Establishing a Business in Turkey

Investment in Turkey Overview


Turkey’s FDI Law is based on the principle of equal treatment, allowing international investors to have the same rights and liabilities as local investors.


The conditions for setting up a business and share transfer are the same as those applied to local investors. International investors may establish any form of company set out in the Turkish Commercial Code (TCC), which offers a corporate governance approach that meets international standards, fosters private equity and public offering activities, creates transparency in managing operations, and aligns the Turkish business environment with EU legislation as well as with the EU accession process.


Company Types under TCC and Alternative Forms


There are corporate and non-corporate forms for companies under the TCC, which states that companies may be established under the following types:

a. Corporate forms


  • Joint Stock Company (JSC)
  • Limited Liability Company (LLC)
  • Cooperative Company

Although some financial thresholds (i.e., minimum capital) and organs differ from each other, the procedure to be followed for establishing a JSC or an LLC are the same.

b. Non-corporate forms


  • Collective Company
  • Commandite Company

Although companies may be established according to these five different types, JSC and LLC are the most common types chosen both in the global economy and Turkey.

In addition to these types of companies, branches and liaison offices may also be considered as two further alternatives when setting up a business in Turkey. However, branches and liaison offices are not considered to be legal entities.


Establishing a Company

When establishing a company in Turkey, one needs to adhere to the following rules and regulations:

c. Submit the memorandum and articles of association online at MERSIS

Pursuant to the Trade Registry Regulation, trade registration transactions must be fulfilled through MERSIS (Central Registry Record System).


MERSIS is a central information system for carrying out commercial registry processes and storing commercial registry data electronically on a regular basis. A unique number is given to legal entities that are actively involved in business. Online establishment of new companies is possible on MERSIS, and already-established companies may operate through the system after the transfer of their records.


d. Execute and notarize company documents

The following documents are required for registry application at the relevant Trade Registry Office:


  • Notarized articles of association (four copies, one original)
  • In case the foreign partner is a real person, the required documents are:
    o For each real person shareholder, two copies of their passports
  • In case the foreign partner is a legal entity, the required documents are:
    o The Certificate of Activity of the legal entity designated as the shareholder issued by the relevant authority in the investor’s country. The certificate must bear information regarding the current status and signatories of the company.
    o Resolution(s) of competent corporate organ of legal entity shareholder(s) authorizing the establishment; if there will be any specific condition for the prospective company to be incorporated (name of the company, field of activity, etc.) it must be stated in the resolution for the sake of clarity.
    o In case a legal entity is going to be appointed as a member in the board of directors of the prospective company to be incorporated, the name of the real person who will act in the name of the legal entity and the legal entity board member’s appointment must be stated within the same or with a separate resolution for the sake of clarity.
    o If the process is going to be followed by proxy, a notarized copy of a power of attorney authorizing the attorneys who will follow up the application before the competent Trade Registry Office and other official authorities in order to proceed with the application (where applicable).
  • Notarized signature declarations (two copies)
  • Notarized identity cards of the company managers (one copy)


It should be noted that, except the first item above, all the necessary documents that will be issued and executed outside Turkey must be notarized and apostilled or alternatively ratified by the Turkish consulate where they are issued. The original executed, notarized, and apostilled documents must be officially translated and notarized by a Turkish notary.


e. Obtain potential tax identity number

A potential tax identity number for the company, non-Turkish shareholders, and non-Turkish board members of the company, must be obtained from the relevant tax office. This potential tax identity number is necessary for opening a bank account in order to deposit the capital of the company to be incorporated.

The documents required by the tax office are as follows:


  • Petition requesting registration
  • Notarized articles of association (one original)
  • Copy of the tenancy contract showing the registered address for the company
  • If the process is going to be followed by proxy, a power of attorney must be issued specifically showing the authority to act on behalf of the company before the tax authority in order to obtain a tax identity number or potential tax identity number


f. Deposit a percentage of capital to the account of the Competition Authority


Original of bank receipt (from Halk Bank, Ankara corporate branch) indicating that the 0.04 percent of the capital has been deposited to the account of the Competition Authority at the Central Bank of the Republic of Turkey (CBRT) or a public bank, or the EFT receipt signed and stamped “collected” (account no: 80000011 – IBAN no: TR40 0001 2009 4520 0080 0000 11), which shows an amount equal to 0.04 percent of the company’s capital has been paid to the account of the Competition Authority.

g. Deposit at least 25 percent of the startup capital in a bank and obtain proof thereof

25 percent of the share capital must be paid in prior to the new company registration. The remaining 75 percent of the subscribed share capital must be paid within two years. Alternatively, the capital may be fully paid prior to registration.

h. Apply for registration at the Trade Registry Office

Pursuant to gathering the following documents, founders may apply for registration:


  • Petition requesting registration
  • Four copies of incorporation notification form
  • Four copies of the notarized articles of association (one original)
  • Bank deposit receipt with respect to the payment made to the bank account of the Competition Authority (0.04 percent of the company’s share capital)
  • For each person authorized to represent the founders of the limited liability company, two copies of the signature declarations
  • Founders’ declaration (one original)
  • Chamber of Commerce registration form (two different forms for two different shareholder types: real person shareholder or legal entity shareholder)
  • The written statement of non-shareholder members of board of directors that states acknowledgement of this duty
  • Bank certificate of the paid-in minimum capital deposit (at least 25 percent of subscribed capital). If there will be any capital contribution in kind:
    o The expert report regarding the capital in kind
    o The statement of the relevant registry indicating there is no limitation on that capital in kind
    o The document indicating the annotations have been done to relevant registries regarding the capital in kind
    o The written agreements between founders, other persons, and the founding company regarding the foundation of the company


Following completion of the registration phase before the Trade Registry Office, the Trade Registry Office notifies the relevant tax office and the Social Security Institution ex-officio regarding the incorporation of the company. The Trade Registry Office arranges for an announcement in the Commercial Registry Gazette within approximately 10 days of the company registration. A tax registration certificate must be obtained from the local tax office soon after the Trade Registry Office notifies the local tax office.


A social security number for the company must be obtained from the relevant Social Security Institution. For the employees, a separate application has to be made following the registration of the company with the Social Security Institution.

i. Certify the legal books by a notary public

The founders must certify legal books the day they register the company with the Trade Registry Office. The notary public must notify the tax office about the commercial book certification.


  • Journal
  • Ledger
  • Inventory book
  • Share ledger
  • Manager’s meeting minutes book
  • General assembly meeting minutes book

j. Follow up with the tax office on the Trade Registry Office’s company establishment notification

The Trade Registry Office notifies the tax office and the Social Security Institution of the company’s incorporation. A tax officer comes to the company headquarters to prepare a determination report. There must be at least one authorized signature in the determination report. Trade Registry Officers send the company establishment form, which includes the tax number notification, to the tax office.


Issuance of signature circular: After the company has been registered before the Trade Registry the signatories of the company must issue a signature circular.

Branch Office


  • No shareholder
  • Not an independent legal entity. Its duration is limited to the duration of the parent company
  • No capital requirement, however, it would be wise to allocate a budget for the operations of a branch office
  • A branch office may be incorporated only for the same purposes as those of the parent company
  • Repatriation of branch profit is allowed. The branch profit transferred to the headquarters is subject to dividend withholding tax at a rate of 15 percent, which may be reduced by Double Taxation Prevention Treaties


Getting registered at the Trade Registry Office

An application with the following documents must be submitted to the relevant Trade Registry Office for the registration of a branch:


  • Petition (must be signed either by an authorized signatory under the company seal or by proxy; if signed by the latter, then the original or the notarized copy of the power of attorney must be attached to the petition)
  • The resolution of the competent organ of the parent company to open a branch
  • A certified original copy of the parent company’s articles of association
  • Certificate of Activity of the parent company or any equivalent documentation that sets forth registration and current status of the parent company
  • A power of attorney granted by the parent company in favor of its resident representative, assigning full representation and accountability
  • Five copies of the Establishment Declaration Form (the related fields must be filled and signed by the authorized person)
  • Two copies of the power of attorney stating the representative in Turkey
  • If the branch representative is a Turkish national, a notarized copy of his/her ID card. If not, a notarized copy of the authorized representative’s passport translated into Turkish
  • Two copies of the signature declarations of the branch representative under the branch title
  • A letter of commitment (signed by authorized person)
  • A Chamber Registry Declaration Form Statement to be obtained from the Trade Registry Office (including photographs of the branch representatives)

It should be noted that all the necessary documents that will be issued and executed outside Turkey must be notarized and apostilled or alternatively ratified by the Turkish consulate where they are issued. The original executed, notarized, and apostilled documents must be officially translated and notarized by a Turkish notary.

Liaison Office


  • Main activity is to conduct market research and feasibility studies and to oversee investment opportunities in the Turkish market on behalf of the parent company
  • Not allowed to carry out any commercial activity
  • Required to obtain permit from the Ministry of Economy, General Directorate of Incentive Implementation and Foreign Investment
  • The condition of being operational for at least one year might be sought for permit
  • The initial permit is issued for three years and can be extended depending on the activities in the past three years and the future plans of the parent company
  • Applications of international investors to establish liaison offices to operate in sectors that are subject to special legislation, such as money and capital markets, and insurance, etc., are assessed by the relevant authorities

Permit from Ministry of Economy

The documents required by the Ministry of Economy for establishing a liaison office in Turkey are as follows:


  • Application form
  • The Letter of Commitment indicating the liaison office’s field of activity, a written statement that the liaison office will not carry out commercial activities, and the authorization document of the parent company official who signed the letter
  • The Certificate of Activity of the parent company
  • Activity report or balance sheet and income statement of the parent company
  • The certificate of authority issued in the name of the person/persons who is/are appointed to carry out the operations of the liaison office
  • The power of attorney in case another person will carry out the establishment transactions of the liaison office


It should be noted that all the necessary documents issued and executed outside Turkey must be notarized and apostilled or alternatively ratified by the Turkish consulate where they are issued. The original executed, notarized and apostilled documents must be officially translated and notarized by a Turkish notary.


  1. TAXES


Turkey has one of the most competitive corporate tax rates in the OECD region. The Turkish corporate tax legislation has noticeably clear, objective and harmonized provisions which are in line with international standards.


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


1.1. Income Taxes


The Turkish tax legislation includes two main income taxes, namely individual income tax and corporate income tax. Although individual income tax and corporate income tax are governed by different laws, many rules and provisions pursuant to individual income tax also apply to corporations, particularly in terms of income elements and the determination of net income.


1.1.1. Individual Income Tax


Real persons’ income is subject to individual income tax. Income is defined as the net amount of all earnings and revenues derived by an individual within a single calendar year. As per the Income Tax Law, income may consist of the elements listed below:

  • Business profits
  • Agricultural profits
  • Salaries and wages
  • Income from independent personal services
  • Income from immovable property and rights (rental income)
  • Income from movable property (income from capital investment)
  • Other income and earnings


According to the Turkish tax legislation, there are two main types of tax statuses regulated on the basis of residence: resident taxpayers and non-resident taxpayers. Resident taxpayers (those who reside in Turkey, and those who spend more than a continuous period of six months in Turkey within a calendar year) are taxed on their earnings and incomes derived in and outside Turkey, whereas non-residents (those who do not reside in Turkey and those who do not spend more than a continuous period of six months in Turkey within a calendar year) are taxed only on their earnings and incomes derived in Turkey.


Individual income tax rate varies from 15% to 35%.


Individual income tax rates applicable for 2017 are as follows:


Income Scales (TRY)

(Employment Income)

Rate (%) Income Scales (TRY)

(Non-Employment Income)

Rate (%)

Up to 13,000


Up to 13,000










110,001 and over


70,001 and over



1.1.2. Corporate Income Taxes


In case income elements specified in the Income Tax Law are derived by corporations, taxation is applicable on the legal entities of these corporations. Corporate taxpayers defined in the law are as follows:

  • Capital companies
  • Cooperatives
  • Public economic enterprises
  • Economic enterprises owned by associations and foundations
  • Joint ventures


Corporations with legal or business centers located in Turkey are qualified as residents and are subject to tax on their income derived in Turkey and other countries. If both the legal and business centers are not located in Turkey, then these corporations are qualified as non-residents and subject to tax only on their income derived in Turkey. The legal center is the place stipulated in the Articles of Association or the incorporation law of corporations that are subject to tax, while the business center is defined as the place where business activities are concentrated and managed.


In Turkey, the corporate income tax rate levied on business profits is 20%.


Resident corporations are subject to a 15% withholding tax when dividends are paid out to shareholders. However, dividends paid by resident corporations to resident corporations are not subject to withholding tax. As a share capital increase by the corporation using the retained earnings is not considered to be a dividend distribution, no withholding tax applies to dividends. Similarly, non-resident corporations are subject to a 15% withholding tax during remittance of such profits to the headquarters. Withholding tax is applied on the amount after the deduction of corporate income tax from taxable branch profits.


1.2. Taxes on Expenditure


1.2.1. Value Added Tax (VAT)


The generally applied VAT rate is set at 1%, 8%, and 18%. Commercial, industrial, agricultural, and independent professional goods and services, goods and services imported into the country, and deliveries of goods and services as a result of other activities are all subject to VAT.


VAT exemptions include, but are not limited to, the following:

  • Exports of goods and services
  • Roaming services rendered in Turkey for customers outside Turkey (i.e. non-resident customers) in line with international roaming agreements, where a reciprocity condition is in place
  • Contract manufacturing for clients operating in free zones
  • Petroleum exploration activities
  • Services rendered at harbors and airports for vessels and aircrafts
  • Supply of machinery and equipment within the scope of an investment certificate
  • Transit transportation
  • Deliveries and services made to diplomatic representatives and consulates on condition of reciprocity, international organizations with tax exemption status and to their employees
  • Banking and insurance transactions which are subject to Banking and Insurance Transactions Tax


1.2.2. Special Consumption Tax (SCT)


There are four main product groups that are subject to SCT at different tax rates:

  • Petroleum products, natural gas, lubricating oil, solvents, and derivatives of solvents
  • Automobiles and other vehicles, motorcycles, planes, helicopters, yachts
  • Tobacco and tobacco products, alcoholic beverages
  • Luxury products


Unlike VAT, which is applied on each delivery, SCT is charged only once.


1.2.3. 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 banks, such as loan interest. Although the general rate is 5%, some transactions, such as interest on deposit transactions between banks, are taxed at 1%. No tax is levied on sales from foreign exchange transactions since 2008.


1.2.4. Stamp Duty


Stamp duty applies to a wide range of documents, including contracts, 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 at rates ranging from 0.189% to 0.948% and is collected as a fixed price (a pre-determined price) for some documents.


1.3. Taxes on Wealth


There are three kinds of taxes on wealth:

  • Property taxes
  • Motor vehicle tax
  • Inheritance and gift tax


Buildings, apartments and land owned in Turkey are subject to real estate tax ranging at a rate between 0.1% and 0.6%, while Contribution to the Conservation of Immovable Cultural Property is levied at a rate of 10% of this real estate tax. Motor vehicle taxes are collected on the basis of fixed amounts that vary according to the age and engine capacity of the vehicles every year. Meanwhile, inheritance and gift taxes are levied at a rate of 1% to 30%.




Effective as of January 1, 2012, the investment incentives system comprises four different schemes. Local and foreign investors have equal access to:

  • General Investment Incentives Scheme
  • Regional Investment Incentives Scheme
  • Large-Scale Investment Incentives Scheme
  • Strategic Investment Incentives Scheme


For detailed information about incentives:

Investment Zones

There are three types of special investment zones in Turkey:


1. Technology Development Zones – Technoparks


Technology Development Zones (TDZ*) are areas designed to support R&D activities and attract investments in high-technology fields.


There are 63 TDZs of which 50 are operational and 13 have been approved and are currently under construction.


Advantages of TDZs


  • Profits derived from software development, R&D, and design activities are exempt from income and corporate taxes until December 31, 2023.
  • Sales of application software produced exclusively in TDZs are exempt from VAT until December 31, 2023. Examples include software for systems management, data management, business applications, different business sectors, the internet, mobile phones, and military command control.
  • Wages of R&D, design and support personnel employed in the zone are exempt from all taxes until December 31, 2023. The number of the support personnel covered by the exemption cannot exceed 10 percent of the number of the R&D personnel.
  • Investments for the production of the technological products obtained as a result of the R&D projects conducted in the zone may be made in the TDZ if deemed suitable by the operator company and allowed by the Ministry.
  • 50 percent of the employer’s share of the social security premium will be paid by the government until 31.12.2023.
  • Customs duty exemption for imported products and stamp duty exemption for applicable documents within the scope of R&D, design, and software development projects.


2. Organized Industrial Zones


Organized Industrial Zones (OIZ*) are designed to allow companies to operate within an investor-friendly environment with ready-to-use infrastructure and social facilities. The existing infrastructure provided in the zones includes roads, water, natural gas, electricity, communications, waste treatment, and other services.


There are 284 OIZs in 80 provinces, 215 of which are currently operational, while the remaining 69 OIZs are being constructed throughout Turkey.


Advantages of OIZs


In addition to the investment incentives scheme in Turkey (general investment incentives, regional investment incentives, large-scale investment incentives, strategic investment incentives, employment incentives, R&D support, etc.), investors operating in the OIZs can benefit from the following advantages:


  • No VAT for land acquisitions.
  • Exemption from real estate duty for five years starting after the construction of the plant.
  • Low water, natural gas, and telecommunication costs.
  • For unification and/or separation of plots, no tax to be paid. Exemption from municipality tax for construction and usage of the plant.
  • Exemption from the municipality tax on solid waste if the OIZ does not benefit from the municipality service.


3. Free Zones


Free zones (FZ) are special sites considered to be outside the customs area, although they are within the political borders of the country. These zones are designed to increase the number of export-focused investments. Legal and administrative regulations in the commercial, financial, and economic fields that are applicable within the customs area are either not implemented or partially implemented in the free zones.


There are 19 FZs in Turkey located close to the EU and Middle Eastern markets adjacent to major Turkish ports on the Mediterranean, Aegean Sea, and the Black Sea, with easy access to international trade routes.


Advantages of FZs


  • 100% exemption from customs duties and other assorted duties.
  • 100% exemption from corporate income tax for manufacturing companies.
  • 100% exemption from value-added tax (VAT) and special consumption tax.
  • 100% exemption from stamp duty for applicable documents.
  • 100% exemption from income tax on employees’ wages (for companies that export at least 85% of the FOB value of the goods they produce in the free zones).
  • Goods can remain in free zones for an unlimited period.
  • Companies are free to transfer profits from free zones to abroad as well as to Turkey, without restrictions.

Infrastructure and Logistics

Energy Infrastructure


Turkey has increased its installed power capacity for electricity generation to 73,147 MW in 2015, up from 38,843 MW in 2005. The sector anticipates increasing growth in order to meet the government target of 120,000 MW of installed power by 2023, the centennial celebration of the Republic of Turkey.


Electricity Generation: Installed Power (MW)
























Source: Turkish Electricity Transmission Company (TEIAS)


Efficiency and Adequacy of Energy Infrastructure

(0: Inefficient and Inadequate – 10: Efficient and Adequate)



Source: IMD World Competitiveness Online 1995-2016


Telecommunications Infrastructure


Telecommunications Infrastructure


Mobile Telephone Subscribers

73.7 million

Fixed Line Subscribers

11.5 million

Mobile Broadband Subscribers

39.1 million

Broadband Subscribers

48.6 million


Source: Information and Communication Technologies Authority (ICTA)


Communication Technology (voice and data)

(0: Does not meet business requirements – 10: Meets business requirements)



Source: IMD World Competitiveness Online 1995-2016


Transportation Infrastructure


Transportation Infrastructure


Air Passengers

182 million


55 (39 (25 permenant+14 seasonal) international)

Road Network

66,244 km

  • Motorway

2,289 km

  • State Highway

31,215 km

  • Provincial Roads

32,740 km

Railway Network

12,532 km

  • Conventional Line

11,319 km

  • High-Speed Line

1,213 km

Seaport Handling

416 million tons

  • Loading

118 million tons

  • Unloading

235 million tons

  • Transit

63 million tons

Air Cargo

3.1 million tons

  • Domestic

887,000 tons

  • International

2.2 million tons


Source: Ministry of Transport, Maritime and Communication


One of Turkey’s key advantages is its logistics industry, which has undergone significant development since its entry into the EU Customs Union. The industry’s infrastructure, a unique combination of geographic, physical, and corporate characteristics, makes it one of the key attractions for potential investors, as seen below:


  • Turkey’s proximity to major markets, such as the CIS, the Middle East, and North Africa, means that approx. 1.6 billion consumers can easily be reached.
  • Turkey has a pivotal role in connecting Pan-European transport corridors to Central Asia. Additionally, the Mediterranean basin, to which Turkey is a natural conduit, has gained greater prominence in both East-West and North-South connections.
  • Turkey has invested TRY 253.3 billion in transportation and communication infrastructure between 2003 and 2015, of which TRY 23.1 billion has been realized as PPP investment.
  • The national road and railroad networks are completely integrated into the Eurasian infrastructure. The Silk Road Railway project will ensure a uniform rail route between Europe, the Middle East, the Turkic Republics, and the Far East through Turkey. Regular truck transportation and Roll-on/Roll-off (Ro-Ro) ferry routes are continuing to add to the logistic services capacity.
  • Rapid expansion of a high-speed train network means Turkey is now 6th in Europe and 8th in the world in terms of length of high-speed track. Turkey aims to have a combined 12,000 km of high-speed and fast train lines by 2023, and a combined 18,000 km of high-speed and fast train lines by 2035. These projects include:


o   Ankara-Sivas High-Speed Train Project

o   Sivas-Erzincan-Erzurum-Kars High-Speed Train Project

o   Ankara-Polatli-Afyon-Usak-Izmir High-Speed Train Project

o   Bursa-Bilecik Fast Train Project

o   Konya-Karaman Fast Train Project

o   Karaman-Niğde-Mersin Fast Train Project


  • Law 6461 regarding the liberalization of railway transportation in Turkey was enacted on May 1 , 2013. Full application of the law in the railway market is being expected by the end of 2016 following the dissemination of all secondary legislations.


Efficiency in the Distribution Infrastructure for Goods and Services

(0: Inefficient – 10: Efficient)



Source: IMD World Competitiveness Online 1995-2016


Mega Projects


  • Marmaray: Marmaray is an undersea railway tunnel linking the Asian and European sides of Istanbul, and its first phase has been in operation since October 2013, the 90th anniversary of the Republic of Turkey. Marmaray makes a significant contribution to Istanbul’s railway network, with connections to the Istanbul metro and the high-speed railway line between Istanbul and Ankara. Marmaray has carried more than 120 million passengers since its inauguration.
  • Third Bosphorus Bridge and North Marmara Highway: Istanbul’s third Bosphorus bridge (Yavuz Sultan Selim Bridge) links Istanbul’s European and Asian sides. It was designed as a hybrid bridge, and as such holds the distinction as the world’s widest and longest combined road and rail bridge. The bridge is part of the North Marmara Highway project, stretching from Adapazari, Sakarya to Tekirdag. Once fully operational, the project will further ease the burden on the existing two bridges spanning the Bosphorus and provide a transit corridor for freight transportation that bypasses the busy city center. The project has created around 6,000 jobs and the construction activities have added an annual TRY 1.75 billion to the economy.
  • Eurasia Tunnel: The tunnel enables motor vehicles to travel between Asia and Europe via a highway tunnel running underneath the Marmara seabed. The 3.34 km-long two-deck undersea tunnel will have a daily capacity of 120,000 vehicles and will significantly cut the distance between Kazlicesme on the European side and Goztepe on the Asian side of Istanbul. It is expected to be open by the end of 2016. The expected fuel saving with the tunnel is around 38 million liters annually. The project, with an employment of 1,800 people, will also decrease carbon emissions by 82,000 tons a year.
  • Third Airport in Istanbul A joint venture of Turkish companies won a tender for the third Istanbul airport in May 2013. The companies will pay the government EUR 22.1 billion plus taxes for the right to operate the airport for 25 years starting in 2017. The project, which is expected to cost around EUR 33 billion with all investments and annual rent, is the largest project in the country so far. Located on the northwest of Istanbul’s European side, the 150-million-passenger capacity air terminal will be connected to the Third Bosphorus Bridge via the North Marmara Highway. The airport will play a vital role in making Istanbul a global air travel hub. The airport’s first stage will incorporate two runways and a terminal with an annual capacity of 90-million passengers. This first stage is due to be operational in 2018.
  • Gebze-Orhangazi-Izmir Highway and Izmit Bay Bridge: The project shortens the overland travel distance between Istanbul and Turkey’s third largest city, Izmir. This project features the 3-km long Izmit Bay Bridge (Osman Gazi Bridge), the fourth largest suspension bridge in the world.
  • Three-Storey Grand Istanbul Tunnel: The three-storey subsea tunnel will connect Istanbul’s Asian and European sides under the Bosphorus and will feature a railway sandwiched between two highways. The 6.5-km-long tunnel will sit 110 m below sea level and will be the first of its kind in the world. The tunnel will not only reduce the traffic load on the bridges spanning the Bosphorus, but will also maximize time savings.
  • Canakkale Suspension Bridge: This bridge will be located at the western end of the Sea of Marmara, close to the province of Canakkale. It will span the Dardanelles and will become the longest suspension bridge in the world, with a center span longer than 2 km once completed. The bridge will be part of the Canakkale-Tekirdag-Kinali-Balikesir Highway and feature three lanes in each direction as well as train tracks.
  • Canal Istanbul: The canal will be an artificial sea-level waterway that will run parallel to the Bosphorus, connecting the Black Sea with the Sea of Marmara. 47 km in length and 150 meters wide, the canal will provide relief to naval traffic in the Bosphorus, particularly tanker traffic. The canal will be able to handle 160 vessels a day and is set to offer many investment opportunities since there will be huge growth potential in its immediate vicinity.
  • Gebze-Halkali Commuter Rail Upgrading: The renovated train links that will connect Istanbul’s outskirts on the European side with those on the Asian side are expected to be completed in 2018. The EUR 1 billion project has created jobs for over 800 people and has contributed around TRY 500 million to the economy.
  • Baku-Tbilisi-Kars Railway: This railway will be the third largest project made jointly by Azerbaijan, Georgia and Turkey, following two major energy pipeline projects. Once the railway project is complete, the line will be able to carry a total of 1 million passengers and 6.5 million tons of cargo annually. The capacity of the railway is expected to increase to 3 million passengers and 17 million tons of cargo by 2034. The project has created 8,237 jobs and has made a contribution of around TRY 988 million to the economy so far. A test drive of the railway line is slated for the end of 2016.
  • Ovit Tunnel: The construction of a new highway tunnel in the northeastern region of Turkey, which is planned to be one of longest tunnels in the world, is invigorating the commercial prospects of local investors, both regionally and internationally. The tunnel is set to cut through Ovit Mountain, which is located between Ikizdere, a district in the northwestern province of Rize, and the eastern province of Erzurum’s Ispir district. The dual-tunnel project will eventually exceed 14.7 km, including the linking roads around it. Construction of the project is expected to be finalized by the end of 2017.


With regard to the maritime sector, important projects include the Candarli Port on the Aegean Sea, the Mersin Second Container Port on the Mediterranean Sea, and the Filyos Port on the Black Sea. With these projects, one in each of the three seas surrounding Turkey, Turkey’s current container handling capacity is expected to triple.

Foreign Trade

Foreign Trade Statistics


USD million









Exports (FOB)








Imports (CIF)








Trade Volume








Trade Balance









Source: TurkStat


Due to the implementation of the liberalization process since the 1980s, the Turkish economy has experienced a period of substantial growth. Foreign trade, in respect of both exports and imports, has grown rapidly and notable changes in the structure of exports have been observed. In this regard, industrial products have gained prominence over agricultural products.


Turkey became a member of the World Trade Organization (WTO) in 1995. Following this move, it finalized an agreement with the European Union, enabling it to join the Customs Union on January 1, 1996.




In line with the policies implemented as part of the export-led development model followed since 1980, exportation has become important to Turkey in both qualitative and quantitative terms.


Starting in particular in 1980 and continuing up to the mid-1990s, significant developments have been observed in the market share held by labor-intensive industrial products such as textiles and clothing, iron and steel, and foodstuffs.


In 1996, following the establishment of a Customs Union with the European Union, Turkey’s exports entered a new structural transformation process. Developments in recent years show that production and exportation have increased substantially in high-technology sectors, where goods include electrical and electronic machinery and equipment, as well as in the automotive industry. In this respect, it can also be observed that the export market share of manufactured industrial products has increased.


Top 10 Export Product Groups in 2016


  Product Groups

USD billion

Share in total exports (%)


Vehicles other than railway or tramway rolling-stock, parts thereof




Boilers, machineries and mechanical appliances, parts thereof




Precious stones, precious metals, pearls and articles thereof




Knitted and crocheted goods, and articles thereof




Electrical machinery and equipment, parts thereof




Iron and steel




Non-knitted and crocheted goods, and articles thereof




Plastic and articles thereof




Articles of iron and steel




Edible fruits and nuts, peel of melons or citrus fruits




Source: TurkStat


Major Export Markets in 2016 



USD million

Share (%)

A-EU 28



B-Free Zones in Turkey



C-Other countries



1- Other European countries



2- North African countries



3- Other African countries



4- North American countries



5- Central American countries and Caribbean



6- South America countries



7- Near and Middle Eastern countries



8- Other Asian countries



9- Australia and New Zealand



10- Other countries



Source: TurkStat




The Turkish import regime highlights the liberalization of Turkish imports in line with its commitment to complete the Customs Union with the EU, its relationship with EFTA, and its obligations under the World Trade Organization (WTO). Turkey has placed special emphasis on its commitment to reduce customs duties in order to align itself with the Common Customs Tariff. Turkey has made some necessary modifications to its import regime, and by January 1, 1996 the Customs Union with the EU became effective.


The basic aims of Turkey’s import policy since the early 1980s can be summarized as follows:


  • To reduce protectionist measures in conformity with the new GATT rules
  • To reduce bureaucratic procedures
  • To secure a supply of raw materials and intermediary goods at suitable prices with certain quality standards


Turkey’s Membership of International Trade Organizations


Turkey has been a member of the World Trade Organization (WTO) since 1995. The country’s commitment to integrating regional and international trade norms can be seen in its participation in and membership of various organizations, including the Economic Cooperation Organization (ECO), the United Nations Conference on Trade and Development (UNCTAD), the Organization of the Black Sea Economic Cooperation (BSEC), the World Customs Organization (WCO), the International Chamber of Commerce (ICC), D-8, and various other organizations.


In addition to the Customs Union with the EU, Turkey has signed Free Trade Agreements (FTA) with Albania, Bosnia-Herzegovina, Chile, Egypt, Faroe Islands*, Georgia, Ghana*, Iceland, Israel, Jordan, Kosovo*, Lebanon*, Macedonia, Malaysia, Mauritius, Montenegro, Moldova*, Morocco, Norway, Palestine, Serbia, Singapore*, South Korea, Switzerland and Lichtenstein, Syria (pending), Tunisia. (*to be ratified).

Investment Legislation

Turkey’s investment legislation is simple and complies with international standards, while it offers equal treatment for all investors. The backbone of the investment legislation is made up of the Encouragement of Investments and Employment Law No. 5084, Foreign Direct Investments Law No. 4875, the Regulation on the Implementation of the Foreign Direct Investment Law, multilateral and bilateral investment treaties and various laws and related sub-regulations on the promotion of sectorial investments.


Legal Framework of Foreign Direct Investment


1. Foreign Direct Investment (FDI) Law No. 4875


The aim of the Foreign Direct Investment (FDI) Law No. 4875 is:


  • to encourage FDI in the country
  •  to protect the rights of investors
  • to align the definitions of an investor and investment with international standards
  • to establish a notification-based system rather than an approval-based one for FDI
  • to increase the volume of FDI through streamlined policies and procedures


The FDI Law provides a definition of foreign investors and foreign direct investments. In addition, it explains important principles of FDI, such as freedom to invest, national treatment, expropriation and nationalization, freedom of transfer, national and international arbitration and alternative dispute settlement methods, valuation of non-cash capital, employment of foreign personnel, and liaison offices.


The Regulation on the Implementation of the FDI Law consists of specifying the procedures and principles set forth in the FDI Law. The aim of the FDI Law with regard to the work permits for foreigners is:


  • to regulate the work carried out by foreigners
  • to stipulate the provisions and rules on work permits given to foreigners


2. Bilateral Agreements


2. a. Bilateral Agreements for the Promotion and Protection of Investments


Bilateral Agreements for the Promotion and Protection of Investments were signed from 1962 onwards with countries that show the potential to improve bilateral investment relations. The basic aim of bilateral investment agreements is to establish a favorable environment for economic cooperation between the contracting parties by defining standards of treatment for investors and their investments within the boundaries of the countries concerned. The aim of these agreements is to increase the flow of capital between the contracting parties, while ensuring a stable investment environment. In addition, by having provisions on international arbitration, they aim to prescribe ways to successfully settle disputes that might occur among investors and the host state. Turkey has signed Bilateral Investment Treaties with 94 countries. However, Turkey is a dualist country, where an international treaty has to be ratified and promulgated in order to become part of the national legal system. Within this regard, 75 Bilateral Investment Treaties out of these 94 have gone into effect so far.


75 countries


Afghanistan, Albania, Argentina, Australia, Austria, Azerbaijan, Bangladesh, Belarus, Belgium-Luxembourg, Bosnia and Herzegovina, Bulgaria, China, Croatia, Cuba, Czech Republic, Denmark, Egypt, Estonia, Ethiopia, Finland, France, Georgia, Germany, Greece, Hungary, India, Indonesia, Iran, Israel, Italy, Japan, Jordan, Kazakhstan, Kuwait, Kyrgyzstan, Latvia, Lebanon, Libya, Lithuania, Macedonia, Malaysia, Malta, Moldova, Mongolia, Morocco, Netherlands, Oman, Pakistan, Philippines, Poland, Portugal, Qatar, Romania, Russian Federation, Saudi Arabia, Senegal, Serbia, Singapore, Slovakia, Slovenia, South Korea, Spain, Sweden, Switzerland, Syria, Tajikistan, Thailand, Tunisia, Turkmenistan, Ukraine, United Arab Emirates, United Kingdom, United States of America, Uzbekistan, Yemen


Source: Ministry of Economy


2. b. Double Taxation Prevention Treaties


Turkey has signed Double Taxation Prevention Treaties with 80 countries. This enables tax paid in one of two countries to be offset against tax payable in the other, thus preventing double taxation.


80 countries


Albania, Algeria, Australia, Austria, Azerbaijan, Bahrain, Bangladesh, Belarus, Belgium, Bosnia and Herzegovina, Brazil, Bulgaria, Canada, China, Croatia, Czech Republic, Denmark, Egypt, Estonia, Ethiopia, Finland, France, Georgia, Germany, Greece, Hungary, India, Indonesia, Iran, Ireland, Israel, Italy, Japan, Jordan, Kazakhstan, Kuwait, Kyrgyzstan, Latvia, Lebanon, Lithuania, Luxembourg, Macedonia, Malaysia, Malta, Moldova, Mongolia, Morocco, Netherlands, New Zealand, Norway, Oman, Pakistan, Poland, Portugal, Qatar, Romania, Russian Federation, Saudi Arabia, Serbia and Montenegro, Singapore, Slovakia, Slovenia, South Africa, South Korea, Spain, Sudan, Sweden, Switzerland, Syria, Tajikistan, Thailand, Tunisia, Turkish Republic of Northern Cyprus, Turkmenistan, Ukraine, United Arab Emirates, United Kingdom, United States of America, Uzbekistan, Yemen


Source: Revenue Administration


Turkey is continuing to expand the area covered by the Double Taxation Prevention Treaty by adding more countries on an ongoing basis.


2. c. Social Security Agreements


Turkey has signed Social Security Agreements with 26 countries. These agreements make it easier for expatriates to move between countries. The number of these countries will increase in line with the increased sources of FDI.


26 countries


Albania, Austria, Azerbaijan, Belgium, Bosnia and Herzegovina, Bulgaria, Canada and the Province of Quebec, Croatia, Czech Republic, Denmark, France, Georgia, Germany, Libya, Luxembourg, Macedonia, Netherlands, Norway, Romania, Slovakia, Serbia, South Korea, Sweden, Switzerland, Turkish Republic of Northern Cyprus, United Kingdom


Source: Social Security Institution (SSI)


3. Customs Union and Free Trade Agreements (FTA)


A Customs Union Agreement between Turkey and the European Union has been in effect since 1996. The agreement allows trade between Turkey and the EU countries without any customs restrictions. The EU-Turkey Customs Union is one of the steps toward full Turkish membership of the EU itself.


Turkey has FTAs with 37 countries, creating a free trade area in which the countries agree to eliminate tariffs, quotas and preferences on most goods and services traded between them. This framework explains why many global companies are now using Turkey as a second supply source and manufacturing base, not only for the EU and rapidly growing Turkish markets, but also for the Middle East, Black Sea and North African markets, with the added advantage of a relatively low-cost but well-educated labor force, coupled with cost-effective transportation.


37 countries


Albania, Bosnia and Herzegovina, Egypt, Georgia, EFTA, Israel, South Korea, Macedonia, Morocco, Malaysia, Mauritius, Palestine, Jordan, Syria*, Tunisia, Montenegro, Serbia, Chile


Countries that have finalized the negotiation process: Faroe Islands, Ghana, Kosovo, Lebanon, Moldova, Singapore

Countries in the negotiation process: Democratic Republic of the Congo, Cameroon, Colombia, Ecuador, Gulf Cooperation Council, Japan, Libya, Mexico, Mercosur, Peru, Seychelles, Ukraine



Source: Ministry of Economy