Company Formation Comparison: Turkey and Ukraine

Despite the Ukraine not being the easiest of countries for foreigners to establish a new business in, the country has seen a steady flow of international business start-ups. The Ukrainian authorities have facilitated this, further encouraging foreign investment by relaxing regulations and abolishing investment permits. 

However, there are still strict Ukrainian laws to abide by. All enterprises must be set up in line with procedures and registered with the appropriate government agencies.  It is highly recommended that you hire a Ukrainian legal specialist to ensure compliance with legalities.

In comparison, the processes for establishing a new company in Turkey are simple. The Turkish economy is extremely healthy and the country’s location as a natural gateway to Europe, Asia and the Middle East is incredibly beneficial. Few countries are known to have faster company incorporation procedures and you can set up a business in Turkey within a day as long as you have the correct documentation ready.

Company Forms

To establish a legal entity in the Ukraine you have to apply to the local state registrar, tax authorities, statistics office and pension and social funds. It’s also necessary to open a bank account. The three main forms of company are: Limited Liability Company (LLC), Joint Stock Company (JSC) and Representative Office.

The minimum share capital for an LLC in Ukraine is €80 and €53,000 for a PLC. A Ukrainian Limited Liability Company does not have traditional shares; company members own a percentage of the company’s capital and shareholders may transfer their shares in the company’s capital to third parties only with the consent of all other shareholders.

In Turkey the two most popular forms of company are Limited Liability (LS) and Joint Stock Company (AS). The minimum share capital for LS is €2,700. There must be a minimum of one shareholder who can be either a Turkish or foreign national, and accounts requirements are not necessary if the company has fewer than 50 shareholders.

Recruiting staff

In the Ukraine, foreign companies can take their pick from a wide choice of educated, well trained and skilled local staff.

From a population of 73 million in Turkey, much of the working population is semi-skilled but the country’s economic resurgence has brought about an urban professional class which is ambitious and well educated.

There won’t be a shortage of staff in either country and labour costs are relatively low compared with countries in Western Europe.

Financial incentives

No real incentives are available in the Ukraine for new start-ups, but recent government influence has given confidence to investors and as a result many western banks have set up branches there. This has brought improved banking facilities that will be particularly advantageous to international businesses.

Turkey however has a liberal business environment for foreign investors. Major investors are exempt from customs duties and VAT on plants and equipment. There are also large incentives for companies investing in certain areas, such as less developed areas, free trade zones and high technology parks.