Circular No. 1998/4 - Evaluation of Free Zone Activity License Applications & Branch Establishment

Purpose

This circular establishes the rules and evaluation criteria for companies applying for a Free Zone Activity License and those planning to set up a branch in a Free Zone.

Key Points & Rules

  1. Priority on Export-Oriented Businesses:
    • The majority of products manufactured or traded in the Free Zone must be exported abroad.
    • Companies engaged in production or trade must notify the authorities before adding new goods to their list of activities.
  2. Eligibility & Preference Criteria:
    • Companies already operating in Turkey or abroad have an advantage in the application process.
    • Turkish companies can only operate in the Free Zone through a registered branch.
    • Financial health (last three years’ balance sheets) is examined for businesses applying to set up a branch.
  3. Financial & Operational Requirements:
    • Companies must allocate dedicated capital for Free Zone operations.
    • Branches must maintain separate accounting records from their main company.
  4. Employment Regulations:
    • Preference is given to Turkish employees.
    • Foreign employees can be hired only if they possess specialized expertise.
  5. Legal Obligations for Free Zone-Based Companies:
    • Company headquarters must be within the Free Zone.
    • Business address changes must be reported to authorities.
    • A company registered in a Free Zone cannot open branches elsewhere in Turkey.
    • Foreign expansion is allowed, but only with prior approval from the General Directorate of Free Zones.
  6. Consequences of Non-Compliance:
    • Businesses must start operations within 6 months of obtaining their license.
    • If a company fails to meet license conditions, it may be suspended for 3 months, followed by license cancellation if issues are not resolved.
    • Companies that previously had their license revoked for violating regulations cannot reapply.

Impact on Company Registration

This circular defines the eligibility criteria, legal restrictions, and financial requirements for companies in the Mersin Free Zone. It ensures that only financially stable, export-oriented, and compliant businesses receive a license.