As of October 2026, a company from mainland China or Hong Kong has three main ways to set up in Türkiye: a subsidiary (a Turkish Ltd. Şti. or A.Ş.), a branch of the foreign company, or a liaison office. A subsidiary and a branch may both trade and both pay 25% corporate tax, and profit sent to the parent bears 15% Turkish withholding in either case unless a tax treaty lowers it. A liaison office needs a permit from the Ministry of Industry and Technology, may not carry on any commercial activity, and its first permit runs for up to three years.
This guide compares the three for owners in mainland China and Hong Kong. If you have already decided on a company, our article Ltd. Şti. or A.Ş.? compares the two company types.
At a glance
| Subsidiary (Ltd. Şti. or A.Ş.) | Branch | Liaison office | |
|---|---|---|---|
| Legal status | Turkish company with its own legal personality | Part of the foreign company, not a separate legal entity | Office of the foreign company under a Ministry permit |
| Set up through | Trade registry | Trade registry | Ministry of Industry and Technology |
| May carry on business | Yes | Yes, for the parent’s own business purposes | No commercial activity |
| Minimum capital | TRY 50,000 (Ltd. Şti.) or TRY 250,000 (A.Ş.) | None; the parent states the capital allocated to the branch | Not applicable; the parent pays the costs from abroad |
| Liability | The company, with its own assets | The parent itself | The parent funds the office |
| Corporate tax | 25%, on worldwide income | 25%, on income earned in Türkiye | Not allowed to earn income |
| Profit sent to the parent | 15% dividend withholding; a treaty can lower it | 15% on profit transferred to head office; a treaty can lower it | Only the balance left on closure |
| Run by | Managers (Ltd. Şti.) or a board (A.Ş.) | Fully authorised representative domiciled in Türkiye | Person(s) authorised by the parent |
| Permit term | None | None | Up to 3 years at first, then extensions |
| Yearly report to the Ministry | Activity form in E-TUYS by end of May | Activity form in E-TUYS by end of May | Information form (Annex 4) by end of May |
What is the difference between a subsidiary and a branch?
A subsidiary is a Turkish company. The Commercial Code gives every commercial company its own legal personality. A joint-stock company (A.Ş.) is liable for its debts only with its own assets, and its shareholders are liable only for the capital they committed. Shareholders of a limited company (Ltd. Şti.) are not liable for the company’s debts either; they owe their committed capital and any additional payments written into the articles.
One exception matters to foreign owners. If taxes or other public receivables cannot be collected from a limited company, its shareholders are directly liable in proportion to their shares (Law No. 6183, Article 35). That article covers limited company shareholders only.
A limited company is run by one or more managers (müdür), and at least one shareholder must hold management and representation rights. An A.Ş. is run by a board of directors with one or more members.
A branch is not a separate legal entity, according to the government’s Investment Office. It has no shareholders and can only be set up for the same purposes as the parent. Its contracts and debts are therefore the parent’s own; no Turkish company stands in between.
How is a branch taxed compared with a subsidiary?
A subsidiary has its legal head office in Türkiye, so it is a full taxpayer on its worldwide income. A foreign company whose legal and business head offices are both outside Türkiye is a limited taxpayer: it is taxed only on income earned in Türkiye, mainly the commercial profit of its Turkish branch (Corporate Tax Law, Article 3). The general corporate tax rate of 25% applies to both (Article 32).
The difference comes when profit goes to the parent:
- Subsidiary: dividends paid to a foreign parent bear withholding tax.
- Branch: after corporate tax, the amount the branch transfers to its head office bears withholding within the branch (Article 30(6)).
Both domestic rates have been 15% since Presidential Decision 9286 took effect on 22 December 2024. Under the Foreign Direct Investment Law, net profit and dividends can be transferred abroad freely through banks. The treaties then cap the Turkish tax:
| Parent company | Dividends from a subsidiary | Branch profit transferred to head office |
|---|---|---|
| No treaty relief | 15% | 15% |
| Resident of mainland China | 10% for the beneficial owner (treaty Article 10(2)) | 10% (Protocol, point 3) |
| Resident of Hong Kong, amounts paid from 1 January 2027 | 5% with at least 25% held directly for 365 days, otherwise 10% | 5% (Article 10(4), applying the 5% rate) |
On the Turkish side, the Hong Kong treaty applies to taxes withheld at source on amounts paid or credited on or after 1 January 2027 (Article 28). Until then, amounts paid to a Hong Kong parent bear the domestic 15%. The treaty’s Protocol raises the 5% and 10% rates to 10% and 15% if Hong Kong begins to tax dividends. Before the first payment we confirm which documents the treaty rate requires. Our articles on dividends and profit repatriation and the Hong Kong–Türkiye tax treaty go further.
How do you register a branch of a foreign company?
Under Commercial Code Article 40(4), a branch of a business headquartered abroad is registered like a Turkish business, and a fully authorised commercial representative (ticari mümessil) whose domicile is in Türkiye must be appointed. The trade registry records the representative’s nationality and domicile. Once the first branch exists, further branches are registered like branches of Turkish companies.
For the first branch, the Trade Registry Regulation (Article 122) asks for:
- a letter from the competent home-country authority confirming its registration conditions are met and listing the documents required for the branch, plus those documents;
- the parent’s current registry record and articles of association;
- the parent’s resolution to open the branch and appoint the Türkiye-resident representative;
- a declaration signed by the parent’s officers giving the parent’s details, the branch name, the capital allocated to the branch, the representatives and the address;
- a power of attorney if the resolution does not set out the representatives’ authority;
- the representatives’ signature declarations, and any sector permit.
Documents issued abroad must be apostilled (or certified by a Turkish consulate) and filed with a notarised Turkish translation (Article 32). Our company formation guide explains the apostille routes in mainland China and Hong Kong. The branch’s trade name must show where the parent and the branch are located and that it is a branch (Commercial Code Article 48(3)).
Choose the representative carefully. If public receivables cannot be collected from the foreign company, Law No. 6183 (repeated Article 35) allows them to be collected from the personal assets of its representatives in Türkiye. A foreign national who will work in Türkiye in this role needs a work permit or a work permit exemption (International Labour Force Law No. 6735, Article 6); see work permits for Chinese and Hong Kong staff.
After registration, a branch files and keeps books much like a subsidiary. Both are corporate taxpayers, which must use the e-Tebligat electronic notification system (Tax Procedure Law, Article 107/A). Both keep balance-sheet books (Article 177), and since 1 January 2025 these are kept as an e-Ledger signed with a financial seal or a qualified electronic signature. Both also report their activities to the Ministry each year by the end of May through its E-TUYS system.
What can a liaison office do in Türkiye?
The Ministry of Industry and Technology, through its General Directorate of Incentive Implementation and Foreign Investment, may permit a company established under foreign law to open a liaison office on condition that it carries on no commercial activity in Türkiye. If the documents are complete, applications are decided within fifteen working days. The Ministry may require the parent to have existed for at least a year.
The application includes a form, a declaration of the office’s activities with an undertaking not to trade, the parent’s certificate of activity (apostilled or certified by a Turkish consulate), its activity report or financial statements, and an authorisation for the person who will run the office.
How long the permit lasts. The first permit is for up to three years. The Ministry may extend it, for a period set by the activity:
| Activity | Extension, if granted |
|---|---|
| Representation and hospitality | 5 years |
| Quality control and sourcing from Turkish suppliers | 5 years |
| Technical support to distributors or suppliers | 5 years |
| Gathering and passing on market information | 5 years |
| Regional management centre | 10 years |
| Market research or promotion | Not extended |
Running the office. Within one month of the permit, the office sends the Ministry its tax office registration and its lease. Every year by the end of May it files the Annex 4 information form on the previous year. With it goes a bank letter confirming that the previous year’s expenses were met with convertible currency sent from abroad by the parent. If the form is missing, an extension request is not considered and the permit may be cancelled. An office found to be trading has its permit cancelled. When it closes, only the balance left after closure can be transferred abroad.
Tax. A liaison office is sometimes described as tax-exempt. That is misleading: it may not earn income in Türkiye at all. Its staff are a separate question. Income Tax Law Article 23 exempts salaries paid in foreign currency, out of earnings made outside Türkiye, by an employer whose legal and business head offices are outside Türkiye; whether every condition is met has to be checked for each office. This is an income tax exemption and does not remove social security: as a rule, people working under an employment contract are insured (Law No. 5510, Article 4), with narrow exceptions in Article 6, for example staff sent from abroad for up to three months and insured at home.
Which structure fits your plan?
A subsidiary often fits when you will sell to Turkish customers, import, hire staff or sign local contracts; when you want the risk kept inside a Turkish company; or when you may bring in a partner later. Some regimes require a company: a qualified service centre under Law No. 7582 must be a capital company.
A branch may fit when the parent wants the Turkish business inside the same legal entity, can supply apostilled parent documents, has a representative who lives in Türkiye, and accepts that the parent itself is bound.
A liaison office fits when you only need to coordinate suppliers, check quality, support distributors or gather market information, with costs paid from abroad. Set up a company or branch before any selling starts.
What this means for you
We form and run Turkish companies (Ltd. Şti. and A.Ş.) for owners in mainland China and Hong Kong:
- Professional package: USD 4,950 a year plus government fees, including company formation without a power of attorney (you sign in Türkiye), an Istanbul virtual office, the e-Tebligat application and bookkeeping for up to 500 transactions. Company formation on its own costs USD 1,250.
- Formation under a power of attorney, without travelling: USD 3,000 without a package; Professional clients pay the full USD 3,000 on top of the package. See company formation with power of attorney.
- Basic package: USD 3,750 a year for a company that already exists in Türkiye. See bookkeeping and tax filing.
- Add-ons: bank account application (USD 1,500), financial seal application (USD 550) and payroll (USD 300 to 1,250 a month).
Prices exclude VAT. No VAT is charged to clients invoiced outside Türkiye; 20% VAT is added for companies in Türkiye.
Considering a branch or a liaison office instead? Write to us with your plans. Our listed prices cover companies only, so we will tell you what we can take on.
You can write to us in Chinese or English: WeChat ID etitax or e-mail info@etitax.com. Pricing · Contact
