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A Comprehensive Guide to Legal Benefits for Tech Start-Ups in Turkey

Table of contents


• Introduction • Legal Framework for Sole Proprietorship and Startups in Turkey • Financial and Investment Incentives for Tech Startups in Turkey • Benefits of Foreign Direct Investment in Turkey • Conclusion



Introduction


Overview of the Turkish startup ecosystem Turkey has been on a mission to establish itself as a hub for tech startups. The country has been offering several benefits to encourage young entrepreneurs to invest in their innovative ideas. The Turkish government is extending its full support to offer every advantage possible to help startups find their footing. With widespread internet access, special incentives, ease of access to the world market, and simplified bureaucratic procedures such as company establishment, Turkey is an attractive destination for startups. Benefits of starting a tech startup in Turkey Apart from the incentives provided by the government, tech startups in Turkey also enjoy financial and investment incentives. Startups operating as sole proprietorships receive legal protection and guidance under the existing laws of commercial, intellectual property, and tax. In addition, young entrepreneurs receive tax exemptions and do not have to pay monthly social security premium payments for one year. Tech startups also benefit from technopark incentives and get investment support under the Small and Medium Enterprises Development and Support Administration (KOSGEB) Investment Programs.


Legal Framework for Sole Proprietorship and Startups in Turkey


Legal Framework for Sole Proprietorship and Startups in Turkey Starting a new business, especially in the tech industry, can be a daunting task, especially with all the legalities involved. Turkey has taken measures to simplify the incorporation of new companies and provide legal protection and guidance to startups and sole proprietorship businesses. The legal framework for startups in Turkey is primarily based on commercial law, law of obligations, intellectual property law, labor law, and tax law. While there is no specific legislation for startups in Turkey, the existing laws are used to draw a legal framework for their activities. In addition to the general legal regulations, startups need to comply with specific rules such as personal data protection law, banking and finance law, capital markets law, investment law, competition law, IT law, and consumer law, depending on the scope of their activities. Compliance with these legal regulations is essential for startups to ensure legal protection and avoid penalties. Furthermore, with the ever-changing technological landscape, Turkey is also introducing new legislation such as e-commerce law, e-sports law, Blockchain law, and Artificial Intelligence law to regulate areas that have exceeded the framework of previously applicable legal regulations. Overall, the legal framework for startups in Turkey is designed to support innovative ideas in a competitive environment while providing financial stability and support for new sole proprietorship businesses. As a result, Turkey has become a safe incubator for startups, reducing investment barriers and encouraging foreign direct investment in its booming startup ecosystem.


Financial and Investment Incentives for Tech Startups in Turkey


Financial and Investment Incentives for Tech Startups in Turkey: Turkey has been investing heavily in nurturing its startup ecosystem, and financial and investment incentives have played a critical role in attracting and retaining international investors. Tech startups operating as sole proprietorships in Turkey have access to many financial and investment incentives from the government, including the Sole Proprietorship Establishment Support Program. This program offers establishment support of up to 10,000.-TRY and performance support of up to 40,000.-TRY. Similarly, the Advanced Entrepreneur Support Program provides up to 10,000.-TRY in establishment support, up to 300,000.-TRY in machinery, equipment, and software support, up to 10,000.-TRY in mentoring support, and up to 40,000.-TRY in performance support. Startup companies can also benefit from the Business Plan Award Support Program, which offers support of up to 300,000.-TRY for projects with higher education institutions, institutions and organizations, national/international competitions, and KOSGEB projects that receive awards. The government's Small and Medium Enterprises Development and Support Administration (KOSGEB) provides multiple investment programs, including funding opportunities for young entrepreneurs and startups. Financial incentives for young entrepreneurs include an exemption from tax for their earnings up to 75,000.-TRY for three years. Additionally, technology companies established in technoparks do not pay corporate tax, and there are other incentives for regional management centers and exports. The R&D Law and Benefits further add to the financial incentive pool, and angel investors are not subject to VAT. To further support the startup ecosystem in Turkey, the state is restructuring its legislation to become a safe incubator for startups and a competitive safe zone for investors. Startups can now be established with a single procedure without the need for intermediaries such as notary public, banks, and Social Security Institutions. With all these incentives and a revised legal framework, Turkey aims to reduce the investment barriers in front of these startups and enable them to reach the unicorn level.


Benefits of Foreign Direct Investment in Turkey


Investing in the Turkish market comes with numerous advantages, with the government introducing various incentives to attract foreign investors. The country's strategic location, customs union with the EU, well-connected transportation infrastructure, and a large, young, and skilled workforce make it a desirable destination for foreign direct investment. Furthermore, investing in startups in Turkey can further improve the startup ecosystem through the infusion of foreign financial and experiential support. The government is continuously adjusting legislation and incentives to reduce investment barriers and encourage foreign investment in the country.


Conclusion


In summary, Turkey offers a highly competitive and profitable environment for tech startups to thrive, with comprehensive legal frameworks, financial incentives, and investment programs under KOSGEB. The ease of setting up a company, reduced bureaucratic procedures, and tax exemptions are just some of the many benefits that young entrepreneurs can take advantage of. With the vision of becoming a safe incubator for startups and a preferred destination for foreign investors, Turkey's startup ecosystem is well on the path to success. As the fifth startup in Turkey hits the unicorn level, the future of Turkey as a startup hub looks bright.

Expanding on the information provided, it is evident that Turkey offers a highly competitive and profitable environment for tech startups to thrive. This is primarily due to its comprehensive legal frameworks, financial incentives, and investment programs under KOSGEB. These initiatives not only provide crucial support but also enhance the confidence of young entrepreneurs in the Turkish startup ecosystem.

One of the significant advantages that Turkey offers is the ease of setting up a company. The streamlined procedures and reduced bureaucratic hurdles make it convenient for aspiring entrepreneurs to establish their startups. This expedites the process, allowing them to focus more on their business strategies and innovations rather than getting entangled in time-consuming administrative tasks.


Moreover, the startup-friendly policies in Turkey also provide tax exemptions, which further incentivize young entrepreneurs to choose Turkey as their startup hub. By reducing the financial burden in the initial stages, these tax benefits allow startups to allocate more resources towards research and development, product refinement, and market expansion.

With its vision of becoming a safe incubator for startups and a preferred destination for foreign investors, Turkey has been diligently fostering its startup ecosystem. The culmination of these efforts is evident as the country celebrates its fifth startup reaching the unicorn level, which is a testament to the thriving entrepreneurial spirit within Turkey.

Looking ahead, the future of Turkey as a startup hub looks exceptionally promising. With the continuous advancement of its startup ecosystem, further breakthroughs and success stories are anticipated. The collaborations between local startups and international investors are fueling innovation and opening up new avenues for growth. As Turkey continues to create an environment that fosters innovation and nurtures startups, it is poised to become a prominent player in the global startup landscape.

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