Advantages and disadvantages for creating a subsidiary in Turkey

Creating a subsidiary in Turkey, like expanding into any foreign market, comes with its own set of advantages and disadvantages. It’s essential to thoroughly research and evaluate the specific circumstances of your business and the Turkish market before making a decision. 

Here are some key advantages and disadvantages to consider before creating a subsidiary in Turkey :

advantages of creating a subsidiary in Turkey

Turkey has a large and rapidly growing population, making it an attractive market for many industries.

Turkey serves as a bridge between Europe and Asia, providing a strategic location for businesses looking to expand their reach.

Turkey has a customs union with the European Union (EU), making it easier to trade with EU member countries and benefiting from reduced trade barriers.

The Turkish government offers various incentives to attract foreign investors, including tax incentives, subsidies, and grants.

Turkey has a well-educated and relatively affordable labor force, especially in industries like IT, engineering, and manufacturing.

Turkey has invested significantly in infrastructure development, including transportation, telecommunications, and energy, which can benefit businesses.

disadvantages of creating a subsidiary in Turkey

Turkey’s bureaucratic processes can be complex and time-consuming, which may slow down the establishment and operation of a subsidiary.

Navigating Turkey’s legal and regulatory environment can be challenging, and compliance with local laws and regulations is critical.

Turkey has experienced currency volatility in the past, which can pose financial risks to businesses with operations in the country.

Turkey has experienced periods of political and economic instability, which can affect business operations and investment confidence.

Language and cultural barriers can pose challenges for foreign businesses operating in Turkey, necessitating the need for skilled local staff or translation services.

Many industries in Turkey are highly competitive, and businesses may face stiff competition from both local and international companies.

Certain regions of Turkey may face security concerns, so it’s essential to assess the security situation and take appropriate precautions.

While there are tax incentives, the Turkish tax system can be complex, and businesses may face challenges in understanding and complying with tax regulations.

Before establishing a subsidiary in Turkey, it’s crucial to conduct thorough market research, seek legal and financial advice, and develop a comprehensive business plan that addresses these advantages and disadvantages to mitigate risks and maximize opportunities.

If you’re looking for a cost-effective solution, we recommend considering outsourcing the Payroll in Turkey solution:

  • Azkan will oversee the recruitment process.
  • Furthermore, we suggest handling their payroll on your behalf. This entails:
    • Azkan managing the recruitment of your employees.
    • Our team signing an employment contract with them and handling salary and tax payments.
    • Providing a car rental service if necessary.

This approach eliminates the need for you to establish a separate entity.”

Azkan Group can support you in your Employer of Record (EOR) and payroll requests (also called Umbrella Company) in Turkey. We can manage your HR requests even if you don’t have a legal entity in Turkey.