Tax-exempt start-up for multinational companies: setting up liaison offices

Публикация посвящена вопросам, связанным с освобождением от налогов транс-национальных корпораций в Турции. Особо внимание уделяется связанным офисам, то есть несамостоятельным бизнес-структурам, подобным представительствам юридического лица. Речь идет об условиях освобождения иностранных корпораций от подоходного налога по турецкому законодательству. В особенности тех, которые работают на финансовых рынках.

Introduction

With the rise of global cash transactions, multinational companies have been forced to consider more carefully the tax benefits and cost implications of investing in any given country. Industrial zones, free trade zones, offshore centres and other tax-exempt areas often provide solutions in this regard. As an emerging market, Turkey offers a further option for those looking for tax efficiency before they penetrate the market or run Turkey-related businesses through their headquarters abroad – liaison offices in free trade zones (ie, areas that are exempt from the laws regarding the foreign trade regime).

Liaison offices, like representation offices, have no independent legal status and, once established (subject to permission), can be used only for the purpose of coordinating a business; they cannot conduct commercial income-generating transactions within the country. However, such establishments have wider allowances in Turkey, depending on the field of activities, and have been shown to be the best fit for multinationals both at the start-up stage and on a short to mid-term basis, since the employees of a liaison office are exempt from income taxes under Turkish law.

Operation of liaison offices

As of July 3 2012, liaison offices have been subject to new regulations in relation to both permission and operational proceedings. Accordingly, foreign companies running businesses in the banking, capital markets and insurance-based financial arenas must observe special rules and requirements when opening liaison offices, subject to the permission of the relevant authorities supervising those sectors in Turkey.

The period for operating as a liaison office depends on the validity of the permit. Operation is initially limited to three years. Permits obtained by foreign companies for market research or to promote products or services cannot be extended. However, a five-year extension is available for representation and hosting activities, as well as for control, inspection and provision of local suppliers, technical support, communication and transfer of information. Furthermore, a 10-year extension is available for the operation of regional management headquarters. This 10-year extension offers regional management headquarters a reasonable period of time in which to carry out activities to realise the company’s potential in the country, by providing a structure that is tax exempt for the first 13 years. Such activities include the coordination and management of some operations (eg, management and investment strategies, sales, promotion, financial management, training) that are particularly oriented to other units of the foreign company in other countries.

The regulation further defines ‘control, inspection and provision of local suppliers’ and ‘communication and transfer of information’ as fields of activity. The former covers arranging local producers and products for the foreign company, and the inspection of those suppliers in terms of the foreign company’s quality standards. The latter covers the collection and transmission of information to the foreign company with business contacts in Turkey (eg, relating to market conditions, consumer trends, sales of competitors and distributors, performance of distributors).

Comment

Liaison offices in free trade zones offer multiple advantages for multinationals, especially in relation to taxation and operations. Today, many multinationals operate in free trade zones in the form of liaison offices in order to benefit from such advantages.

Автор: Safak Herdem at HERDEM&Co

Источник: http://www.internationallawoffice.com/Newsletters/Detail.aspx?g=f5d49308-0821-4f20-8a46-e0cbbbf5a696&utm_source=ILO+Newsletter&utm_medium=email&utm_campaign=Company+%26+Commercial+Newsletter&utm_content=Newsletter+2014-01-20

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