The Ministry of Economics published a new Decree, which provides opportunity for Regional Management Centers to operate under a liaison office structure.
i. Highlights of the New Decree
Recently, the foreign investors have been considering Turkey as a hub for regional management services to be provided to their business units in Europe, Asia and Middle East region.
On July 3rd, 2012, the Ministry of Economics has published a new Decree, which provides an opportunity for such regional management centers to operate in Turkey under a liaison office structure.
According to the new Decree, a Regional Management Center can perform the coordination and management services for business units in other countries for the following areas:
- Establishment of investment and management strategies,
- Planning,
- Promotion,
- Sales,
- After sales services,
- Brand management,
- Financial management,
- Technical support,
- R&D,
- Procurement,
- Testing of new products (including labarotary activities),
- Research and analysis,
- Training of the employees,
In principle, the liaison offices are granted the license to operate in Turkey for a period of 3 years. However, based on the new Decree, if a liaison office operates as a Regional Management Center, after the initial period of 3 years, an extension of additional 10 years could be granted by the Ministry of Economics for that liaison office.
Regarding the establishment of the liaison office, once the documents are properly submitted to the Ministry, the Ministry is required to finalize the application process within 15 days following the application.
ii. The Advantages Grated to Regional Management Centers Operating Under a Liaison Office Structure
The liaison offices are defined as business units of foreign investors that do not have commercial operations in Turkey. As they are deemed not to have any commercial operations, they are also exempted from the major taxes in Turkey.
Accordingly, based on the new Decree, a Regional Management Center operating under a liaison office will be exempted from the following taxes:
- Corporate income tax
- Value added tax
- Income tax on salaries of the liaison office employees,
- Stamp tax
