Establishing a Free Zone Company in Turkey: A Guide for Foreign Investors

You can set up a 100%-foreign-owned company in a Turkish free zone under Free Zones Law No. 3218 to access customs relief, VAT exemptions and, since 2025, a corporate tax exemption on income from exported goods. This guide explains the legal framework, the incentives that still apply in 2026, the cost of setting up, and the step-by-step process to obtain an operating licence and incorporate your company. It also covers the important 2025 change that limits the tax exemption to export sales, so you can judge whether a free trade zone genuinely fits your business model.

What Is a Turkish Free Zone (Serbest Bölge)?

A free zone (serbest bölge), also called a free trade zone, is a defined area inside Turkey's borders that is treated as outside the customs territory for trade, foreign-exchange and certain tax purposes. Companies licensed to operate there receive a package of customs, VAT and tax benefits designed to promote export-oriented manufacturing, trade and logistics.

Turkey runs a network of free zones positioned next to major seaports, airports and industrial corridors. Each zone is operated by a private operating company under the supervision of the relevant Free Zone Directorate and the Ministry of Trade. The zones differ in their location, infrastructure and the activities they specialise in, which matters when you choose where to set up.

Turkey's Main Free Zones at a Glance

There are around twenty active free zones across Turkey. The right one for you depends on your supply chain, your customer markets and the kind of premises you need. A few of the most commonly used zones:

When you compare zones, weigh three things: distance to your ports or suppliers, the availability and cost of the premises your activity needs, and whether the zone is geared to your activity type (manufacturing, trade, logistics or services). The incentives differ sharply by activity, so the zone and the activity should be chosen together. If you are weighing a free zone against a conventional structure, our corporate structuring advice can help you model the options before you file anything.

The Legal Framework: Free Zones Law No. 3218

Free zones in Turkey are governed by Free Zones Law No. 3218 and its implementing regulation. The law sets out who may operate in a zone, the available incentives, and the licensing system administered by the Ministry of Trade.

Two routes are available to investors:

• Open a branch of a company that is already established in Turkey; or
• Incorporate a new company directly to operate inside the zone.

Both Turkish and foreign individuals and legal entities may apply. Foreign individuals and companies that do not reside in Turkey can establish a company in a free zone, and 100% foreign ownership is permitted with no local-partner requirement, in line with Turkey's general open regime for foreign-owned companies. The company itself is incorporated under the Turkish Commercial Code (Law No. 6102); the free-zone framework sits on top of that ordinary company. For the mechanics of incorporation, see our guide to free zone and mainland company formation.

Tax and Customs Advantages in 2026

The incentives are the main reason investors choose a free zone over a standard mainland company. The most significant advantages that still apply in 2026 are:

• Customs duty exemption. Goods entering, leaving and circulating within the zone are outside the Turkish customs territory and are not subject to Turkish customs duties while they remain there.
• VAT exemption. Deliveries of goods and services to and within the zone, and transactions between licensed zone users, are generally exempt from Turkish value added tax.
• Stamp duty and fee relief. Many transactions and documents relating to activities carried out in the zone benefit from stamp-duty and fee exemptions, which reduces friction on contracts and payroll paperwork.
• Export-linked corporate tax exemption (since 2025). Manufacturers producing in the zone are exempt from corporate income tax on profits from goods they sell abroad (export). Profits from selling those goods into the Turkish domestic market are no longer exempt and are taxed at the standard corporate rate.
• Income-tax withholding exemption on wages. Licensed manufacturers that export at least 85% of the FOB value of the goods they produce in the zone qualify for an exemption from income-tax withholding on employee salaries. Social-security (SGK) premiums remain payable.
• Transfer of profits abroad. Earnings generated in the zone can generally be transferred abroad in foreign currency, subject to Turkey's prevailing foreign-exchange and capital-movement rules at the time of transfer.

The exact scope of each exemption depends on your activity (manufacturing, trade, logistics or services) and your export ratio. The 85% FOB export threshold and the export-only corporate-tax rule are the gateways to the most valuable incentives, so both should be modelled carefully before you commit.

Export Sales vs Domestic Sales: How the 2025 Tax Split Works

The single most important point for any foreign investor in 2026 is that free-zone manufacturing income is now split by destination. Where your customers are determines whether the profit is exempt.

For context, the standard corporate tax rate in Turkey is 25% as of 2026. So a manufacturer that sells 70% abroad and 30% domestically would, broadly, see the export-linked share treated as exempt while the domestic-sale share is taxed at the standard rate. The precise calculation depends on your accounts and should be confirmed with a tax adviser.

One more consequence of the export-versus-domestic split: when goods leave the zone and enter the Turkish domestic market, that movement is treated as an import. Turkish customs duties and import VAT can then apply, just as they would for any import into Turkey. This is central to the export-versus-domestic decision and should be built into your pricing.

What It Costs to Set Up in a Turkish Free Zone

Cost is one of the first questions foreign investors ask, so it deserves a clear answer. The main cost components are the operating-licence fee, recurring zone fees, the Special Account levy on your trade turnover, and the share capital of the company itself.

• Operating-licence application fee. Paid to the relevant fund account when you apply, set by the General Directorate according to activity type and licence period. Published guidance commonly cites a wide range (for example, around US$5,000 to US$250,000 depending on the activity and term). Confirm the current figure for your zone and activity before you budget.
• Annual licence and zone usage fees. Recurring charges to the zone operator for your licence and for the premises you lease, which vary by zone and unit type.
• Free Zone Special Account levy. A per-mille levy is payable to the Free Zone Special Account on the value of goods you trade through the zone, commonly cited at 0.5 per mille (0.5%) on the FOB value of goods leaving the zone and the CIF value of goods entering it, with exceptions (for example, goods brought in from Turkey and certain investment-stage equipment). Confirm the current rate and exemptions for your activity.
• Company share capital. Standard minimum capital rules under the Turkish Commercial Code apply to the company you incorporate, the same as for a mainland limited or joint stock company.
• Professional and compliance costs. Accounting and the sworn financial adviser (YMM) certification needed to claim some incentives (see below) add to ongoing costs.

Step-by-Step: Setting Up Your Free Zone Company

Obtaining the right to operate in a free zone is a two-track process: securing an operating licence and incorporating the company itself.

1. Prepare a business plan. Draft a detailed plan covering your intended activity, projected trade volumes, export ratio and financial projections. The strength of this plan affects whether your licence is granted.
2. Apply to the Free Zone Directorate / operator. Submit your application and supporting documents to the relevant zone operator for preliminary evaluation.
3. Obtain conditional approval. If the preliminary assessment is positive, conditional approval is granted, allowing you to proceed with incorporation and leasing.
4. Incorporate the company. Establish the company under the Turkish Commercial Code (Law No. 6102), typically as a limited liability company (limited şirket) or a joint stock company (anonim şirket), and register it with the relevant trade registry.
5. Lease or build premises in the zone. Most zones require a genuine physical presence, such as an office, warehouse or factory unit, so the operator can verify your activity is really based in the zone. We can help you negotiate the lease and supply contracts inside the zone.
6. Receive your operating licence. Once incorporation and the lease are in place, the operating licence (faaliyet ruhsatı) is issued and you can begin trading.

The process typically takes between two and six weeks, depending on the zone, the permits your activity requires and the complexity of your business plan.

Foreign managers and qualified staff relocating to Turkey to run the company will usually need a residence and work permit under Law No. 6458 on Foreigners and International Protection. Long-term investors should also consider Turkish citizenship by investment eligibility under Citizenship Law No. 5901. Our team can coordinate company formation, licensing and immigration in a single workflow. For the broader picture, see our full guide to setting up a business in Turkey, or contact us to discuss your project.

Licence Duration, Renewal and Ongoing Compliance

Operating licences in a free zone are granted for a set term, and the typical length differs depending on whether you are a tenant-user or an investor-user and whether your activity is production or trade. Investor-users who build their own facilities generally receive longer terms than tenant-users who lease space, and production activities are often granted longer terms than pure trade activities. Confirm the exact term and renewal conditions with your zone operator, because they vary by zone and activity.

On the compliance side, two points matter for foreign investors:

• SGK / payroll. The wage incentive is an exemption from income-tax withholding only. Employer social-security (SGK) premiums are still due in full, so your true payroll cost is not zero.
• YMM certification. To claim the wage-withholding incentive, the 85% FOB export condition is assessed annually and typically must be certified by a sworn financial adviser (YMM). Build this reporting into your annual compliance calendar.

Free Zone vs. Mainland Company: Which Is Right for You?

A free zone company is not automatically the right choice for every foreign investor. After the 2025 changes, the decision turns mainly on where your customers are and how much you export.

As a rough decision framework: a free zone tends to pay off when a high share of your output is exported, your inputs are imported, and you can meet the export thresholds. If most of your sales will be to customers inside Turkey, a conventional mainland limited or joint stock company setup is usually simpler and, since 2025, may carry a similar tax outcome on those domestic sales. Where cross-border trade is central, also plan for the risk of unpaid invoices: see our guide to enforcing unpaid invoices and debt collection. A short consultation will usually make the right structure clear for your figures.

Frequently asked questions