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Investment Legislation
Turkey’s
investment legislation is simple and complies with international
standards, while it offers equal treatment for all investors. Recent
amendments to the existing law improve Turkey’s investment environment
still further.
1. Legal Framework of Foreign Direct Investment
The aim of the Foreign Direct Investment (FDI) Law is:
to encourage FDI in the country
to protect the rights of foreign investors
to align investors and investments 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, transfers, access to real estate, dispute settlement,
valuation of non-cash capital, employment of expatriates, and liaison
offices.
The regulation on the implementation of the FDI Law consists of:
specifying the procedures and principles of the issues that are laid down in the FDI Law.
The aim of the new FDI Law on work permits for foreigners is:
to regulate the work carried out by foreigners
to stipulate the 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 hosting state.
Turkey has signed Bilateral Investment Treaties with 72 countries.
72
countries Afghanistan, Albania, Argentina, Australia, Austria,
Azerbaijan, Bangladesh, Belarus, Belgium, 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, Lithuania, Luxembourg, Macedonia,
Malaysia, Malta, Moldova, Mongolia, Morocco, Netherlands, Oman,
Pakistan, Philippines, Poland, Portugal, Qatar, Romania, Russian
Federation, Saudi Arabia, Serbia, Singapore, Slovakia, Slovenia, South
Korea, Spain, Sweden, Switzerland, Syria, Tajikistan, Thailand, United
Kingdom, United States of America, Tunisia, Turkmenistan, Ukraine,
Uzbekistan.
2.b. Double Taxation Prevention Treaties
Turkey
has signed double taxation prevention treaties with 75 countries. This
enables tax paid in one of two countries to be offset against tax
payable in the other, thus preventing double taxation.
75
countries Albania, Algeria, Austria, Azerbaijan, Bahrain, Bangladesh,
Belarus, Belgium, Bosnia and Herzegovina, Bulgaria, China, Croatia,
Czech Republic, Denmark, Egypt, Estonia, Ethiopia, Finland, France,
Germany, Georgia, Greece, Hungary, India, Indonesia, Iran, Ireland,
Israel, Italy, Japan, Jordan, Kazakhstan, Kuwait, Kyrgyzstan, Latvia,
Lebanon, Lithuania, Luxembourg, Macedonia, Malaysia, Moldova, Mongolia,
Montenegro, Morocco, Netherlands, Norway, Oman, Pakistan, Poland,
Portugal, Qatar, Romania, Russian Federation, Saudi Arabia, Serbia,
Singapore, Slovakia, Slovenia, South Africa, South Korea, Spain, Sudan,
Sweden, Syria, Tajikistan, Thailand, United Arab Emirates, United
Kingdom, United States of America, Tunisia, Turkish Republic of
Northern Cyprus, Turkmenistan, Ukraine, Uzbekistan, Yemen.
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 22 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.
21 countries Albania,
Austria, Azerbaijan, Belgium, Bosnia and Herzegovina, Bulgaria, Canada
and the Province of Quebec, Czech Republic, Denmark, France, Georgia,
Germany, Libya, Luxembourg, Macedonia, Netherlands, Norway, Romania,
Sweden, Switzerland, Turkish Republic of Northern Cyprus, United
Kingdom.
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 towards full Turkish membership of the EU
itself.
Turkey has FTAs with 20 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. The FTAs marked with (*) in the list
below are in the process of ratification.
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 Undersectreatiatof Treasury |
