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Invest in Turkey

Reasons for Investing in Turkey

Updated on Thursday 23rd July 2020

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Turkey has always offered numerous investment opportunities and a stable economic growth which still attracts the overseas investors. According to statistics, Turkey is the 17th largest economy in the world, with a GDP (gross domestic product) growth of about 3.8 % this year. Low taxes, a developed market, infrastructure and an excellent location are among reasons why foreign investors choose Turkey to set up all types of businesses. Our Turkish lawyers are ready to provide you with information and guidance if you are interested in making investments in the country.
 

Great location and infrastructure

 
The strategic location of Turkey implies Asia and Europe, and cities like Istanbul, Ankara, Adana, Izmir or Bursa are top choices for businessmen who wish to establish their companies in this country. The openings to the Black Sea, Marmara, Aegean Sea, and the Mediterranean Sea, besides the well-developed shipping industry, have offered great importance to the country’s economic sectors. About 8,500 km of the coastline have important and developed ports for a proper function of the trade activities. Our lawyer in Turkey is able to offer details and important information about the investment opportunities in the country.
 
The railway system in Turkey covers about 11,000 km and it is developing daily, due to modern and well-planned government reforms. This is an important conveyance in Turkey, with direct implications in different economic sectors in the country and outside of it. Besides that, the highway system is quite consistent and covers about 383,000 km, one of the main aspects to consider when having a business in Turkey. Here is an infographic that explains more:
 
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The main business sectors with full potential in Turkey

 
The energy,  constructionchemical and the automotive industries offer excellent investment openings and a proper environment for all people who want to make 100% profit. The tobacco industry is extremely tempting, and here the numbers say that Turkey is the third largest exporter. Beside these important sectors, the manufacturing field represents about 30% of the annual GDP. The tourism sector has full potential, due to the excellent location and the proper climate of the country, where businessmen have developed numerous accommodations, hotels, and high-class buildings. Foreign investors who choose to establish a company in Turkey have the possibility to hire the workforce available here and can rely on their experience and knowledge.
 
The law related to foreign investments in Turkey offers accessibility and a proper approach to all overseas entrepreneurs.  Regarding the taxes, many companies are exempt from certain fees, and the corporate tax is set to 20%.
 
Turkey is an attractive country for investments on a long term, according to the Ernst&Young report “Turkey Attractiveness Survey” and “The Doing Business Report” published by the World Bank. Turkey can be ranked the 12th economy in the world in 2030, as the specialists from PricewaterhouseCoopers expect, and the 8th by 2050, according to those from Goldman Sachs. The report from Ernst&Young states that foreign investments in Turkey have grown since 2007, despite the economic crisis that has affected almost all the major countries in Europe. The interest of the foreign entrepreneurs to open companies in Turkey is due to this country strategic location between two continents, with very good transport facilities and logistic means, very important for developing a business especially in export & import field. One of our lawyers in Turkey can explain the applicable laws on foreign investments and can provide assistance in starting a business in Turkey.
 

Simplified business formalities in Turkey

 
The business climate of Turkey provides a series of advantages, including the ones related to the registration process of a company. In most cases, international entrepreneurs are interested in fast business incorporation, without having to deal with bureaucratic procedures that look complex. Luckily, the incorporation process in Turkey has been simplified in the past few years and that to attract as many businessmen as possible, among other aspects. In Turkey, the limited liability company is the most appreciated and used form of business due to the lack of harsh registration regulations. If you would like to register an LLC or Limited Şirket as it is known in Turkey, you might be interested in the following aspects and procedures:
 
  1. TRY 10,000 is the minimum share capital for an LLC in Turkey which needs to be deposited in a local bank account;
  2. A name verification and reservation are required prior to the incorporation process. Our Turkish lawyers can help.
  3. The Articles of Association will comprise information about the company, the activities, the general rules, business address, company owners, dissolution and many more;
  4. Special licenses and permits are required for particular activities in Turkey;
  5. The registration for taxation and social contributions is mandatory in Turkey.
 
These are a few aspects of the company registration in Turkey, a simple procedure that can be overseen by our lawyers in Turkey. Our team can facilitate the business requirements of international entrepreneurs in Turkey by helping them from a legal point of view.
 

Is it hard to establish a branch or a subsidiary in Turkey?

 
No, it is not hard to open branches or subsidiaries in Turkey, as long as you obtain the needed licenses and permits issued by the entitled authorities. In this matter, a written decision issued by the parent company intending to start a business in Turkey is required. The limited liability company might represent a suitable business form for branches and subsidiaries, however, the joint-stock company can be another alternative. Large companies from abroad already enjoy the business benefits of having branches and subsidiaries in Turkey, such as preferential taxation, excellent workforce, great infrastructure and logistics, business support in Turkey’s free trade zones, plus a series of appealing incentives offered by the government.

 

Facts about investments in Turkey
 

Investors are confident that the Turkish economy will grow in the future and 80% from the entrepreneurs questioned by E&Y said that they expect an improvement in investments in Turkey. This country is ranked 2nd in the world and on the first place regarding the investor confidence is Brazil. Almost one third of the foreign investments in Turkey, from 2007 to 2012, were made by American companies interested in fields such as: business service, chemicals, transport and logistics, which attracted also investors from EU, mostly from Germany, France and UK. Turkey has also a solid economy that has grown year after year and the authorities offer important incentives to businessmen interested in setting up companies in the special investment zones. 
 

Istanbul, the most successful city in Turkey

 
Most investors are interested in opening companies in Istanbul, one of the most attractive cities in Turkey where over half of the foreign investments came starting 2007 to 2012. The foreigners appreciate the good infrastructure, skilled workforce and the good location of the country. Other towns chosen by the foreign investors to grow their business were: Izmir, Ankara and Bursa.The foreign investments on a long term are expected to grow and the Turkish authorities should take action to eliminate bureaucracy and corruption. Turkish economy is considered an emerging market, along with the BRIC nations, and the political instability at the beginning of 2014 seems to affect the economic growth.  Below you can find recent information and interesting details and facts about investments and business in Turkey:
 
  • a complete VAT refund is granted to investments of at least TRY 500 million in Turkey;
  • according to the latest statistics, Turkey is the 17th largest economy in the world;
  • approximately USD 174.5 billion was the GDP reported in Turkey this year in June;
  • in 2018, Turkey was the 7th most popular FDI destination of Europe;
  • around 34% of the foreign investments were directed to the finance sector in Turkey in 2018;
  • around 24% of the FDI in Turkey were registered in the manufacturing sector.
 
We also invite you to watch a comprehensive video about foreign investments in Turkey
 
 

Investment incentives in Turkey

 
Since 2016, Turkey introduced two important incentive programmes, one called “Super Incentives” and the other named “Center of Attraction”. The first one was created to encourage the research and development sector and any technological field, while the second one was meant to attract foreign investors in less developed regions in Turkey by focusing on employment and exports. Overall, the investment incentives in Turkey are meant to accelerate the inbound investments for a long period of time. Those entrepreneurs wanting to start a business in the import and export sector in Turkey can get in touch with one of our Turkish attorneys and find out all the legal details involved.
 

What are regional and sector-based investments in Turkey?

 
Three out of six major regions in Turkey are less developed and therefore, the target is to attract investments as much as possible, sustained by proper industrial and economic conditions to satisfy the international business climate. Foreign entrepreneurs can benefit from varied investment incentives if their business plan is accepted by the Ministry of Industry and Technology in Turkey.
 

The agriculture sector in Turkey sustains the economy

 
The agriculture sector of Turkey sustains about 23% of the country’s economy, representing a strong sector for business. The country is now found in the modern era in terms of technologies and new business climate in this sector, placing Turkey 7th among the world’s largest agricultural producers. In this direction, numerous governmental projects and incentives helped quite much. For instance, the National Agricultural Project worth around USD 4 billion per year aims to place Turkey among the top 5 biggest agricultural producers in the world, by the end of 2023. Foreign investors interested in placing their operations in the agriculture sector of Turkey can discuss all the aspects with our Turkish lawyers.
 

Large scale investments in Turkey

 
If at least TRY 50 million are invested in Turkey, this means that the entrepreneurs qualify as large investors. Most of these kinds of investments are directed to sectors like oil and gas, pharmaceuticals, port and fishery, and transportation by air, sea, and land. Also, some might be interested in the automotive sector, electronics, or transit pipeline transportation services where there is a demand for foreign investments.
 

What are prioritized investments in Turkey?

 
The following category of investments can be subject to all sorts of investments and can be in the attention of numerous entrepreneurs:
 
  1. Investments in the accommodation sector to sustain and thrive in the tourism field in Turkey.
  2. The defence industry where the Undersecretaries for Defence Industry issues the approvals.
  3. Investments made in the transportation sector (sea, aid, and land) in turkey.
  4. Mine extraction, daycare centers, aircraft training, and shopping mall units. 
  5. Companies using waste heat-based electricity generation.
 
Investors obtaining the exploration license in agreement with the Mining Law in Turkey can make investments in this field. Also, some entrepreneurs might be interested in placing their investments in OIZ or the Organized Industrial Zones and benefit from a series of governmental incentives.
 
It is important to know that investments made in the first three developed regions of Turkey can benefit from varied encouragements provided by the government if the investment is directed to the medium-high technology sector. This normally addresses to international players who want to invest more than TRY 1 million.

The legislation that regulates the foreign investments in Turkey is in compliance with the international standards and all foreign investors are welcome in this country, without any discrimination. The main laws in the field of foreign investments are no. 4875 and 5084 and these have, as the major goal, encouraging foreign investments and protecting the rights of the investors. Any foreign citizen is free to invest in Turkey as long as he respects the local legislation.

Before starting an investment in Turkey, a foreign entrepreneur should know the main regulations related to doing business in this country. If you don’t have time to read the laws or you need some legal terms to be explained, you may contact our Turkish lawyers. They will clarify your legal issues and help you start a company in Turkey.
 

International agreements signed by Turkey

 
Turkey has signed a lot of bilateral agreements with other countries for the protection of foreign investments. Through these agreements, there were established favorable conditions for foreign businessmen interested in investing in Turkey and for increasing the volume of capital invested in Turkey’s economy. In order to ensure a business friendly environment for foreign investors in Turkey, the authorities from this country have signed over 70 double taxation treaties. The foreign investors from the countries that have signed the treaties are not required anymore to pay taxes in both countries.
 
The trade between Turkey and any of the countries that are EU members is free and it can be made with no custom restrictions.This country prepares for becoming a member of European Union in the next years. One of our lawyers in Turkey can tell you more about these double taxation agreements signed by this country. You can also ask information about how to register for VAT in Turkey.
 

What is the foreign direct investment law in Turkey?

 
Foreign direct investment in Turkey is defined by the Law no. 4875 that came into force in 2003. This term refers to foreign investors who open a company or a branch of their firm in Turkey or purchase shares in a company incorporated in Turkey.
 

Key facts about Turkey’s solid points – a short conclusion

 
Turkey is for sure a great candidate in terms of business and investors, a country positioned among top priorities of international entrepreneurs who want to generate profits in a stable business market. With all the business tools needed, Turkey aligns among influential business destinations in the world, alongside USA, China, Japan, to give a few examples. Here are the key points of Turkey that you might want to consider at the time you decide on making investments in this country:
 
  • a stable economy that protects the business environment in Turkey;
  • prolific business sectors that attract international investors in a large number;
  • the protection of international conventions and double tax treaties for companies and activities in Turkey;
  • an appealing tax regime and a series of tax incentives to sustain small and medium businesses;
  • simplified registration procedures. The company is ready for business in a couple of days;
  • the possibility of obtaining special licenses and permits in a fast manner;
  • the automotive, tourism, agriculture, energy and technology are productive business sectors in Turkey;
  • Istanbul, the capital of Turkey is the main investment attraction for international entrepreneurs, however, special encouragements are offered to investors starting companies in other regions too.
 
 
Our law firm in Turkey can offer information and guidance if you want to make investments in Turkey, or if you need legal services, therefore, do not hesitate to contact us.