Free Zone Establishment Application & Legal Consultancy Services
Free zones are designated special economic areas established to facilitate trade and encourage investment by providing specific economic advantages and incentives. These zones offer tax, customs, and other financial benefits designed to support export-oriented production and commercial activities. Companies operating in free zones may reduce their costs through various tax incentives and gain a more competitive position in global markets. In Türkiye, free zones are regulated primarily under Law No. 3218 on Free Zones and the relevant secondary legislation.
Although establishing a company and commencing operations in a free zone may offer significant advantages to investors, the process also involves an application and authorization procedure requiring careful attention to specific legal and administrative requirements. Obtaining professional legal counsel during this process helps investors take the appropriate steps and ensure compliance with applicable legislation.
Free Zone Establishment Process
- Pre-Application Preparation
Investors seeking to establish a company or commence operations in a free zone should first clearly define their business plans and intended activities. After determining the sector in which they intend to operate and planning their investment, investors must prepare the documents required for the free zone application process. Applications may cover activities such as manufacturing, trading, assembly, and warehousing. - Application Form and Required Documents
An investor seeking to operate in a free zone must submit an application to the Ministry of Trade of the Republic of Türkiye. The application generally requires documents including:- Free Zone Operating Licence Application Form.
- Company incorporation documents and the relevant Trade Registry Gazette.
- Signature circular showing the company’s authorized representatives.
- A project and information file containing details of the proposed activity and business plan.
- Lease agreement or title deed documents relating to the facility or premises to be used in the free zone.
- Corporate and investor information, including identification and tax identification details.
- Application Fees
During the free zone application process, an application fee determined by the Ministry of Trade may be payable for obtaining an operating licence. The applicable fee may vary depending on the sector, type of activity, and scale of the investment. In addition, specific lease or purchase costs may apply to land leased or acquired within the free zone. - Obtaining an Operating Licence
If the investor’s application is approved, the Ministry of Trade issues an Operating Licence. This licence grants the investor the right to conduct specified activities within the free zone for a defined period. The duration of an operating licence may generally range from 10 to 15 years, depending on the type of activity and applicable regulations, and may be renewed upon expiry. Companies holding an operating licence may benefit from applicable tax incentives and commercial advantages available within the free zone.
Free Zone Activities and Advantages
- Tax Advantages
Companies operating in free zones may benefit from various tax incentives, depending on the nature of their activities and the applicable legislation. These may include:- VAT exemptions applicable to qualifying transactions, including certain export-related activities.
- Potential corporate tax exemptions or incentives applicable to income derived from qualifying free zone activities.
- Exemptions or advantages concerning customs duties, import duties, and certain other commercial taxes, where applicable.
- Customs Facilitation
Free zones provide various customs and trade facilitation mechanisms. This may simplify and accelerate procedures relating to goods brought into the free zone, processed there, or subsequently exported, potentially reducing transaction costs. - Flexible Use of Foreign Currency
Foreign exchange transactions between domestic and foreign investors may be conducted with greater flexibility within the framework applicable to free zones. Companies may conduct commercial transactions in foreign currencies and generate foreign currency revenues, subject to applicable regulations. This flexibility can provide significant advantages to companies engaged in international trade. - Domestic and International Markets
Free zones can serve as strategically important locations for international trade. Depending on the applicable regulations, procedures relating to the export of goods produced in free zones and the movement of goods into the Turkish domestic market may benefit from various administrative and customs facilitations. Free zones therefore offer an attractive environment for both export-oriented manufacturers and companies engaged in international trade.
Key Considerations in the Free Zone Application Process
- Selecting a Free Zone Suitable for the Intended Activity
Türkiye has numerous free zones, each of which may offer different advantages depending on the sector and type of activity. Selecting the most suitable free zone for the intended business activity is important for ensuring an efficient application process. For example, certain free zones may be more suitable for manufacturing activities, while others may be preferable for trading or warehousing operations. - Legal and Regulatory Compliance
Companies operating in free zones must comply with the applicable free zone legislation as well as relevant national and international trade rules. Particular attention should be paid to areas such as environmental regulations, occupational health and safety requirements, and product certification, where applicable. - Operating Licence Duration and Renewal
Investors should ensure that operating licences are renewed before their expiry where renewal is required. The renewal process may involve reporting on the company’s activities within the free zone and satisfying the criteria established by the Ministry of Trade and applicable legislation.