Manufacturing Company Formation in Turkey

Why Manufacture in Turkey?

Turkey is one of the largest manufacturing economies in the region, ranking in the top 15 globally by industrial output. Key competitive advantages for manufacturing investors:

• Cost-competitive labor: Skilled manufacturing workforce with wages competitive relative to EU alternatives
• Customs Union with the EU: Manufactured goods can be exported to EU markets without customs duties (for qualifying products)
• Geographic position: Access to 1.5 billion consumers within a 4-hour flight
• Energy infrastructure: Well-developed electricity grid and growing renewable energy capacity
• Government incentives: Regional, strategic, and sector-specific investment incentives
• Organized Industrial Zones: Ready-made industrial infrastructure with utilities, roads, and logistics

Step 1: Choose the Right Location

Organized Industrial Zones (OIZ)

Organized Industrial Zones (Organize Sanayi Bölgeleri — OSB) are purpose-built industrial areas with ready-made infrastructure:

• Pre-installed electricity, water, gas, and wastewater treatment
• Internal road networks and logistics access
• Shared facilities (training centers, banks, social amenities)
• Simplified administrative procedures
• Lower land and utility costs than open market

There are 300+ OIZs operating across Turkey. Some are sector-specific (automotive, textile, food processing, chemicals), while others are general-purpose.

Key advantage: Companies in OIZs benefit from reduced corporate tax rates under the regional investment incentive system and may qualify for land allocation at below-market rates.

Industrial Zones (Endüstri Bölgeleri)

Industrial zones are designated areas for large-scale manufacturing investments, particularly for foreign investors. They offer:

• Long-term land leases (40+ years)
• Simplified environmental permitting
• Government coordination on infrastructure

Free Zones

Manufacturing companies in free trade zones benefit from corporate tax exemptions if they export 85%+ of production. See our Free Zone Company guide for details.

Step 2: Form a Turkish Company

Manufacturing operations require a Turkish legal entity. An LLC is suitable for most manufacturing setups:

• Minimum capital: 50,000 TRY (though most manufacturing investments require substantially more practical capital)
• 100% foreign ownership permitted
• Formation time: 5–10 business days

For large-scale manufacturing requiring equity investment, a JSC provides more structural flexibility.

The articles of association must describe the specific manufacturing activities. Be specific about the types of goods to be manufactured.

See our LLC formation guide.

Step 3: Investment Incentive Certificate

For investments meeting minimum investment thresholds (typically 1 million TRY or more), an Investment Incentive Certificate (Yatırım Teşvik Belgesi) from the Ministry of Industry and Technology unlocks significant benefits:

General Investment Incentives (All regions)

• VAT exemption on machinery and equipment purchases
• Customs duty exemption on imported machinery

Regional Investment Incentives (Based on underdeveloped region)

• Corporate tax rate reduction (from 25% to 2%–18% depending on region)
• Income tax withholding reduction for employees
• Social security contribution support (employer share subsidized)
• Interest rate support for investment loans
• Land allocation

Strategic Investment Incentives (Import-substituting or high-value manufacturing)

• VAT exemption
• Customs duty exemption
• Corporate tax rate reduction to 2%
• 50% of investment amount eligible for income tax withholding exemption
• Up to 5% investment contribution

Priority Investment Incentives

• Defense, aviation, space, automotive, chemistry, electronics manufacturing qualify
• Extended incentive packages comparable to strategic investments

Apply for the incentive certificate before beginning the investment to ensure eligibility for all applicable benefits.

Step 4: Environmental and Operational Permits

Environmental Impact Assessment (EIA)

Certain manufacturing activities require an Environmental Impact Assessment (Çevresel Etki Değerlendirmesi — ÇED) before permits are granted. The requirement depends on:

• Type of industrial activity
• Scale of production
• Location proximity to sensitive areas

Activities subject to mandatory EIA include chemical plants, metal processing, cement manufacturing, and large food processing facilities.

For smaller activities, a preliminary environmental assessment (Çevre İzni) may suffice.

Operating Permit (İşyeri Açma ve Çalışma Ruhsatı)

All manufacturing facilities must obtain an operating permit from the local municipality or governorate. This permit certifies that the facility complies with safety, health, and environmental standards.

Sector-Specific Permits

Step 5: Workforce Planning

Labor Costs

Turkey’s minimum wage is adjusted twice yearly (January and July). As a benchmark for 2026, the gross minimum wage is approximately 26,000 TRY/month — verify the current minimum wage at çsgb.gov.tr.

Manufacturing workers typically earn 1.2–2.5× minimum wage depending on skill level and sector.

Employer Payroll Costs

In addition to gross wages, employers must pay:

• SGK employer contribution: approximately 20.5% of gross wage
• Unemployment insurance employer contribution: 2% of gross wage
• Total employer cost: approximately 22.5% above gross wage

Foreign Workers

Manufacturing companies with foreign ownership may hire foreign technical and management staff subject to work permit requirements. The ratio of foreign to local employees is regulated — generally, no more than 20% of workforce can be foreign nationals. See our Work Permits guide.

Step 6: SGK and Tax Registrations

After company formation:

1. Register with SGK as an employer before the first employee starts
2. Enroll in e-invoice and e-ledger systems (mandatory for companies above turnover thresholds)
3. Register for VAT — manufacturing purchases (raw materials, machinery) generate recoverable input VAT
4. Apply for Investment Incentive Certificate if applicable

See our Social Security Registration guide and VAT Registration guide.

Key Cost Considerations

Frequently Asked Questions

Is there a minimum investment size to qualify for investment incentives? The general investment incentive program typically requires a minimum investment of 1 million TRY for machinery and equipment. Regional and strategic incentive programs may have higher thresholds (verify at invest.gov.tr).

Can a foreign company own 100% of a Turkish manufacturing company? Yes. Foreign investors can own 100% of a Turkish manufacturing company in virtually all sectors. Defense-related manufacturing may have specific restrictions or require co-investment with Turkish entities.

Do manufacturing companies in OIZs pay reduced rent? Many OIZ management bodies offer land at subsidized prices or long-term lease arrangements to attract investment. Terms vary significantly by OIZ. Contact the specific OIZ management company for current pricing.

How are raw material imports taxed? Imported raw materials are subject to customs duties (if applicable) and VAT at point of importation. Both customs duties and import VAT may be exempted under the Investment Incentive Certificate for qualifying machinery and equipment — raw materials are generally not exempted from customs duties unless specifically included.