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Software Company in Turkey

Establishing a Successful Software Company in Turkey

Introduction Turkey has emerged as a key player in the global software industry, thanks to its strategic location between Europe and Asia, a young and tech-savvy population, and a supportive government promoting technology-driven businesses. Starting a software company in Turkey offers numerous opportunities, both for local entrepreneurs and foreign investors. In this article, we’ll explore the software industry landscape in Turkey, the steps to establish a software company, and the benefits of operating in this thriving market.

Overview of the Software Industry in Turkey

The software industry in Turkey has seen rapid growth over the past decade, fueled by increasing digital transformation, rising demand for technology solutions across various sectors, and government incentives aimed at fostering innovation. Key areas of software development in Turkey include:

Fintech
E-commerce platforms
Cybersecurity
Artificial Intelligence (AI) and Machine Learning (ML)
Gaming industry
Mobile application development

Turkey’s unique positioning as a technological hub between the East and West makes it an attractive destination for software outsourcing, IT services, and product development.

Government Support and Incentives for Software Companies

The Turkish government actively promotes the software and tech industry through various initiatives:

R&D Tax Incentives: Companies involved in research and development (R&D) can benefit from reduced corporate taxes, VAT exemptions, and government-backed grants.
Technoparks: These are special zones where software companies receive tax exemptions, reduced bureaucratic procedures, and other financial benefits. They are designed to encourage innovation, startups, and tech entrepreneurship.
Tech Visa Program: This program facilitates the recruitment of foreign talent in the tech industry, offering software companies easier access to skilled developers and engineers from abroad.
Export Incentives: Software companies exporting their services internationally can benefit from VAT exemptions and financial incentives that reduce operational costs.

Steps to Start a Software Company in Turkey

Starting a software company in Turkey involves several key steps:

1. Choose a Company Structure

The most common legal structures for software companies in Turkey are:

Limited Liability Company (LLC): This is the most popular structure due to its simplicity and low capital requirements (minimum capital of 50,000 TL).
Joint-Stock Company (JSC): Ideal for larger software firms, with a minimum capital requirement of 250,000 TL.

2. Company Registration

To establish a company, you’ll need to follow these steps:

Prepare Company Documents: Draft the Articles of Association and have them notarized.
Register with the Trade Registry Office: Submit the necessary documents to the Trade Registry to legally establish the company.
Obtain a Tax Identification Number: Register the company with the local tax office.
Open a Bank Account: Open a corporate bank account to deposit the initial capital.

Click the link of Company Registration in Turkey for more details

3. Social Security Registration

Register with the Social Security Institution (SGK) for social security contributions. This is mandatory for companies employing staff in Turkey. Required documents are follow:

Company registration documents.
Identification documents of the directors.
Employment contracts of the employees.

For further information, check out our article on Turkish Social Security System

4. Secure Office Space (Optional)

While many software companies operate remotely, securing office space in one of Turkey’s technoparks can offer significant tax advantages and better networking opportunities.

5. Recruit Skilled Workforce

Turkey has a large pool of talented software developers and engineers, particularly in major cities like Istanbul, Ankara, and Izmir. Foreign companies can also take advantage of the Tech Visa Program to bring in skilled workers from abroad.

Software Development Ecosystem in Turkey

Turkey’s software development ecosystem is growing, with a focus on collaboration and innovation. The country has numerous tech conferences, coding bootcamps, and accelerator programs that help foster talent and provide networking opportunities for tech entrepreneurs.

Additionally, several universities in Turkey are renowned for their computer science and engineering programs, providing a steady stream of new talent for the industry. Istanbul, in particular, is home to many startups, incubators, and venture capitalists, making it a vibrant hub for tech innovation.

Market Opportunities for Software Companies in Turkey

The demand for custom software development in Turkey is increasing across various industries:

Finance and Banking: Turkey has a rapidly expanding fintech sector, with banks and startups seeking innovative software solutions for digital payments, blockchain, and security.
Healthcare: The rise of telemedicine and health tech applications has opened up new opportunities for software companies focusing on healthcare solutions.
E-commerce: The boom in e-commerce has increased demand for scalable platforms, payment systems, and digital marketing solutions.
Government Digitalization Projects: The Turkish government is investing heavily in digital transformation, opening up new avenues for software companies that provide public sector solutions.

Challenges of Operating a Software Company in Turkey

Despite the many opportunities, there are also challenges to be aware of:

Economic Volatility: Turkey’s economy is prone to inflation and currency fluctuations, which can impact operational costs and profitability.
Regulatory Changes: While the government is generally supportive of tech companies, sudden regulatory changes, particularly around data privacy and cybersecurity, can require quick adaptation.
Competition: The growing popularity of the tech sector has increased competition, especially in cities like Istanbul where many startups are vying for talent and market share.

Taxation for Software Companies in Turkey

Software companies in Turkey are subject to the following taxation and financial reporting requirements:

Corporate Tax: The standard corporate tax rate is 25%. However, software companies that engage in R&D activities or are located in technoparks or sell abroad can benefit from reduced tax rates of up to 80%.
VAT: The general VAT rate is 20%, but software exports are VAT-exempt.
Withholding Tax: The general WHT rate is 20%, levied on rent payments for offices or warehouses and payments to freelancers such as accountant and lawyer.

Contact Us to Register a Software Company in Turkey

The software industry in Turkey offers promising opportunities for both local and international businesses. With strong government support, a growing tech ecosystem, and a large pool of skilled professionals, Turkey is well-positioned as a competitive market for software companies.

By leveraging the available incentives, conducting thorough market research, and adapting to the local business culture, entrepreneurs can successfully navigate the Turkish software landscape and achieve long-term growth.

A&M Consulting Co. is a consulting firm specialized in providing end-to-end getting Software Company Registration & Tax Consulting Services for especially global investor and foreign entrepreneurs which wants to walk into to Turkey’s market

We continue to offer cost-effective accounting & tax consulting services to global companies and individual entrepreneurs who want to enter the Turkish market smoothly and quickly, to ensure their full compliance with local legislation and to facilitate their access to tax exemptions and incentives.

DISCOVER OUR SERVICES:

You can reach out to our experienced consultans via email or by filling out the Contact Form on our website’s contact page

FAQs About Software Company in Turkey

What is the current state of the software industry in Turkey?

The software industry in Turkey is rapidly growing, supported by a tech-savvy population, government incentives, and a burgeoning startup ecosystem.

What are the steps to establish a software company in Turkey?

To establish a software company in Turkey, you need to choose a legal structure, register the company, obtain a tax identification number, and secure a workspace if necessary.

What legal structures can I choose for my software company?

Common legal structures include Limited Liability Company (LLC) and Joint-Stock Company (JSC).

What government incentives are available for software companies in Turkey?

Government incentives include R&D tax incentives, benefits for companies in technoparks, export incentives, and support through the Tech Visa Program for foreign talent.

Are there any tax benefits for software companies?

Yes, software companies engaged in R&D can benefit from reduced corporate tax rates, VAT exemptions, and other financial incentives.

How do I recruit skilled employees for my software company in Turkey?

Turkey has a large pool of talented software developers. You can recruit through local universities, online job platforms, and networking events. The Tech Visa Program also allows for the recruitment of foreign talent.

What are the main sectors driving the demand for software solutions in Turkey?

Key sectors include finance (fintech), e-commerce, healthcare (health tech), and public sector digitalization.

What challenges do software companies face in Turkey?

Challenges include economic volatility, regulatory changes, competition, and the need for continuous innovation.

Is it mandatory for software companies to comply with local financial reporting standards?

Yes, software companies must comply with Turkish regulations and international financial reporting standards (IFRS) for their financial reporting.

How can a software company in Turkey benefit from networking and collaboration?

Networking can lead to partnerships, funding opportunities, and collaborations that enhance innovation and market reach. Participating in tech conferences and joining industry associations can help build valuable connections.

What role do technoparks play for software companies in Turkey?

Technoparks offer tax exemptions, reduced bureaucracy, and a supportive ecosystem for startups and tech companies to foster innovation and growth.

What is the typical timeline to establish a software company in Turkey?

The process can vary but generally takes between a few weeks to a couple of months, depending on the legal structure and registration requirements.

Can foreign investors start a software company in Turkey?

Yes, Turkey encourages foreign investment in the tech sector, and foreign investors can establish companies under the same legal frameworks as local entrepreneurs.

What trends are shaping the future of the software industry in Turkey?

Key trends include increased investment in AI, machine learning, cybersecurity, and growth in the fintech and e-commerce sectors.

Are there any support organizations for software companies in Turkey?

Various organizations, including government agencies, industry associations, and tech incubators, provide support, resources, and funding opportunities for software companies.