Free Zone branch establishment in Turkey enables a foreign company to conduct commercial activities within a designated free zone without incorporating a separate legal entity. The branch operates under the legal identity of the parent company and is subject to both Turkish commercial law and the Free Zones regulatory framework.
Free Zones in Turkey are governed by Law No. 3218 and are structured to facilitate export-oriented manufacturing, logistics, and certain service activities under a special customs and tax regime.
Legal Structure of a Free Zone Branch
A branch does not have separate legal personality. All rights, obligations, and liabilities arising from Free Zone activities remain legally attributable to the foreign parent company.
Accordingly:
- The parent company bears unlimited liability.
- Financial reporting and accounting must reflect branch operations separately.
- Capital allocation must be declared in the branch registration documents.
This structure is generally preferred where the foreign company intends to maintain operational control directly from headquarters while accessing Free Zone status.
Operating License Requirement
Commercial activity in a Free Zone is not permitted without an Operating License issued by the Ministry of Trade.
The Operating License defines:
- Scope of activity (manufacturing, trading, logistics, etc.)
- Duration of operation
- Facility type (tenant or investor status)
Application requires submission of:
- Business plan
- Parent company corporate documents
- Lease or land-use agreement
- Application fee (USD 5,000 or equivalent)
License duration varies depending on status:
- Tenant companies: up to 15 years (20 years for manufacturing)
- Investor companies: up to 30 years (45 years for manufacturing)
Operations outside the scope of the licensed activity are not permitted.
Establishment Procedure
1. Facility Selection
The company must select a Free Zone among the active zones and enter into a preliminary agreement with the zone operator for facility allocation.
2. Operating License Application
The application is submitted via the Free Zone Directorate to the Ministry of Trade.
Review timeline typically ranges between 15–20 business days for complete files.
3. Branch Registration
Following license approval:
- The branch is registered with the relevant Trade Registry.
- The registration is published in the Turkish Trade Registry Gazette.
- A tax identification number is obtained.
4. Free Zone Registration
The branch must also be recorded in the Free Zone Directorate registry before commencing operations.
5. Customs System Integration
SBİF (Free Zone Transaction Form) procedures must be activated.
Where applicable, integration with SEBİS and customs IT systems is required.
Tax and Customs Framework
Corporate Income Tax
Profits derived from the export of goods manufactured within the Free Zone are exempt from corporate income tax.
As of 1 January 2025, domestic sales of goods produced within the Free Zone are subject to corporate tax.
Wage Withholding
Employee wages within the Free Zone may qualify for withholding tax exemption if export revenue thresholds are met under applicable regulations.
VAT and Customs
- Deliveries from Turkey to a Free Zone are treated as exports.
- Deliveries from a Free Zone to Turkey are treated as imports.
- Customs procedures apply accordingly.
Stamp Duty
Transactions directly related to Free Zone activities may benefit from stamp duty exemptions within the legal scope.
Accounting and Operational Considerations
Free Zone branch operations must be accounted for separately from any off-zone activities.
Companies are expected to:
- Maintain distinct accounting records
- Ensure accurate SBİF reporting
- Align customs declarations with accounting entries
- Apply Turkish Financial Reporting Standards where applicable
Operational planning should consider:
- Export ratio management
- Currency exposure
- Transfer pricing alignment with parent company transactions
Cost Overview
- Operating License Application Fee: USD 5,000 (official)
- Facility rent: determined by zone operator (typically USD-indexed)
- Registry, notary, and translation costs: variable
Exact cost structure depends on selected Free Zone and activity type.
Strategic Consideration
A Free Zone branch structure enables direct operational control by the foreign parent while accessing the Free Zone regulatory framework.
The structure is generally used for:
- Export-oriented manufacturing
- Regional logistics hubs
- Controlled trading operations
The suitability of this model depends on activity scope, export profile, and corporate governance preferences.
For technical evaluation of Free Zone branch establishment, tax structuring, and compliance implementation in Turkey, you may contact ÖzbekCPA.
