Present trends indicate a fall in population growth to an annual rate of 1,62% for the period 1995-2000 and a peak population of some 75 – 80 million after 2020.

Currency  : Turkish Lira (TL)
Time zone : GMT + 2
Language : Turkish
Climate : Three main climatic zones are discernible. The weather in northern coastal region (looking onto the Black Sea) is mild and generally rainy throughout the year, with temperatures neither very low in winter nor very high in summer. On Southern and Western coastline, typical Mediterranean climate with mild winters and hot and dry summers reigns. The most extreme temperature differences occur in the interior parts with highland plains and mountainous east of Anatolia marked by cold and snowy winters and hot and dry summers.

Major cities:
   

Age structure (including forecasts)
 

 The distribution of population which is 31%, 65% and 5% for age groups of 0-14, 15-64 and 65 + respectively for 1999, is estimated to be 20%, 69% and 8% respectively in 2023. The growth rate of population is estimated to decrease to an annual rate of below 1% by 2023.

Education (Universities and Technological Institutes in Turkey)

There are 71 universities in Turkey. The total number of students in the universities are  1.491.806 in the 1999-2000 academic year. New admissions are 396.512 in the same academic year and the number of graduates are 210.901 in 1999.  There are 491 faculties in the universities. The classification of the faculties are given below. The student (1999-2000) and graduate (1999) numbers of some faculties are given in parentheses.

Faculty of medicine, dentistry, pharmacy, letters, languages and history, geography, education, educational science, vocational education, technical education (14,951/2,774), fine arts, law, theology (14,428/2,281), economics (189,049/7,195), economics and administrative science (105,120/14,764), business administration (164,789/7,628), political sci., shipbuilding and marine science, electrical and electronical eng. (3,933/813), chemistry and metallurgy, civil eng., mining eng., mechanical eng. (4,439/880), architecture, engineering (58,054/8,469), engineering and technology (366/36), engineering and architecture, forestry, veterinary sci., agriculture,  open education,  aeronautics and space sci.,  music and performing arts, humanities and letters, art, design and agriculture, economics-adm. and social sci. (1,697/292), vocational education for adults, marine sci., fish and fisheries, naval, commerce and tourism edu., industrial arts and edu. (1,306/361), science humanities and arts, communication (11,078/1,133), communication sci. (758/171), health sci., health edu.

There are 162 higher education schools with four-year programs and 392 two-year vocational training schools. The total number of students in four-year higher education is 46,667 for the academic year 1999-2000 and the number of graduates is 6,959 in 1999. The above mentioned numbers for two-year vocational schools are 217,758 and 53,727 respectively.

1.1 What are the main economic indicators of Turkey? (i.e.GDP growth, employment, exports and imports)

GDP annual average growth rate  is 4,2% for period 1995-2000, is planned to be 6,5% for 2000-2005 and 7% for 2000-2023 periods.
 

*according to the new economic stability program

 
  1.2 What is the rate of inflation ?
 
 

* 12 month, end-of period
 

 1.3 What are the foreign exchange rate policies and regulations of Turkey?

 After the establishment of the foreign exchange market in August 1988, the exchange rate of the Turkish Lira started to be determined by the market forces. Since November 1995, the exchange rate policy of the Central Bank had been to devalue the Turkish Lira in line with WPI inflation against a currency basket consisting of US $ 1.00 and DM 1.5 over the long run. In line with the launch of the euro, the Central Bank replaced the Deutsche mark in the basket with euro. The basket now comprises US $ 1.00 and €0.77.

The foreign exchange rate system proposed by the economic program in 2000 was crawling peg system. But it also envisaged an exit strategy from that system. Financial and macro economic developments led us to float the Turkish Lira and our new economic policy framework for 2001 is based on floating exchange rate system.

 Pursuant to Decree Law No. 32 issued in august 1989 and amended in June 1991, the Government eased restrictions on the convertibility of the Turkish Lira by facilitating exchange of the proceeds of transactions in Turkish securities by foreign investors, enabling Turkish citizens to purchase securities on foreign securities exchanges, permitting individuals to take up $ 5.000 of foreign currency notes and US $ 15.000 worth of jewelry  abroad, permitting non-residents to buy foreign exchange without limitation and transfer such foreign exchange abroad and permitting Turkish companies without ministerial approval, to invest up to US $ 5 million abroad. By law, 70 % of the proceeds of export transactions must be repatriated to Turkey within a prescribed time. All restrictions on the convertibility of the Turkish lira for current account transactions and non-resident capital transactions have also been lifted.

 The following table presents the average rates(*) of exchange of Turkish Lira Per United States Dollar, Deutsche Mark and JapaneseYen.
 

 (*) Central Bank foreign exchange selling rates

For a detailed information on exchange rates : www.tcmb.gov.tr
 

 1.4 What is the average interest rate and discount rate (opportunity cost of capital)?
 

The Turkish tax regime can be classified under three main headings:
 

          1.5.1 Income Taxes

                Corporate Income Taxes
                 Individual Income Taxes

 1.5.1 Income Taxes

Income taxes in Turkey are levied upon the income, both domestic and foreign, of individuals and corporations resident in Turkey. Non-residents earning income in Turkey through employment, ownership of property, carrying on a business or from other activities giving rise to income are also subject to tax, but only on their Turkish derived income.

    Corporate Income Tax :

For tax purposes, companies are grouped as limited liability companies (corporations and limited companies) and personal companies (limited and ordinary partnerships). Corporate tax applies to limited liability companies. State economic enterprises and business entities owned by societies, foundations and local authorities are also subject to corporation tax.

Whether a company is subject to full or limited tax liability depends on its status of residence. A company, whose statutory domicile or place of management are established in Turkey (resident company), will have full tax liability; in this case, worldwide income is taxable. If a non-resident company conducts business through a branch or a joint venture, it will have limited tax liability; i.e.. fully subject to corporate tax on profits earned in Turkey on an annual basis. If there is no presence in Turkey, withholding tax will generally be charged on income earned; for example, for services provided in Turkey. However, if here is an avoidance of double taxation treaty, reduced rates of withholding may apply.

The basic corporate tax rate is 30%; with additional levies amounting to 10% of the tax, the total tax rate becomes 33%. For resident corporations, tax is levied on worldwide income, but credit is given for foreign tax payable in respect of income from foreign sources (up to the amount of Turkish corporate income tax, i.e.. 30%)

Corporate entities having their statutory domicile and place of management outside Turkey, but established in Turkey in the form of a branch are subject to tax on an annual return based on income received from the permanent establishment in Turkey.
 

From the non-resident's point of view, many payments abroad including those for professional services and technical assistance, royalties and rentals are subject to withholding tax at rates varying between 10% and 25%. In this regard, countries having avoidance of double taxation treaties with Turkey have considerable advantages. Turkey has signed such treaties with 46 countries (please double clic to see the list of these countries) and the investors of these countries can benefit from a reduction in withholding taxes.

    Individual Income Tax :

The limited tax liability covers trade or business income from a permanent establishment, salaries for work done in Turkey (regardless of where paid or whether or not remitted to Turkey), rental income from real property in Turkey, Turkish derived interest, and income from the sale of patents, copyrights and similar intangible assets. The range of tax rate for individual taxes is 15-45%

 1.5.2 Taxes on expenditure

    Value Added Tax (VAT):

Deliveries of goods and services are subject to VAT at rates varying from 1 % to 40%.

The general rate applied is 18%. VAT payable on local purchases and on imports is regarded as "input VAT" and VAT calculated and collected on sales is considered as "output VAT". Input VAT is offset against output VAT in the VAT return filed at the related tax office by the 25th of the following month. If output VAT is in excess of input VAT, the excess amount is paid to the related tax office. On the contrary, if input VAT exceeds the output VAT, the balance is carried forward to the following months to be offset against future output VAT. There is no cash refund to recover excess input VAT, except for exportation.

There is also a so-called reverse charge VAT mechanism, which requires the calculation of VAT by resident companies on payments sent abroad. Under this mechanism, VAT is calculated and paid to the related tax office by the Turkish company on behalf of the foreign company. The local company treats this VAT as input VAT and offsets it in the same month. This VAT does not create a tax burden for the Turkish and the non- resident company, except for its cash flow effect.

Banking and Insurance Transaction Tax :

Banking and Insurance company transactions remain exempt from VAT, but are subject to a Banking and Insurance Transaction Tax. This tax applies to income earned by the banks, for example on loan interest.

Stamp Duty :

Stamp duty applies to a wide range of documents, including contracts, agreements, notes payable, capital contributions letters of credit, letters of guarantee, financial statements and payrolls. Stamp duty is levied as a percentage of the value of the document.

 1.5.3 Taxes on wealth

Inheritance and Gift Taxes :

Items acquired as gifts or through inheritance are subject to taxes between 1% and 30% of the item's appraised value. Tax paid in a foreign country on inherited property is deducted from the taxable value of the asset. Inheritance tax is payable over the period of five years and in two installments per year.

Property Taxes :

Property taxes are paid each year on the tax values of land and buildings at rates varying from 0.3% to 0.6%. In the case of the sale of property, a 4.8% levy is paid on the sales value by both the buyer and the seller. The rate is reduced to 2.4% if the property is contributed as capital-in-kind.

1.6 What is the availability of the labour force by age class?
 

1.7 What is the employment by branch of economic activity?
 

1.8 What is the educational attainment of the workforce?
 
 

A minimum wage is set by the government, but actual wages are higher than the minimum wage rate. Salaries are normally reviewed on a half yearly or quarterly basis. The review of wages depends on whether there is a collective bargaining             agreement with a union and how long this is valid for. Current minimum gross wage for the period between January 1 and June 30, 2001 is 142,749,000 TL. for the employees less than 16 years old and 167,940,000 TL for the others.

1.10 What are fringe benefits in Turkey ?

Fringe benefits cost employers about 30-40% of blue collar worker's gross wages and 25-30% of white collar salaries. The most common fringe benefits are meals,  transportation, and yearly bonuses of two or four month's salaries. In addition, cash benefits payable in the event of births, marriage, etc. And heating and clothing  allowances are provided through union agreements.

1.11 How does social security system work in Turkey?

Legislation requires that all employees should be covered by the social security system and pay social security contributions. The system includes benefits for industrial accidents and sickness, health insurance, maternity, disability, old age and                death. It also covers almost all costs of a modest level of medical care.

Contributions as a percentage of gross salary are payable by individual employees  and employers. The contribution rate for the employer and employee is around 19,5-25% and 14% of the gross salary respectively. There is an additional employment fund which is 3 % for the employer and 2 % for the employee. For citizens of countries with which Turkey has bilateral social security agreements, it is possible to stay within  their own national social security schemes.

Employment law currently allows males to retire at age 60 and females at age 58.
 

1.12 What is the electricity prices for industry ?
 

1.13 What is the development level of transportation ?  

1.14 Is it possible in Turkey to employ ex-patriates ?

The employment of foreign personnel is possible in Turkey. In order to be able to work and reside in Turkey, all non-residents must first obtain a work permit from the General Directorate of Foreign Investments and parallel with this permit, a residence permit from the Ministry of Internal Affairs. 

1.15 What are the working regulations affecting foreigners?( i.e. residence visas, local hiring )

There are some limitations on job categories for foreigners. Only the Turkish Citizens can work as doctor, dentist, midwife, nurse, pharmacist and veterinary, optician; as Public Notary; as Certified Public Accountants; as Attorneys; as managers in charge of administration of hospitals; as responsible managers of pharmaceutical factories. Besides, according to the law concerning Crafts and Services in Turkey, only Turkish Citizens can work as peddler, musician, photographer, barber, typesetter, broker, garment, cap and footwear producer, broker in stock exchange, salesman of goods produced by state monopolies, interpreter, guide, highway worker, driver, watchman, office boy, doorkeeper, waiter and waitress, singer; worker in construction, iron and woodwork industries.

In order to be able to work and reside in Turkey, all non-residents must first obtain a work permit from the General Directorate of Foreign Investments and parallel with this permit, a residence permit from the Ministry of Internal Affairs. Work permit applications only can be made by the company which wants to employ a non resident. A real person cannot make an application by himself.

The applications (for longer than six months) are made directly to the General Directorate of Foreign Investments and the applications are evaluated according to a specific criteria where the qualifications of the personnel and the performance of the company are taken into account.

After the work permit issued by the GDFI, a work visa must be obtained from a Turkish Consulate abroad. With this work visa, local security offices issue the residence permit.  

1.16 Labour regulations in Turkey 

1.16.1 Labour contract

There are three laws which regulate employee employer relations:

1.  Labour Law  No.1475
2.  Maritime Labour Law No. 854
3.  Press Labour Law No 5953

According to Labour Law No. 1475 there is an obligation of labour contract for employees recruited for one year or more.
 
  1.16.2 Overtime

The legal working week is 45 hours in Turkey. Overtime may not exceed 3 hours a day or 90 days a year and is not allowed in underground work. Usual overtime rates involve a 50% daytime premium on weekdays and Saturdays and 100% on Sundays and public holidays.
 
1.16 3 Employment and dismissal regulations

According to Labour Law No. 1475 there is an obligation of labour contract for employees recruited for one year or more. The annulment of Labour Contract is possible for both employee and employer  in condition of a pre notification before 15 days of the annulment.
 
  1.16.4 Labor and Employee Confederations in Turkey

-  DISK (Confederation of Revolutionary Workers’ Trade Unions)
-  TISK (Turkish Confederation of Employers’ Unions)
-  TURK-İS (Confederation of Turkish Workers’ Trade Unions)
-  HAK-IS (Confederation of Rights of Turkish Workers’ Trade Unions)

1.17 What is the amount of indemnity of a dismissal ?

Under existing labour law, a company is required to make lump sum payments to employees whose employment is terminated due to retirement or for reasons other than resignation or misconduct. Severance pay is calculated at one month's salary up to a maximum amount per year of service. This limit is adjusted four times a year. The employer has no obligation to provide severance payment if the employee resigns.
 
  1.18 What are the number of paid vacation days in the Turkey ?  

1.19 What are the national holidays in Turkey ?

 -National Holiday : October 29
 -Official Holidays : April 23, May 19, August 30
 -Religious Holiday: Ramadan: 3 days, Sacrifice: 4 Days
 -New Year: January 1
 
  1.20 What is the unionization degree ?

13% (3,086,305 workers out of 23 million workers)
 
 
1.21 What are the working days lost in the economy due to strikes 1995-1999?
 

2. ENVIRONMENTAL ISSUES
 

2.1 What permits are required for heavy industry ?

 Environmental Impact Assessment Report and/or Environmental Impact Assessment Preliminary Research Report shall be requested for some types of  industrial investments, before obtaining every kind of incentives, approvals, permissions and license.
 

.2 Which  activities are subject to Environmental Impact Assessments (EIA) ?
 

List Of The Activities  Subject To EIA To Be Applied, ANNEX I
 

1) Refineries, gasification and liquefaction facilities,

a) Crude oil refineries (exclusive of those facilities producing lubrication agents out of crude oil),
b) Facilities where coal or bituminous schist are liquefied or gasified (500 ton day or above),

2) Petrochemical complex
3) Tire producing factories (Tire, tube, column, back rubber, plane tire, cord cloth, etc.),
4) Those plants where agricultural herbicides and pesticides or pharmaceutical products are produced,
5) Battery or cell producing factories,
6) Factories where flammable and explosive compounds are produced,
7) Petroleum, petrochemical or chemical product storage facilities (total storage capacity is 5000 m3 and above),
8) Integrated facilities producing chemical fertilizer and intermediate product of the fertilizers,
9) Cement factories and clinker producing facilities,
10) Ceramic, porcelain, glass factories,
11) Textile or carpet factories complete with finishing, dyeing and sizing facilities,
12) Raw leather processing facilities (exclusive of those facilities producing finished products from processed raw leather)
13) Cellulose and celluloid producing facilities, factories producing paper pulp and every kind of paper,
14) Sugar factories
15) Yeast factories
16) Integrated meat facilities complete with slaughterhouses, side product processing and similar facilities (4000 ton/year live weight and above),
17) Facilities processing and converting asbestos and products containing asbestos,

a) Facilities producing asbestos- cement products as a final product, with an annual production capacity of 20.000 tons or above,
b) Facilities producing friction materials as final product with an annual production capacity of 50 tons.
c) Other types of facilities using more than 200 tons of asbestos,

18) Specialized industrial zones.
19) Manufacture and   assembly of every kind of motorized vehicle,
20) Waste removal facilities related to incineration and chemical treatment, final storage and entombment into the land of chemical and hazardous wastes and residues, (1200 kg and above),
21) Steel facilities;

a) Integrated steel   facilities producing raw product from the ore,
b) Facilities producing liquid steel from junk material (Production capacity 100.000 tons/year and above),
c) Rolling mills (production capacity 100.000 tons/year and above),
d) Hot wrought and cold pressing facilities (Production capacity 10.000 ton/year and above)
e) Cast factories (production capacity 5.000 tons/year and above),
f) Facilities producing pipes (production capacity 100.000 tons/year and above)

22) Facilities where nonferrous metals are molten and produced,
23) Thermal power plants (established power 150 MW and above),
24) Nuclear power plants and other nuclear reactors,
25) Radioactive waste storage facilities (those facilities designed for the purpose of storage, removal and processing of the radioactive wastes),
26) Facilities related to production and enrichment of the nuclear fuels,
27) Large infrastructure facilities,

a) Highways, express ways, and state ways (except those city passages marked on the settlement plan),
b) Airports (runway lengths 2100 m and above),
c) Ports,
d) Wharves and quays, (Ships with a capacity of 20.000 DWT, and above, can dock)
e) Marines
f) Water storage facilities (reservoir volume 100 million m3 and above or reservoir surface 15 km2 and above),
g) River type power plants (established power 50 MW and above),

28) Collectively designed housings (1000 and above) and Olympic sportive villages
29) Tourism resort facilities  (200 room and above),
30) Petroleum and gas pipelines (pipe diameter 600 mm and above),
31) Power transmission lines with a voltage of 154 kilovolts or above
32) Bottom dredging (200.000 m3 and above),
33) Ship dismantling shipyards,
34) Shipyards,
35) Water supply activities with an annual underground water pumping capacity of 10 million m3 and above, as well as water supply activities with an annual surface water pumping capacity of 3 million m3 (exclusive of water storage facilities),
36) Mining activities,  of the licenses which are obtained pursuant to Mining Law no 3213,

a) All of energy mines,
b) All of metal mines,
c) All of industrial metal mines for Boron compounds, Barite, Diatomite, Sulfur, Phosphate Fluorite, Zeolite, Calsedon, Strontium, Feldspar, Trona, and trace soil elements,
d) Every kind of ore enrichment facilities (except for simple ore enrichment facilities such as crashing, sieving etc.),

37) Petroleum production activities in the seas,
38) Solid waste storage facilities (garbage disposal areas larger than 10 hectare, or with a storage volume of more than 100 tons per day),

List Of Activities Subject To EIA Preliminary Research To Be Applied, ANNEX II.
 

1- Processing of intermediate product, and production and storage of every kind of chemicals,
2- Petroleum, petrochemicals or chemical product depots (total storage capacity is between 500 - 5.000 m3, except 5. 000 m3),
3- Food and spirit industry

a) Slaughterhouses, facilities processing meat and meat byproducts (1000 tons/year inclusive, up to 4000 tons/year live weight),
b) Facilities producing animal or vegetable oils,
c) Production of milk and milk products (capacity 5000 1t/day and above)
d) Beer or malt production facilities,
e) Alcohol spirits and beverage production facilities,
f) Facilities producing and processing water products
g) Canneries,

4- Cigarette factories,
5- Textile plants,

a) Synthetic yarn, fiber factories,
b) Individual finishing, dyeing, and sizing facilities,
c) Wool squeezing, oil removal and bleaching plants,

6- Industries where wood is subjected to chemical treatment, plywood, wood veneer, and artificial wood factories,
7- Cement grinding, filling and packaging facilities,
8- Brick and roof tile factories,
9- Steel - iron facilities,

a) Facilities producing liquid steel from junk material (those not included in Annex I),
b) Rolling mills (those not included in Annex I),
c) Hot forgery and cold pressing facilities (those not included in Annex I)
d) Cast factories (those not included in Annex I),
e) Facilities producing pipes (those not included in Annex I )

10- Production and assembly of railway equipment, wagons and every kind of railway vehicle,
11- Factories producing every kind of motors and engines,
12- Electronics and electromechanical facilities,
13- Coal and lignite briquetting facilities,
14- Geothermal power production,
15- Kitchen gas and coke facilities,
16- Land use and infrastructure projects

a) Solid waste storage facilities (those not included in Annex I), garbage transfer stations, solid waste processing or incineration facilities,
b) Waste removal facilities related to incineration, chemical treatment, final storage or embedding into land, of toxic and hazardous wastes,
c) Education campus and sport complexes,
d) Deep sea discharge and wastewater treatment facilities (Design population for the settlement unit is 20.000 or above),
e) Collectively designed housings, (200 houses inclusive up to 1000 houses),
f) Tourist resort facilities (50 room inclusive, up to 200 houses)
g) Wharves and quays (those not included in Annex I),
h) Fisherman and trailer harbors, marines (those with maintenance, repair, wintering facilities),
i) Bottom dredging (those not included in Annex I),
j) Obtaining land from the sea,
k) Airports (those not included in Annex I),
1) Water storage facilities (reservoir volume 10 million m3 inclusive, up to 100 million m3 and reservoir surface area 1 - 15 km2),
m) Province roads,

17- Petroleum searching and production activities,
18- Mining Activities. Mine searching and mining of the metals which are covered by the Mining Law and not referred to in Annex I as well as quarries which are specified in Stone Quarries Ordinance and Salt Water and/ or ore preparation processes
 

3. FOREIGN TRADE

The most significant phenomenon in Turkey's foreign trade policy is the Customs Union established between the EU and Turkey as of 01.01.1996. This development initiated the duration needed for the legal infrastructural consistency of foreign trade strategy with the EU’s norms, and thus both import and export regimes have been made consistent with the regulations of the EU.

3.1 Export Regime of Turkey

Competent authority regarding exports is the Undersecretariat for Foreign Trade. Authority in the field of exports includes a wide variety of subjects; general topics like regulations, support and implementation of exports in the framework of the official development policies, determination of export policies or more specific subjects like regulation of transit trade and determination of principles and procedures regarding establishment of free zones.

The legal fundament for export regulations is the “Export Regime Decree” published in 1996. With this new legislation and related measures, export regulations were harmonized with Turkey's international obligations, especially in the framework of WTO and Customs Union between EU and Turkey.

Naturally, subjects like co-ordination of export oriented activities or development and implementation of export related promotion and marketing activities are also in the authority of Undersecretariat for Foreign Trade.

3.2 Types of Exports in Turkey

Export is the "de facto" exportation of goods or their value in compliance with the current Export Regulations, Customs Regulations and bringing the value of the goods back to the country through Turkish Currency Legislation or other ways of                   leaving country which can be accepted as an export by the Undersecretariat for Foreign Trade.

Types of exports are as follows:

a) Exports having no special nature
b) Exports on registration
c) Exports on credit
d) Export by means of consignment
e) Exportation of imported goods
f) Exportation to free zones
g) Exportation made through barter trade
h) Exports through leasing
i) Transit trade
j) Exports without returns

3.3 Is it free to export all goods?

All goods, other than those whose exportation is prohibited by laws, decrees and international agreements, can be freely exported within the framework of the Export Regime Decree.

However, within the framework of WTO rules, restrictions and prohibitions on exports may be imposed in case of market turmoil, scarcity of exported goods, in order to protect public safety, morals, health; flora and fauna, environment, as well as, articles bearing artistic, historical and archeological value.

The goods whose exportation is prohibited and subject to permit are listed in the Communiqué numbered 96/31 (http://www.foreigntrade.gov.tr ).

3.4 What is the Export Promotion System in Turkey?

Due to WTO regulations and Customs Union with the EU, Turkey now applies measures indirectly assist exporters such as; export finance and insurance, promotion and marketing assistance. Overall, Turkey has reshaped her incentives provided to exporters, eliminated subsidies in order to harmonize her foreign trade policies with her international obligations and increase transparency of export subsidy programmes.

During the creation of new export promotion system, Undersecretariat for Foreign Trade has set rules in favor of SMEs. There are ten different state aid programmes which are currently in force:

Turk Eximbank has an important role to play in the liberalization and outward orientation of the Turkish economy. Increasing the competitiveness of Turkish exports under free market conditions is the Bank's main goal  which coincides with Turkey’s international commitments. Following Turkey’s agreement to eliminate export subsidies in accordance with GATT provisions and the subsequent elimination of all direct incentives to exports, export credits extended through Turk Eximbank have played a crucial role in securing the stable export growth.

Turk Eximbank enhances export Performance primarily through her credit, guarantee and export credit insurance. For further information  please consult : http://www.eximbank.gov.tr

3.6 What is the current Import Regime?

 The Import Regime of 2001 which is transparent, explicit and easy to understand for the importers and other users, has been prepared by taking into account the agreement establishing the World Trade Organization (WTO) to which Turkey is a member, the Customs Union Agreement between Turkey And the European Union and within this context, the free trade agreements signed with various countries, the preferential treatments granted by Turkey to least Developed Countries as well as sector specific needs.

 Customs duties have been rearranged according to the kind (industrial, agricultural, processed agricultural, fish and fishery products) and sources (country or country groups) of the products in order to provide more openness and transparency to the regime and to make it simpler and more understandable for the importers and other users.

 For further information do not hesitate to contact :  http://www.foreigntrade.gov.tr
Undersecretariat for Foreign Trade  Inonu Bulvari, 06510 , Emek - Ankara

3.7 What are the most important goods imported by Turkey?

 Top ten chapters in imports as of December 2000.
 
 

3.8 How is Turkish Legislation on Safeguards?

 Turkish safeguards legislation sets rules forth for application of safeguards measures and surveillance for imports. Safeguard measures are actions taken on the increased imports of a certain product, where such imports have caused or threaten to cause serious injury to the domestic industry. They can take the form of a quantitative restriction (quota). Surveillance is a tool for finding out quickly the trend in current and foreseeable imports, when the trend threatens to cause injury to the domestic producers.

 Turkey has two different regulations on safeguard measures. One is defined as “Legislation on the Safeguard Measures and Surveillance for Imports of Products Originating in Certain Countries” and designed specially for state trading countries and transition economies which are not members of the World Trade Organization (WTO). The other is called “Legislation on Safeguard Measures and Surveillance for Imports” and implemented on the importation of products originating in countries which have liberal trade regimes, mostly the Members of the WTO.

 Textile products excluding that of integrated to the GATT 1994, are not in the scope and the coverage of this legislation.

Turkey had prepared its Safeguards Legislation in full conformity with the principles and rules of the WTO’s Agreement on Safeguards and notified it to the Committee on Safeguards. Moreover the Agreement has the force of law in Turkey.

For further information please do not hesitate to contact

Undersecretariat for Foreign Trade ( Dis Ticaret Mustesarlıgı)
Directorate General for Imports (Ithalat Genel Mudurlugu)
Department of Safeguard Measures and Surveillance
06510, Inonu Bulvari – Emek/Ankara
TURKEY

3.9 What documents are required for import and export?

In order to be an importer, having a tax number is sufficient. For importation of agricultural products and some specific items for public order, public moral and public security, preservation of the human, animal and plant health, the protection of the environment and consumer rights, additional documents may be required by the relevant authorities.
 

3.10 What are the requirements to track down in and out bond flows (products and machines) from the plant to the markets in Europe?

In order to track down in and out bond flows, certain official documents are needed. These are mainly : moving certificates (ATR and EUR1), certificate of origin, inspection certificate, control certificate, phytosanitary certificate, veterinary certificate and ATA carnet.
 

3.11 What are the import laws to bring in equipment (machines) from US, Japan, Switzerland and EU countries?

The importation of equipment and machines is totally free except some of products which can only be imported with guaranteed after–sale maintenance, repair and service certificate. Those are air conditioner, washing machines, water heaters, earth moving equipment, lathes, TV sets, motor vehicles, tractors and such. On the other hand, importation of old, used, renovated, faulty (defective) and flat (obsolete) goods is subject to permission from the Undrsecretariat for Foreign Trade.
 

3.12 What is the custom clearance time and cross border waiting time for the most important border crossings to Western Europe?

 Turkey has two border crossings to Western Europe via Bulgaria and Greece which are available for TIR passing.  There is no waiting at the customs area since the customs authority  inspect the products during loading on truck in the factory.
  

4. FOREIGN INVESTMENT REGIME AND INCENTIVES

4.1 Basic information about FDI regime in Turkey

Foreign direct investment regime of Turkey is mainly formulated by the Law No. 6224 of 1954 Concerning the Encouragement of Foreign Capital, which is based on the principle of  equal treatment for domestic and foreign investors.

Almost all sectors of the economy open to private domestic investors are also open to foreign participation However there are some other legislation having provisions relating to rights and obligations of foreign investors and in some cases setting some restrictions for them. These legislative arrangements regulate specific sectors like broadcasting, aviation, maritime transportation, petroleum, and mining with the aim of ensuring national security, public order and health, professional standards.  The restrictions are as follows;

- Up to 20% equity participation in broadcasting
- Up to 49% participation in aviation, maritime transportation, port services and value-added telecommunications services
- Real estate trading and fishing are closed to foreign investors

Real and legal persons resident abroad must bring a minimum 50.000 US Dollars per person to establish corporations, become partners in existing companies and opening branch offices. In the case of that the number of foreign shareholders is above one, the participation amounts of foreign partners in total capital can be arranged freely.

4.2 What are the main principles of the foreign investment policy in Turkey ?
 

• Equal treatment : For the purpose of making investments and carrying out commercial activities, to establish a joint stock or limited liability company is necessary. For establishing a company or opening a branch office, minimum capital requirement (per real or legal person) is USD 50,000. Companies with foreign capital have the same rights and obligations as the domestic capital
• No limitation in participation of foreign capital, except broadcasting where the equity participation ratio of foreign shareholders is restricted to 20% (Establishment and Broadcasting of Radio and Television Law No. 3984); and aviation, maritime transportation and ports where the equity participation of foreign shareholders are restricted to 49% (Civil Aviation Law No. 2920; Cabotage Act No 815, Turkish Commercial Code No. 6762)
• Free transfer of profits, fees and royalties and repatriation of capital in the event of liquidation or sale are also guaranteed,
• Open field of activity : Almost all sectors which are open to the private domestic investors are open to foreign participation. Investment by foreigners in the field of real estate is restricted, and establishments in the financial, petroleum and mining sectors require special permission according to appropriate Laws
• Employment of foreigners : There is no  limitation for assigning expatriates as managers and technical staff.
• There is no condition of approval of foreign credit acquisition.
• There is no condition of approval of license, know-how, technical assistance and management agreements. Only a registration of these agreements is done through Undersecretariat.
• The Foreign exchanges (including effective) brought from abroad for the purpose of establishing corporations, increasing capital or buying the shares of existing Turkish companies can be blocked in Foreign Exchange Deposits Account.
• The involvement of international investors are highly encouraged in the massive privatization program and the participation of private sector in huge energy, telecommunication and infrastructure projects, especially after the adoption of the amendments to the Turkish Constitution in order to allow the international arbitration, which removes an important disincentive for foreign direct investment.

4.3 What are the regulations affecting the granting of technological, industrial and intellectual property rights ?
Public and private sector enterprises shall apply to the General Directorate of Foreign Investments for the registration of license, know-how, technical assistance, management and franchising agreements to be made with persons and legal entities residing abroad. These agreements shall become effective only after the registration by GDFI and payments arising from the implementation of these agreements shall be transferred abroad through banks on the basis of terms of the Agreement. The parties can freely determine the license fees and royalty rates; there is no recognized ceiling on the rates.

 

4.4 What incentives are available for foreign companies ?

The Turkish incentive system for investments can be classified under three main headings :

- General Incentive Regime
- Incentives granted to Small and Medium Sized Enterprises (SMEs)
- Incentives granted to less developed regions

4.5 General Incentive Regime :

The main incentive tools granted to investors by the current legislation are;

- Exemption from customs duties and fund levies
- Investment allowance
- VAT (Value Added Tax) exemption for imported and locally purchased machinery and equipment
- Exemption from taxes, duties and fees

Exemption from customs duties and fund levies : This incentive measure ensures that the imported machinery and equipment for the investment can be brought to the country with the exemption of customs duties and fund levies. The machinery and equipment which are to be imported under this measure must be included in the  import machinery and equipment list to be approved by GDFI. Within this context, raw materials and intermediate goods cannot be imported.

Investment allowance : Investment allowance is a corporate tax exemption applied to taxpayers. Of the expenses incurred within the scope of investment incentive certificate, those relating to buildings, machinery, equipment, freight and installation are entitled to benefit from the investment allowance.

VAT exemption for imported and locally purchased machinery and equipment : The Value Added Tax, which is due to be paid for both the imported and locally purchased machinery and equipment, shall be exempted by this incentive measure. The imported machinery and equipment, which are included in the import machinery list approved by GDFI, can be brought to Turkey without paying Value Added Tax. The locally purchased machinery and equipment should also be included in the locally purchased machinery list to be approved by GDFI. With this approved machinery list, the investor can purchase the local machinery without paying the VAT to the seller.

Exemption from certain taxes, duties and fees : The investors who commit to realize 10.000 US Dollars of exports upon the completion of the investment are granted exemption from the taxes, duties and fees related to;
- Establishing a company
- Increasing capital within the investment period
- Receiving investment credits whose terms are at least one year
- Registration of land and properties as capital-in-kind

The general incentive regime is applied varying to the location, scale and subject of investments. In terms of application of general incentives, Turkey is divided into three types of regions :

- Developed Regions : The city boundaries of Istanbul and Kocaeli; and the municipality boundaries of Ankara, Izmir, Bursa, Adana and Antalya)
- First priority regions : 50 cities determined by the Council of Ministers
- Normal Regions : The remaining cities
 

To be eligible for these incentive measures, the minimum amount of fixed investment must be 600 billion TL for the developed regions, 400 billion TL for the normal regions and 200 billion TL for the first priority  regions.

 

4.5 What is the time required to set up a business in Turkey (the time to register a Turkish company)?

Average time required is three weeks or less than that.
 
 

4.6 What kind of procedures have to be completed to set up a business?

 Please take the following steps to establish a limited or joint stock company in Turkey.

 First step

Please submit the following documents to the General Directorate of Foreign Investments

1- For legal entities residing abroad,

• Certificate of Activity (certified by the related Turkish Consulate or in accordance with the provisions of the Abolition of the Requirement for Approval of Foreign Official Documents Agreement)
• Previous year Activity Report

2- For real persons residing abroad

• Copy of passport (certified by the notary public)
• Detailed commercial and industrial background and verifying documents

3- Letter of intent stating that each foreign partner will bring at least 50,000 USD to Turkey as company capital.
4- Draft articles of the company to be established.
5- Power of attorney given by shareholders to the person who will be the contact person in course of the application procedure.
6- Application form prepared in accordance with the attached sample.

Second Step

For publishing the establishment of the company, please apply to the Ministry of Industry and Trade

Third Step

For endorsing permission certificate (red paper), apply the GDFI with the following documents:
1- Original of the permission certificate
2- Trade Registry Gazette in which the establishment of the company is published
3- If the foreign exchanges brought as foreign capital is converted in to Turkish Liras, Foreign Exchange Purchase  Receipt or if they are kept in foreign exchange deposit account, related bank document should be submitted. ( Foreign Exchange Purchase Receipt or relating bank document should include the name of foreign capital company and foreign partner, the country from which the foreign exchange transferred, currency amount, USD equivalent, TL equivalent and state that the currency was brought as company capital.

 Time frame to obtain the following permits:

- Land use permits         1-15 days
- Planning permits          1-15 days
- Building permits           1-15 days

The cost of receiving the above permits is negligible. 

4.7 Which agencies have the responsibility of promoting investments?

General Directorate of Foreign Investments (GDFI), operating within the Undersecretariat of Treasury, is the main governmental institution promoting foreign investment in Turkey. The contact data for GDFI is as follows;

Address : General Directorate of Foreign Investments (Yabanci sermaye Genel Mudurlugu)
     Undersecretariat of Treasury ( Hazine Mustesarlıgı)
     Inonu Bulvari 06510
     Ankara - Turkey
Phone : 90-312-2128914
Fax :  90-312-2128916
URL : www.hazine.gov.tr/english/ybsweb/index.htm