US dollars applied to every investor should not be assumed. (S6)

In a joint-stock company, at least one quarter of the nominal value of shares undertaken in cash must be paid before registration, and the remainder within 24 months following registration. In a limited company, no one-quarter payment condition applies before registration; the payment schedule for cash capital is determined by the relevant provisions and the articles of association.

The liability of a limited company partner for public receivables that cannot be collected from the company, or that are understood to be uncollectable, in proportion to its share of capital, must also be taken into account. The liability arising from a joint-stock company shareholder merely being a shareholder is not the same as the liability arising from the capacity of a manager or legal representative. The liability of legal representatives for public debts is assessed separately in both structures. (S6)

Management and representation powers, banking transactions, transfer of shares, disputes between partners and the exit of an investor should be settled at establishment. In a limited company, the requirement that at least one partner have management and representation authority, the written form for transfer of shares, notarial certification of signatures and, as a rule, the approval of the general assembly may affect the choice.

Which documents are required for a foreign investor?

The mere fact that an investor is foreign does not create an obligation to find a Turkish partner. Foreign natural or legal persons may invest in a free zone, subject to the special conditions of the activity and sector. However, Article 12 of Law No. 3218 contains a provision that the Foreign Direct Investment Law No. 4875 does not apply in a specific respect; the general foreign investment incorporation template should therefore not be transferred to the zone unchanged. (S1, S6)

For a foreign natural person, identity or passport, tax number, address and representation documents are examined; for a foreign legal person, the current registry and activity documents, the decision of the competent organ, and signature and representation powers are examined. For a branch of a foreign company, the legal status of the head office, the decision to open the branch and the fully authorised representative resident in Türkiye must be separately documented.

Documents issued abroad may require an apostille or consular certification, a Turkish translation and other necessary approvals, depending on the country and the type of document. A bank review of the ultimate beneficiary, the partnership structure and the source of funds should also be included in the establishment timetable. Setting up a company does not automatically grant the partner a right to work or reside. (S6, S17)

How does an activity licence application and the setup process proceed?

The activity licence is issued by the competent unit of the Ministry of Trade. The zone operator takes part in the provision of premises and operating services; it is not on its own the authority that grants the activity licence. The application is made to the Free Zone Directorate concerned, with the Activity Licence Application Form and its annexes. The Regulation regulates delivery by hand and by registered post; electronic application and document procedures are followed separately for the relevant transaction. (S2, S4)

In setting up, first the activity, the zone and the model of company or branch are determined. The draft contract of the new company, the decision on the branch or the transfer of the head office of the existing company, and the business plan are prepared in line with the licence file. The application fee is paid; the file goes through the operator's opinion and the administrative assessment. After the letter of conformity, the premises agreement and the necessary supplementary documents are submitted within the time limit; commercial registration, tax and licence procedures are linked according to the investor's existing structure.

Where an application is found acceptable under Article 11 of the Regulation, it is important that the rent agreement and the necessary documents are completed within 30 days from notification of the letter of conformity. This period does not mean that all company establishments will be completed in 30 days. Failure to complete in time and rejection of the application on the merits may also have different consequences for the refund of the fee paid. (S2)

After the licence is granted, registration in the Firm Information Register of the Directorate is completed separately from registration in the trade registry. The Free Zone Transaction Form (SBİF) authorisations, customs, stock, bank, accounting and staffing arrangements should be set up before the first transaction. The Warehouse Use Certificate (Depo Kullanma Belgesi) is a separate document for a suitable storage model; it does not replace the licence for all production and trading activities. (S2, S4)

Licence term, application fee and renewal application

The basic periods under Circular No. 2009/3 are as follows. The investor means a user who builds its own workplace; a tenant means a user who rents a ready workplace. (S5)

A licence relating to the activity of renting a workplace is issued for at most five years. Special provisions apply to R&D activities in the TÜBİTAK-MAM Technology Free Zone. Standard periods do not confer an unconditional acquired right on every application.

The general activity licence application fee is 5,000 US dollars. This amount does not cover company capital, rent or all establishment costs. The conditional discount under TÜBİTAK-MAM is not a general investor discount. For re-issue transactions, such as changes to the information on the licence or loss of the document, separate fees are provided, such as 200 US dollars; for transfers of buildings or superstructures, 500 US dollars for the transferor, among others. (S5)

A refund on rejection of an application is distinguished from withdrawal from an application that has been assessed favourably. On notice of withdrawal given within 30 days of the date of the letter of conformity, the 500 US dollar transaction and the refund conditions in the Circular apply. The period running from the notification of submission of the premises agreement should not be confused with this starting point.

A user wishing to continue its activity must apply before the period expires. After evaluation of the activities of the last three years, a new licence may be issued under the same licence number, starting from the date on which the previous period ended. The document issued is not an "activity report". Because there are special period arrangements for former investor licences, it cannot be said that the period can never be changed in any circumstance. (S5)

Rent, superstructure investment and total establishment cost

Renting a ready workplace and building a facility on Treasury land are not the same investment. In the case of Treasury land, the superstructure passing to the Treasury at the end of the period of use; in the case of private land, ownership, transfer and lease conditions; and in both models, administrative approvals, should be examined before the contract. Transfer of the licence, transfer of shares in a company and transfer of the superstructure are different transactions. (S2, S7)

The premises agreement should clearly state the condition of delivery, the purpose of use, the term, the price and method of increase, the deposit, common expenses, infrastructure capacity, maintenance, insurance, sub-use, early exit and the condition of the building at the end of the investment. A mismatch between the licence and the lease term may cause the business to assume a debt for a period it cannot use.

The general investment timetable in Circular No. 2019/3 provides six months for a project and eighteen months for construction; special facilities, permit processes and conditions for extension of time are assessed separately. The obligation of a tenant to begin operations within six months from the date of the licence, and of an investor from the date of the occupancy permit, is also monitored separately. Annual insurance, and where necessary the obligation to show the Treasury's interest in the policy, should be included in the investment file. (S3, S7)

The real budget consists of capital, the licence application, registry/notary/translation, rent and guarantees, construction or alteration, machinery, energy, insurance, staff, accounting, certified public accountant fees, legal services, customs consultancy and operator tariffs. Tax exemption, cash support and operator discounts are separate items. A fixed total price or a definite completion week should not be promised before the gaps in the file and the technical permits are known.

For details of the subject, reference may be made to the section on yacht construction agreements.

Which earnings within a free zone are exempt from tax in 2026?

The transitional right granted to existing licences as of 6 February 2004 and the provisions on production and service activities that started later must be kept separate. The transitional right is limited to the period stated in the licence as at that date; continuing the licence later does not automatically extend the former tax right. (S1, S9)

The limitation on sales abroad introduced for the production exemption for 2025 was re-regulated in 2026. By Law No. 7577, from 1 January 2026, earnings from the sale of goods manufactured in the zone abroad, into the same free zone or into other free zones have been brought within the scope. Communiqué No. 26 of the Corporate Tax series, dated 4 July 2026, explains the application. Earnings from sales to the part of Türkiye outside the free zone fall outside this production exemption. (S1, S8)

On the assumption that the other conditions are met and the amounts are the earnings after deduction of expenses, in this example 9,000,000 TL falls within the exemption. Other tax provisions apply separately to the 3,000,000 TL. The table is prepared on the assumption that there is no pre-2004 transitional licence or other special exemption.

Does a production licence cover all income?

No. Products actually manufactured in the zone must be separated from commercial goods bought and sold externally. Merely holding a production licence does not turn trading income into production income. Entrusting the entire production to outside contract processing, and procuring contract services at certain stages where the main production is carried out in the business, are also not the same. In the latter case, the conditions of the Communiqué, the capacity, the organization of the work and the costs are considered together. (S9)

The law lists specific conditions for maintenance and repair, assembly, disassembly, handling, sorting, packaging, labelling, testing and storage services; for example, the whole of the service being provided to foreign customers whose qualifications are stated, and the relevant goods being sent to a foreign country without entering Türkiye. Not every consultancy or service income falls within this provision. For software, the licence type, the actual production, the location of the customer, the place of use and the documentation of export are assessed separately. (S1, S10)

How is the exemption amount and shared expense calculated?

The exemption applies not to sales revenue but to the earnings found after deduction of cost and expenses from the relevant revenue. Exempt and taxable activities must be tracked separately. A loss from the exempt activity cannot be used to reduce taxable income.

Shared general expenses between the head office and free-zone activities are distributed according to the cost ratio in the Communiqué; depreciation of depreciable assets used in common is distributed mainly according to days of use. Where the period of use cannot be determined, the shared expense method applies. Exchange-rate and maturity differences on receivables from activity and revenue temporarily held until used in activity payments, and non-operating financial income, are not treated as the same. The location of a bank account in the zone does not exempt all interest and repo income. (S9)

Minimum corporate tax and the 2027 production rate

In calculating domestic minimum corporate tax, the deduction of exempt earnings under Law No. 3218 does not mean that the examination of the domestic and global minimum top-up tax for large multinational groups has disappeared. When the consolidated revenue threshold and the group scope are met, the second regime is assessed separately. (S9, S25)

The 12.5% rate for the exclusive production earnings of institutions holding an industrial registration certificate and actually producing, introduced by Law No. 7582, relates to the 2027 and subsequent taxation periods. The period beginning in 2027 under the special accounting period is taken as the basis. This rate should not be used as if it applied to 2026 earnings; for production earnings outside the exemption, it should be considered together with the date of entry into force. (S9)

The 85% export condition on employee wages and certified accountant reports

The export condition in the income tax application on wages is separate from the company's production earnings exemption. The total FOB value of products manufactured in the free zone must be exported abroad to the extent of at least 85%, and the other conditions must be met. The fact that sales earnings from the same or another free zone fall within the exemption in 2026 does not mean that such a sale is automatically counted as export abroad for the calculation of wage withholding. (S1, S10)

In a simplified example, suppose that 1,000 units of a single product were manufactured and sold in full in the same year, with a unit FOB value of 100 US dollars. If 900 units were exported abroad, the ratio is 90%; if 800 units were exported, it is 80%. In the first case the threshold is exceeded; in the second it is not. For a business with opening and closing stocks, different products, prices and sales in the following year, this simple formula should not be used directly; the calculation should be made by the production and sales method in the Communiqué.

If the conditions are not met on an annual basis, the delay surcharge on tax not collected in time and the collection mechanism in the Law arise. This arrangement does not mean that every breach of documentation or declaration obligations goes unsanctioned. The wage withholding advantage does not remove social security premiums or the employer's total staff costs.

Three different reports should not be confused

For the wage withholding, the general date for submitting the Free Zone Activity Certification Report is 15 February of the year following the year concerned. In cases such as the end of the activity during the year or the satisfaction of the export condition through sales in the following year, special periods apply. An additional period on reasonable excuse, and the late submission arrangement of 46 days from the final date in Communiqué No. 2, should not be used as an ordinary and penalty-free extension. (S10)

Certification of the earnings exemption in the annual return falls under Communiqué No. 49. For the year 2025, criteria of 500,000 TL in a separate line item and 1,000,000 TL in the relevant total were set. The thresholds for later years depend on the revaluation mechanism; a 2025 return submitted in 2026 and the 2026 earnings are not the same period. The mandatory certification report is generally submitted with the return or within two months after the end of the period for filing the return. Where the full certification report requires a separate section, no duplicate report is required. In case of deficiency, the process under VUK Article 227 (supplementary provision) is assessed separately. (S11)

The certified accountant report and monitoring documents on support for a specialised free zone are the third file. The wage report or the corporate tax certification does not replace the support report. For each report, the responsible person, period, final date, documents and delivery record should be determined from the start. (S15)

Council of State decision on documentation for software exports

In its decision of 2 March 2021, E.2018/5020, K.2021/1336, the 4th Chamber of the Council of State found lawful the regulation requiring that, for the wage withholding advantage on electronic software exports, the bringing of the foreign currency into Türkiye be documented up to the date on which the certified accountant report is submitted. The action was dismissed as regards the regulatory act. The decision on individual letters and payment orders is based on the assessments of a definitive act and of pending litigation. (S24)

The decision cannot be generalized to say that all free-zone earnings remain taxable until collection. The subject examined is the software export and wage withholding documentation conditions for the relevant period. The lesson for the business is that the contract, invoice, export record, bank document and certified accountant report should be managed together as regards time. (S24)

VAT, special consumption tax, stamp duty, charges and property tax

On deliveries of goods from Türkiye to a free zone, the VAT export exemption applies under the delivery and exit conditions of the Law. The VAT system for goods to which the free-zone provisions apply, and the services supplied in the free zone and the freight transport for export purposes to and from the zone, are regulated in different subparagraphs. A service supplied from outside the zone is not exempt from VAT merely because its recipient is in the free zone. Energy costs should be assessed, in addition to their tax character, with the tariffs and service charges. (S12)

The statement that "all goods in a free zone are 100% exempt from special consumption tax" is not correct for special consumption tax. Under Article 7/7 of Law No. 4760, the exemption under the free-zone provisions is regulated for goods in List (III) annexed to the Law. Other lists are examined under the conditions of the import and export exemption. (S13)

The stamp duty and charges exemption relates to transactions and papers concerning activities carried out in the zone. It is not correct to bring within the exemption all documents issued by the company without examining their link to the activity. (S1)

Buildings in free zones enjoy a permanent exemption under Article 4/m of the Property Tax Law (Emlak Vergisi Kanunu); the condition in that article that the property not be leased out must be taken into account. The building exemption does not make all real property and all models of use tax-free within the same scope. The relevant amendment was made by Law No. 7033. (S14)

Staff and rent support in specialised free zones

The supports under Decision No. 2635 and Circular No. 2020/4 are not an automatic right of every free-zone user. The appropriate activity, licence, admission to the programme, investment and expense documentation conditions for software, informatics and foreign-currency-generating services, and for medium-high and high-technology manufacturing, are examined together. The age of the existing company, its export experience, the model of transfer to the centre, a branch or majority partnership may matter for the application. (S15)

Support may be provided for up to 50% of the gross wage of at most ten qualified personnel, subject to a limit of at most 1,250 US dollars per month and 15,000 US dollars per year per person. For rent of land and buildings the support is 50%, with an annual upper limit of 75,000 US dollars. Support may be used for at most five years. Exclusions of personnel, such as partners, certain close relatives and managers, and the position of users holding a special three-year licence, should be separately checked.

Payment of support requires wage and rent payment documents, appropriate personnel records, a monitoring form and a certified accountant report. The applications made in January, April, July and October following the quarterly expense periods in the Circular should be entered in the business calendar.

Decision No. 10819, published on 8 January 2026, removed the credit support for operating companies with effect from 1 January 2026, and re-regulated the provisions for users. Restrictions on the same activity's use of other support programmes should not be reduced to whether the same invoice was presented twice. The decision on support and the current implementing Circular should be read together. (S15)

Customs procedures, the SBİF, origin and special movements of goods

Trade between the rest of Türkiye and the free zone, and from the free zone to the rest of Türkiye, is subject to the foreign trade regime. Special provisions apply to transactions between the free zone and other countries and other free zones. This does not mean that movements of goods are outside registration and control. The SBİF, invoice, transport document, stock record and, where necessary, the customs declaration must be consistent. (S1, S2, S16)

For certain goods that are not direct production inputs and are sent from Türkiye to the zone for consumption or use, an optional export procedure facility exists, on condition that the total invoice value of a consignment does not exceed 5,000 US dollars or its equivalent in Turkish lira, and with the approval of the Zone Directorate. This provision is not a general tax exemption for all small consignments.

The tariff heading (GTİP), origin and free circulation status are determined separately. The A.TR movement certificate is not a certificate of origin. Processing of foreign input in the zone does not in itself mean that all origin conditions are met. On entry into Türkiye, import duties, trade policy measures and product safety rules may apply depending on the nature of the goods.

For contract processing, maintenance and repair, temporary entry and exit, waste and scrap there are different permit and guarantee arrangements from a definitive sale. For goods not belonging to the user, such as maintenance and repair items, or temporary vehicles and equipment, special provisions such as a twelve-month period apply. The return of goods temporarily removed from the zone and the consideration to be collected at the end of the procedure are monitored separately. The general absence of a time limit for holding goods in the zone does not remove the time limits for temporary goods or the obligation to remove goods when the licence ends. (S2, S16)

Special account fee of 1 per mille and 9 per mille

Under Article 7 of Law No. 3218 and Article 41 of the Regulation, a special account fee is charged on certain users and movements of goods. For manufacturers, or relevant users holding a licence before 6 February 2004, the basic rules are 1 per mille on the CIF value of goods brought into the zone from abroad and 9 per mille on the FOB value of goods taken out of the zone into Türkiye. Exemptions and different rules apply to investment and facility goods, temporary procedures and users who are not manufacturers after 2004.

For example, on 200,000 US dollars CIF of goods entering at 1 per mille, the amount is 200 US dollars; on 300,000 US dollars FOB of goods leaving to Türkiye at 9 per mille, the amount is 2,700 US dollars. These are not customs duty calculations. Certain sales within the zone and temporary exit guarantees are also assessed separately; a single 1% fee is not applied to all transactions. (S1, S2)

For details of the subject, reference may be made to the section on yacht construction, refit contracts and maintenance and repair processes.

For details of the subject, reference may be made to the section on the stay and conditions of use of a foreign-flagged yacht in Türkiye.

Personnel, foreign work permits and social security

For employees of a free zone, obligations under labour law, social security and occupational health and safety continue. The employment contract, working hours, wages, leave, termination and liability for work accidents are independent of tax incentives. A principal employer and subcontractor relationship may be established; the fact that the subcontractor is not a user does not remove the requirement that its employees comply with the zone's entry and safety rules. (S1, S2)

The application of a foreign employee is carried out under the procedure specific to free zones. The file of a foreigner lawfully present in Türkiye is submitted by the user to the Zone Directorate; the application of a foreigner abroad is submitted in connection with the process of the Turkish foreign representation. The permit document is issued by the Ministry of Labour and Social Security. Not requiring a diploma from a company partner does not automatically exempt them from the work permit. (S17)

The thirty-day procedure for completing missing application documents; the obligation to notify the KEP account within 15 days of starting work in applications made from abroad; and the obligation to submit the social insurance registration document to the Zone Directorate within 30 days of delivery of the permit document are separate obligations. The last does not mean that the SGK employment entry notice may be delayed by 30 days. Post-permit procedures, such as return of the document within one week of cancellation of the permit, should also be followed. A zone entry card does not replace a work permit. (S17)

Accounting, contracts, profit transfer and the daily operating arrangement

Branch and head office transactions, exempt and taxable activities, and stock and production records should be tracked separately. The timetable for ledgers, e-documents, returns and certified accountant reports should be set up before the first sale; year-end information and the reports demanded by the administration should be followed up with the responsible persons. A new product's manufacture or trade may require prior approval of the relevant changes to the application form. Adding an activity to the articles of association does not by itself extend the licence. (S2, S3, S9)

In sales and supply contracts, the definition of the goods, quality, mode of delivery, transfer of risk, payment, exchange rate, inspection, warranty, delay, termination and dispute resolution should be clearly regulated. In contract processing agreements, ownership of the goods, losses in processing, return, intellectual property and tax and customs documents should also be stated. For software, source code, licence, employee and contractor works and confidentiality provisions are important.

Obligations under KVKK continue for customer, employee or cloud systems containing personal data. Data sharing with a foreign parent company or a service provider abroad must be established on a legal basis and safeguards consistent with the current cross-border transfer regime. (S19)

Being able to transact in foreign currency in a free zone does not mean that all payments are made only in foreign currency; there are rules for transactions that may be made in Turkish lira. Profit, capital, repayment of debt and service fees are different types of transfer. The foreign investor's documentation that the value to be transferred belongs to it, and the notification obligation to the Zone Directorate, are taken into account. Freedom of transfer does not remove bank review, tax withholding or the audit of transactions with related persons. (S1, S2)

On the distribution of profit, or the transfer of the branch's earnings to the head office of a foreign company, the general domestic withholding rate may be 15% depending on the recipient's status; exemptions for full-liability corporate taxpayers and the applicable double tax treaty must be examined separately. On a hypothetical gross distribution of 1,000,000 TL subject to a 15% withholding, a withholding of 150,000 TL arises. This example is not a fixed result applicable to all partners and all transfers. (S18)

Share transfer, growth and acquisition of an existing business

Acquiring a company's shares is not the same transaction as a separate transfer of the licence, the superstructure or the business. A change of shareholder does not extinguish the company's tax, labour, rent and contractual debts. Before an acquisition, the scope and duration of the licence, the audit and sanction history, tax-exemption files, stock differences, personnel, litigation and enforcement files, intellectual property and encumbrances on real property should be examined.

Circular No. 1998/4 requires that changes in shares be notified within 30 days. For changes of address, location, capital, representation and activity, the licence and the Zone Directorate records should be updated alongside the registry entry. In transfers or growth transactions requiring administrative conformity, the conditions of performance of the contract should be set according to the outcome of the permit. (S2, S3, S7)

When does restriction of activity and cancellation of the licence apply?

Article 14 of the Regulation provides for no single sanction. In certain breaches relating to notification, contracts or the zone's rules, the processing of SBİFs for the exit of goods and for sales within the zone may be suspended for one month. Once the breach has been remedied, the process may resume earlier. The three-month description for the whole of this group in older texts is not the same as the current provisions.

For breaches such as the exit or entry of goods contrary to the regulation, or an unexplained stock difference not exceeding 5% for each type of goods, a three-month restriction is provided under Article 14/b. The 5% limit is not a right of free loss. An unexplained difference exceeding 5%, in cases of misleading activity or repeated serious breaches, may give rise to cancellation of the licence without warning under the relevant subparagraph. In other cases cancellation depends on the result of the assessment. Consequences arising from customs, tax and penal legislation may also apply separately. (S2)

The inspection report, the counting method, stock and production records, notification and the applied subparagraph should be examined together. It is not correct to explain every breach by the same period or by an automatic cancellation.

Which routes of challenge apply to a licence refusal and to financial decisions?

First it should be determined whether the document is a deficiency letter, a final refusal, a restriction on activity, a cancellation of the licence, a tax notice, a customs decision or a payment order. An oral meeting or completing documents does not in itself stop the lawsuit period.

An application made in time and to the correct authority under Article 11 of the İYUK suspends the lawsuit period, insofar as it is applicable. If there is no reply within thirty days, implied rejection and the remaining lawsuit period are calculated. This mechanism must not be carried over uncontrolled to tax, customs and other special routes of application. The bringing of an action does not automatically stay the execution of a licence action; the conditions of Article 27 of the İYUK must be separately shown for a stay of execution. (S20, S21, S22)

The application file should contain the action, the notification, the licence, the contract, the payment and notification records, the inspection reports and the concrete grounds for unlawfulness. A company's dispute with the administration and a private-law dispute with the operator or the landlord may not be subject to the same judicial route.

Eviction, liquidation and third-party rights when activity ends

The expiry of the licence, exit from the zone and liquidation of the company in the trade registry are different transactions. Stock, personnel, contracts, customs closures, tax returns, deposits and handover of the superstructure should be planned together.

Article 52 of the Regulation provides an eviction period of not less than one month and not more than six months, depending on the legal status of the property. For structures on Treasury land, the total six-month limit including extensions is important. For goods not removed within the period, counting, determination and the statutory liquidation process arise. The holding of goods in the zone during the period of use does not give an unlimited right to storage once the licence has expired. (S1, S2)

The Constitutional Court's decision of 11 October 2023, E.2022/96, K.2023/174, annulled the provision in the second paragraph of Additional Article 5 of Law No. 3218 that attachments, pledges, mortgages and similar annotations are deemed lifted after counting and determination. The decision did not remove eviction and liquidation as a whole. The rights of third parties to claims and security must still be protected separately; the old expressions remaining in the regulation do not make the annulled statutory provision applicable again. (S23)

Legal support and preparation for the first meeting in an investment file

For the initial assessment, the planned activity and products, target customers, the direction of sales, the existing company and partnership structure, the investment and staff budget, the intended zone and workplace, and any licence and rent documents should be prepared. For an existing company, tax examinations, administrative notifications, litigation and enforcement files should also be included in the assessment.

Güneş & Güneş Law Firm, in its legal work since 1999, handles together company and branch structuring, activity licences, investment and rent agreements, share transfers, employment and dispute processes. With communication available in Turkish, English, German and Russian, coordination with the relevant professionals and institutions can be arranged in files of foreign investors. The engagement under company law is determined by the needs of the investment.

Information and documents shared at the first meeting are assessed under the lawyer's professional secrecy and the duties to protect personal data. Files containing commercial secrets should be shared through a suitable and secure channel; the scope of work, the power of representation and the information to be shared with relevant specialists should be made clear at the engagement.

Conclusion

The legal foundation of an investment in a free zone is the correct company or branch model, a suitable activity licence, a secure premises agreement and an orderly system of records maintained throughout operations. Tax advantages are consequences of this structure linked to specific activities. It is important that in 2026 the production earnings exemption also covers sales to the same and other free zones; but the export ratio for wage withholding, VAT and special consumption tax, certification by a certified accountant and support applications are subject to separate conditions.

Preparing the establishment file together with the trade registry, the Ministry, tax, customs and staff procedures, and managing subsequent share transfers, changes of activity and decisions to exit the zone within the same legal framework, makes the investment sustainable.

Frequently Asked Questions

Is a Turkish partner required to set up a company in a free zone?

No. The mere fact that the investor is foreign does not create a requirement for a Turkish partner. The activity, sector and specific permit conditions are examined separately.

Can a foreign company open a branch in a free zone?

Yes, if the appropriate licence and the conditions of the Turkish trade registry are met. A branch has no separate legal personality; the documents of the foreign head office and a fully authorised representative resident in Türkiye are required.

Can an existing Turkish company operate in the zone without opening a branch?

For a company continuing its activity in the rest of Türkiye, the branch model in Circular No. 1998/4 is the basis. A transfer of the head office, the termination of activities outside and the conditions of the permit are assessed separately.

What is the minimum capital of a free-zone company in Turkish lira?

A new limited company requires 50,000 TL and a joint-stock company 250,000 TL; in a joint-stock company that is not publicly traded and has registered capital, the initial capital is 500,000 TL. The investment budget and financial capacity are separate from these amounts.

Who issues the activity licence?

It is issued by the competent unit of the Ministry of Trade. The zone operator plays a role in premises and operating services; it cannot grant a special permit in place of the licence.

What is the licence application fee?

The general application fee is 5,000 US dollars. Rent, capital, registry and other establishment costs are not included in this amount; special discounts and other transaction fees are assessed separately.

How long is a licence valid?

The basic periods are 20 years for a tenant in production and 45 years for an investor; 15 years for a tenant and 30 years for an investor in other activities. There are separate arrangements for renting a workplace and for special zone activities.

Can the activity continue after the licence period ends?

A new licence under the same number may be issued after an application and a favourable assessment made before the period expires. The administrative right to continue does not automatically extend the former tax exemption attached to the pre-2004 licence.

Is establishment in a free zone completed in exactly thirty days?

No. The period for completing the documents after the letter of conformity and the period for the whole establishment are different. Translation, registry, premises and technical permits affect the timetable.

Is a three-year balance sheet required from a new company?

Past financial statements that do not exist for a company not yet established are not prepared. The financial capacity and business plan documents appropriate to the founder and the application model are submitted.

Is a trading company wholly exempt from corporate tax?

No. A new trading business is not within the production earnings exemption merely because it is in a free zone. Any separate transitional right or special provision is examined under its own conditions.

Are sales in 2026 to the same free zone exempt?

Earnings from sales of goods manufactured in the zone to the same free zone or to other free zones have been included in the production earnings exemption from 1 January 2026, together with the other conditions.

Can goods be sold to other parts of Türkiye?

Yes; import, product safety and other relevant rules apply. Earnings from such a sale do not fall within the current production exemption, unless there is a separate transitional right of the pre-2004 type.

Is the 85% export condition required for all of the company's earnings?

This rate is a separate condition for the application of income tax on wages. It is not the same test as the production earnings exemption.

When is the certified accountant report generally given?

For the wage withholding, the general date in the activity certification report is 15 February of the following year. The scope and periods of the annual earnings exemption certification and the specialised support reports are different.

Are all purchases exempt from VAT and special consumption tax?

No. The goods, services, direction of delivery, customs status and relevant statutory subparagraph are examined separately. Extending the free-zone provision to all lists in special consumption tax is incorrect.

Does renting out a free-zone building affect property tax?

It may. In assessing the building exemption under the Property Tax Law, the condition that the building not be leased out must be taken into account.

Is personnel and rent support paid automatically?

No. Acceptance to the specialised free zone support programme and the conditions of eligible activity, expense and report must be met. Obtaining a licence alone does not give a right to payment.

Is a company partner exempt from a foreign work permit?

Partnership alone does not create a general exemption. The working status and any statutory exception are examined; not requiring a diploma document is not the same as exemption from the work permit.

Can profit be transferred abroad?

Freedom of transfer exists; the ownership of the money, notification, bank documents and any applicable tax withholding are separately observed. Not every transfer is a dividend.

Is a 1% fee charged on all movements of goods?

No. Special account fees vary according to the type of user and transaction; the 1 per mille and 9 per mille rules and the exemptions must be separated. Customs duties are calculated separately.

Does acquiring a company's shares also take over the licence automatically?

A share transfer is different from a transfer of the licence and the superstructure. The notification and permit conditions and the company's past debts must be examined before the acquisition.

Does bringing an action to cancel the licence keep the activity running automatically?

No. A stay of execution of the administrative act must be requested separately and the statutory conditions are assessed. The lawsuit period must be calculated immediately on notification.

Can goods remain in the zone indefinitely when the licence ends?

No. The eviction and liquidation provisions apply. The periods for temporary goods and the period given for exit from the zone are separate from the general storage advantage.

Can the 12.5% rate adopted for 2027 be used in 2026?

The date of entry into force of the relevant production rate applies to 2027 and subsequent periods. It should not be carried into the calculation of 2026 earnings.

Sources and legal bases

Sources were checked on 13 October 2026. Earlier circulars have been assessed together with the law, regulation and later amendments in force. The source codes below correspond to the relevant explanations in the article.

S1 — Law No. 3218 on Free Zones; Arts. 1, 6–12, Additional Art. 5 and Provisional Art. 3. Official source

S2 — Regulation on the Implementation of Free Zones; establishment, licence, registration, sanctions under Art. 14, special account and evacuation provisions. Official source

S3 — Ministry of Trade, Circular No. 1998/4 on the Assessment of Activity Licence Applications. Official source

S4 — Ministry of Trade, 2026 Application Form for an Activity Licence, application criteria 2009/1 and licence procedure. Official source · Annex document 2 · Annex document 3

S5 — Ministry of Trade, Circular No. 2009/3 on Activity Licence Periods and Application Fees. Official source

S6 — Turkish Commercial Code No. 6102; announcement of minimum capital; Law No. 6183 Art. 35 and supplementary Art. 35. Official source · Annex document 2 · Annex document 3

S7 — Ministry of Trade, Circulars No. 2019/4 on rent and superstructure, No. 2019/3 on investment projects and timelines, and No. 2019/6 on insurance of superstructures. Official source · Annex document 2 · Annex document 3

S8 — Ministry announcement of 17.04.2026 on Law No. 7577; Corporate Tax General Communiqué No. 26 of 04.07.2026. Official source · Annex document 2

S9 — Corporate Tax Law No. 5520, in particular Arts. 32 and 32/C and the schedule of entry into force; Section 5.12.3 of General Communiqué No. 1. The basic Communiqué was read together with the amendment of Serial No. 26. Official source · Annex document 2

S10 — General Communiqué No. 1 (12.03.2009) and No. 2 (29.07.2010) under Law No. 3218; wage withholding and certified accountant report periods. For software, see also S24. Official source · Annex document 2

S11 — SMMM and YMM Law General Communiqué No. 49 of 30.12.2025; Revenue Administration table of certified accountant thresholds. The declaration period in the table has also been taken into account. Official source · Annex document 2

S12 — VAT Law No. 3065, Arts. 11, 12, 16 and 17/4-ı; VAT General Implementation Communiqué. Official source · Annex document 2

S13 — Special Consumption Tax Law No. 4760, in particular Art. 7/7. Official source

S14 — Property Tax Law No. 1319, Art. 4/m, and note on the amendment by Law No. 7033. Official source

S15 — Decision No. 2635 on Supports to be Provided in Specialised Free Zones; amendment No. 10819; implementing Circular No. 2020/4. Official source · Annex document 2 · Annex document 3.pdf)

S16 — Customs Law No. 4458; Ministry of Trade explanations on temporary storage, bonded warehouses and free zones. Official source · Annex document 2

S17 — Law No. 6735 on International Labour Force and the Ministry of Trade procedures and principles for work permits for foreign personnel in free zones. Official source · Annex document 2

S18 — Revenue Administration, withholding tax rates on payments to non-resident taxpayers; together with the recipient and agreement conditions. Official source

S19 — Personal Data Protection Authority, Guide on the Transfer of Personal Data Abroad. Official source

S20 — Law No. 2577 on Administrative Procedure (İYUK); Arts. 7, 11 and 27. Official source

S21 — Ministry of Trade, explanations on objections in customs procedures; Art. 242 of Law No. 4458. Official source

S22 — Law No. 6183, Art. 58; Revenue Administration, Guide to Procedures Against a Payment Order 2026. Official source · Annex document 2

S23 — Constitutional Court, 11.10.2023, E.2022/96, K.2023/174; Official Gazette of 24.11.2023, No. 32379. Reasoning on Additional Art. 5/2 at §§18–43. Official source

S24 — Council of State 4th Chamber, 02.03.2021, E.2018/5020, K.2021/1336; Ministry of Justice case-law search, document 676906600. Official source

S25 — Revenue Administration, General Communiqué on Domestic and Global Minimum Top-Up Corporate Tax. Official source

S26 — Ministry of Trade, General Introduction to Free Zones and General Information Note of May 2026. Official source · Annex document 2