Merhaba! I am Shun Yoshida from Tokyo Consulting Firm Turkey Office.
I hope you all are safe and stay healthy.
For the next 2 weeks I would like to mention regarding “Project-based Business Development in Turkey”.
In general, the basic flow of overseas business development starts with a set-up of a Representative Office (Liaison Office) and conducting market research prior to the set-up of a branch office or a local subsidiary. However, depending on the specific industries such as construction and infrastructure, there may be some international companies conducting overseas business activities on a project basis for a certain period of time. This week, please let me put the focus on the project-based business development in Turkey.
⑴ Form of Business Base
The difference between project-based business activity and normal business activity is that the period of activity is determined beforehand and limited from the start to the completion of the specific project. In some countries, a company is allowed to initiate the business activity with the form of a “project office” which specializes in a project-by-project basis, however, in Turkey there is no concept of such kind of office. As a consequence, it is required to start the project after the completion of set-up of a business base in the form of either a local corporation or a branch office.
On the other hand, there may not always be necessity to set up a base (= Permanent Establishment, hereinafter PE) depending on the duration of the project. In this case, income tax will not be levied in Turkey-side in principle since PE does not exist in Turkey. The bilateral agreement between Turkey and other countries usually states that PE certification for construction projects will be determined based on whether the project period exceeds certain period of time. For instance, the bilateral agreement between Japan and Turkey mentions the period over 6 months. For more details, please refer to the reference at the very bottom of this blog, Article 5 “Permanent Establishment” of the bilateral agreement.
From the explanation above, it is necessary to set up either local corporation or branch office in Turkey if project duration exceeds certain periods of time. Furthermore, it is always easily imaginable that the original project duration will be extended depending on its progress. Therefore, it would be wise as an international company to set up a business base prior to the beginning of the project in order to prevent the risk of PE certification later on as long as there is even a bit of possibility for extension of the project.
That is all for this week.
I will share some more information regarding this topic in the next blog.
We are offering free meeting regarding establishment and business development in Turkey. Furthermore, it is possible for us to provide employee training and personnel evaluation system as solutions to develop the in-company productivity and activate the employee’s performances.
If you have any question other than the above topic, please do not hesitate to contact us.
Thank you very much for your time to read until the end.
References
・AGREEMENT BETWEEN JAPAN AND THE REPUBLIC OF TURKEY FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME
https://www.mofa.go.jp/mofaj/gaiko/treaty/pdfs/A-H6-2191_1.pdf
～▶YouTuberになりました！～
弊社YouTubeチャンネル『久野康成の毎日が有給休暇!!』を開設いたしました！
「久野康成の毎日が有給休暇!!」では、代表の久野が作った365の金言を
『久野語録』として日めくりカレンダーにまとめ、内容を毎日解説していきます。
チャンネル名にある通り、「毎日が有給休暇」になるような生き方のツボとコツを発信しておりますので
ぜひ一度ご覧頂ければと思います！
また、代表の久野が執筆した
『国際ビジネス・海外赴任で成功するための賢者からの三つの教え 今始まる、あなたのヒーロー』
の解説を、執筆者自らが行っている「賢者からの3つの教え」シリーズもぜひご覧ください！
東京コンサルティングファーム・トルコ拠点
吉田瞬
※）記載しました内容は、作成時点で得られる情報を基に、細心の注意を払って作成しておりますが、その内容の正確性及び安全性を保障するものではありません。当該情報に基づいて被ったいかなる損害についても情報提供者及び弊社（株式会社東京コンサルティングファーム並びにTokyo Consulting Firm Private Limited, Tokyo Consulting Firm Human Resources Private Limited）は、一切の責任を負うことはありませんので、ご了承ください。
