Market Entry Guide-turkey 0

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MARKET ENTRY GUIDETURKEY


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1 Introduction 3

2 Modes of Setting up a Business in Turkey 5

2.1 Incorporated Companies 5

2.2 An Office of Foreign Entity 142.3 Unincorporated Company 18

2.4 Reforms in the FDI law 20

2.5 Average Time Required for Setting up a Business 22

3 Procedures for Immigration 24

3.1 Visa Policy of Turkey 24

3.2 Procedure for Obtaining Residence Permit 273.3 Procedures for Work Permit 27

3.4 Work permit for a person Other than Key Personnel 30

3.5 Average Living Costs for Expatriates 32

3.6 Average Rent for Office Space in Turkey 33

4 Social Security System in Turkey 34

4.1 Overview 344.2 Social Security Schemes in Turkey 36

5 Special Investment Zones in Turkey 41

5.1 Introduction 41

5.2 Technology Development Zones – Techno parks 41

5.3 Organized Industrial Zones (OIZs) 43

5.4 Industrial Zones 45

5.5 Free Zones 45

6 Overview of Banking Sector 47

6.1 Introduction 47

6.2 Procedure for Opening a Bank Account 49

7 Recruitment of Local Staff 50

7.1 Major Recruitment Agencies and Websites 50

7.2 Brief Overview of Labour Laws 517.3 Average Salary Range 54

8 Taxation 57

8.1 Tax System in Turkey 57

8.2 Tax Rates 57

8.3 Tax Incentives 62

8.4 Investment Incentive System or Tax Incentives 638.5 Double Tax Treaty 69

9 Appendix 71

Appendix I: Useful Links and Addresses 71

10 Disclaimer 76


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1 Introduction

Turkey is a democratic nation with a total population of 74,72 mil-

lion as of 31 December 2011. About 75 percent of the population

lives in district centres and provinces.1 In 2010, the country’s GDP

was at EUR 528,37 billion (USD 736 billion) and GDP per capita

was at EUR 7,236 (USD 10,079). The country’s exports and imports

value are EUR 81,84 billion (USD 114 billion) and EUR 132,811 billion

(USD 185 billion) respectively. The country’s major export partnersare Germany (10,1 percent); UK (6,3 percent); Italy (5,7 percent);

Iraq (5,3 percent); France (5,3 percent). Its major import partners

include Russia (11,6 percent); Germany (9,5 percent); China (9,3

percent); USA (6,6 percent); Italy (5,5 percent). The country’s Trade

Agreements includes Customs Union Agreement with the Eu-

ropean Union (EU) Free Trade Agreements with Albania, Bosnia

Herzegovina, Chile, Croatia, EFTA member countries (Switzerland,

Norway, Iceland and Liechtenstein), Egypt, Georgia, Israel, Jordan,

Macedonia, Montenegro, Morocco, Palestine, Serbia, Syria, and

Tunisia.2

Turkey remains dependent on § FDI. The country reformed itsFDI laws in 2003 and streamlined the processes for setting up

a new business by removing administrative bottlenecks. Now,

it is a country with ‘best practices’ for setting up a business.3

The net international direct investment inflow has been EUR

4.491,90 million (USD 6.257 million) in 2010. The net international

direct investment inflow has been EUR 451,556 million (USD 629

million) in November 2010.4

1 Turkish Statistical Institute - Facts and Figures 2011 - December 20112 Invest in Turkey3 Istanbul 2009 -Turkish Business Environment – August 20094 Prime Ministry Under-secretariat of Treasury – International Direct Investment Bul-

letin – January 2011


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The country’s new research and development (R&D) law, effec-

tive from 1 April 2008, encourages foreign investment by provid-

ing tax incentives, exempting all R&D expenditure from beingtaxed. According to the law, also R&D personnel become eligible

for an 80 percent deduction on their income tax.5

5 Managing Intellectual Property – Article: Turkey: R&D law good news for overseascompanies – June 2008


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2 Modes of Setting up a Business in Turkey

This section discusses the common investment vehicles available

to foreign investors; the procedures to be followed in order to

establish them and the related regulations for each investment

mode.

Table 1 lists the most common modes of setting up business

entities in Turkey by foreign investors and the legal particulari-

ties involved in each process.

Table 1: Different Modes of Setting up Business in Turkey

MODES OF SETTING UP A BUSINESS

Incorporated companies Merchant/Single proprietorshipCommercial partnership(Joint stock company, limitedcompany, collective company,commandite company)Co-operative association

An office of a foreign entity Liaison officeBranch office

Unincorporated companies Joint venture

Istanbul Chamber of Commerce – Company Establishment and RegistrationProcedures in Turkey 2007;

Turkish Embassy – London – Setting up a company

2.1 Incorporated Companies

Turkey has a highly business-friendly environment. The registra-

tion and establishment of a company can be done within one

day in Turkey.


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2.1.1 Different Types of Companies6

| Merchant/Single proprietorship

· The person who is running the commercial establishment in-

dividually is accepted as a firm.

| Commercial partnership7

· Joint Stock Company: the share capital of a Joint Stock Com-

pany is divided into shares. The liability of the shareholders is

limited to the capital subscribed and paid by them.

- The following is a list of essentials for a joint stock company

in Turkey:

· The minimum number of shareholders required to set up a joint

stock company is five. These can include real and legal persons.

· The minimum capital required for a joint stock company is

EUR 21.500 (YTL 50,000).

· Company organs including the general assembly, the board

of directors and the supervisory board should be present in

a joint stock company.

· Limited Company: the liability of the shareholders in a limited

company is limited to the capital, subscribed by the shareholder.

- The following is a list of essentials for setting up a limited

company:

· There must be a minimum of 2 legal or real persons up to a

maximum of 50 in a limited company.

· The minimum capital required to set up a limited company

is EUR 2.150 (YTL 5,000).

· No stock certificate is required to be issued by the limited

company.

6 Istanbul Chamber of Commerce – Company Establishment and RegistrationProcedures in Turkey 2007

7 Republic of Treasury Prime Ministry Under-secretariat of Turkey - Company Estab-lishment in Turkey -


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· Commandite Company: a Commandite Company is established

to operate a commercial enterprise under a trade name. The li-

ability of some shareholders is limited to the capital subscribedand paid by the shareholders; for some shareholders there is no

limitation of liability. The partner whose liability is unlimited is

known as the active partner or commandite.

- A commandite company has the following characteristics:

· The commandite can only be a legal entity.

· There is no minimum capital requirement to set up a com-

mandite company.

· The rights and duties of the shareholders are defined in the

Articles of Association.

· Collective Company: it is a company, established for the purposeof engaging in commercial activities under a common trade

name, and the liability of none of the shareholders is limited

only to the capital subscribed and paid by the shareholder.

- A collective company has the following characteristics:

· All the shareholders of a collective company must be naturalpersons.

· There is no minimum capital requirement.

· The rights and duties of the shareholders are defined in the

Articles of Association of the company.

· Co-operative Association: this is a business association, estab-lished by persons who want to jointly supply various needs

connected with their professions, craft, and livelihoods. The

Co-operative Association is based on a principle of mutual help

and suretyship.8

Arrangements related to Co-operative Associations are governedby the Co-operatives Law.



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2.1.2 Steps to Establish a New Company9

There are minor differences in the procedures for setting up

different types of companies. The following points detail the

procedure for establishing an incorporated company in Turkey:

| The required documents and statements, as detailed in the

following sections (Section 2.1.2.1– 2.1.2.5), should be submitted

to the Trade Registry Offices (TRO) in the province where the

new company is to be established.

| The TRO will provide approval, only if the documents and

statements are in accordance with the legal requirements. The

rights of a third person should be duly covered by the docu-

ments.

| On approval by the TRO, each company is provided with aunique registration number.

| The Istanbul TRO maintains computerised copies of all the

statements and documents submitted and also files them in

the company dossiers.

| The TRO in Ankara publishes registrations and participationsof the new company in the ‘Turkish Commercial Registration

Newspaper’.

| Digital copies of the official newspaper published in Turkish are

also maintained and filed in the related company dossiers.

| The fee for registration formalities is announced on a yearly

basis by the Ministry of Finance.

| The charges for publishing the registrations and participations

in the Turkish Commercial Registration Newspaper are stipu-

lated by the Union of Chambers, Ankara.



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Figure 1 illustrates the major steps followed while establishing

a new company.

Figure 1: Steps Followed for Setting up a Company

Istanbul Chamber of Commerce – Company Establishment and RegistrationProcedures in Turkey 2007

NOTARISATION OF THE ARTICLES OF ASSOCIATION

SUBMISSION OF THE REQUIRED DOCUMENTS ANDCOMPANY ESTABLISHMENT FORM TO THE TRADE

REGISTRY OFFICE

ESTABLISHMENT OF THE COMPANY

REGISTRATION AT THE TAX OFFICE

COMMENCEMENT OF OPERATIONS


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2.1.2.1 Documents Required to Set Up a Merchant Organisation

The following documents must be submitted to the TRO of the

province where the company is to be established:

| A petition duly signed by the merchant

| The notary-certified company name – it should also include

the following details:

· Home address

· Business address

· Purpose/subject of the business

· Date of commencement of operation

· Nationality of the merchant

· Name of the company

The document should also include three specimen signatures

of the merchant.

| A translated and notary-certified copy of the merchant’s

passport

| The Chamber Registration Statement including a photo of themerchant

| The letter of commitment bearing the merchant’s signature

If the merchant is a foreign national living and working in Tur-

key, he/she is also required to submit their notarised copy of

residence and work permit to the TRO.

2.1.2.2 Documents Required to Set Up a Joint Stock Companyor a Limited Company



| A petition (including the name of the Tax Office of Registration)signed by the authorised person or proxy


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· The notarised copy of or original Power of Attorney document

must be submitted along with the petition

| Five copies of the Establishment Statement, completely filled

in and signed by the authorised person

| Three copies of the Articles of Incorporation, certified by the

notary public

· If the foreign partner is a natural person, he/she should submit

two translated copies of his/her passport and certified by the

notary public.

· If the foreign partner is a legal entity, the following documents

should also be submitted:

- The Activity Certificate of the foreign entity, prepared by the

relevant authority in the entity’s home country

· The Activity Certificate should include information about the

signature executives of the company

- The Power of Attorney, including information regarding the

person or the authority or the natural person responsible

for the establishment procedure of the company in TurkeyIt should include the following details:

· The title of the company to be established

· The name of the person who is authorised to represent the

company

- Signatures of the Turkish Consulate in the investor’s countryshould be present on the Activity Certificate and Power of

Attorney

- The above certificates should also be notarised and translated

into Turkish

- Two copies of the Signature Declarations of the authorisedpersons under the company name


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- A copy of the bank receipt from the Ziraat Bank, Bilkent Plaza

Branch, proving deposit of 4/10,000 of the company’s capital

to the Arbitration Court, or the ETF receipt which is signedand stamped as ‘collected’

- The Chamber Registration Statement including the photos

of natural partners

- Letter of Commitment bearing signatures of the authorised

person

It is mandatory to obtain permission from the Ministry of Trade

and Industry for the documents, created for establishing the

company. The Articles of Incorporation approved by the notary

public are to be approved by the Ministry of Trade and Industry

Domestic Trade Department.

2.1.2.3 Documents Required to Set Up a Collective Company



| A petition (including the name of the Tax Office of Registration)

bearing the signature of the authorised person or the proxy

· A notarised copy of or the original Power of Attorney

| Five copies of the Establishment Statement, completely filled

in and signed by the authorised persons

| Three copies of the Articles of Incorporation, certified by the

notary public and signed by all the partners

| Two copies of the declaration with the company officials’ sig-

natures

| A document bearing the company’s name

| Two copies of the passport approved by the notary public,

translated into Turkish


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| The Chamber Registration Statement including photographs

of natural partners in the company

| The letter of commitment duly signed by the authorised person

| The notarised residence permit (in the case of foreign nationals

residing in Turkey)

2.1.2.4 Documents Required to Set Up a Commandite Company

The documents required for the establishment of a commanditecompany include all the documents required for the establish-

ment of a collective company. If the limited partner is a legal

entity, it is also required to submit the following documents:

| The Activity Certificate of the company, prepared by the rel-

evant authority in the investor’s country; the certificate should

also include the executives’ signatures

| The Power of Attorney with information about the authority

or the natural person responsible for the establishment of the

company in Turkey

· The attorney should mention the title of the company pro-

posed to be set up in the country

· It should also mention the name of the person authorised to

represent the company

| The documents listed above must bear signatures of the Apos-

tle or the Turkish Consulate in the foreign investor’s country.

| The approved certificates should be translated into Turkish.

2.1.2.5 Documents Required to Set Upa Co-operative Organisation




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| A petition bearing the signatures of the authorised persons

| Two copies of the Articles of Incorporation, approved by the

ministry concerned and two copies of its notarised summary

| The Letter of Permission, issued by the ministry concerned

| Name of the co-operative, signed by the board members of the

proposed co-operative

| The Statement of Chamber Registration bearing the partner’s

photo

| Two copies of the passport, translated and certified by the no-

tary public

| The notarised residence permit (to be submitted only by for-

eign nationals living in Turkey)

According to Article No. 56 of the Law for Co-operatives, the ex-

ecutive board members should be citizens of Turkey

2.2 An Office of Foreign Entity

Foreign nationals are allowed to set up a liaison office or a branch

office of their entity in Turkey. The procedure and documentsrequired for setting up a liaison office and a branch office are

detailed below:

2.2.1 Liaison Office10

Liaison offices are a special type of office. The main activity of

which is to conduct market research and feasibility studies andaccumulate investment opportunities in the Turkish market on

behalf of their head offices. They are not allowed to be involved

in any commercial activity.



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2.2.1.1 Procedure for the Establishment of a Liaison Office

The investors have to obtain permission from the General Di-

rectorate of Foreign Investment11

| The General Directorate of Foreign Investment grants initial

permission for three years

| The period permitted could be extended after considering the

past operations and future activity plans of the liaison office

2.2.1.2 Documents Required to Set Up a Liaison Office12

The following documents must be submitted to the General

Directorate of Foreign Investment of Turkey:

| The ‘Certificate of Activity’, certified by the Turkish Consulate

or approved according to the provisions of the ‘Convention

Abolishing the Requirement of Legalisation for Foreign Public

Documents’, prepared on the basis of the Hague Conference on

International Private Law

| The balance sheet and income statement or the operational

report of the investor’s parent company

| The Power of Authority disclosing the name of the person re-

sponsible for operating the liaison office in Turkey

| A Power of Attorney is also required in case a person other than

the authorised person is asked to perform duties necessary for

establishing the company

2.2.2 Branch Office13

Foreign companies whose capital is divided into shares can open

a branch in the country on receiving approval from the Ministry

of Commerce and Industry (MoCI).

11 The General Directorate of Foreign Investment can be contacted via email [email protected] and by post at Hazine MüstesarligiYabanci Sermaye Genel Müdürlügü 20. Kat Emek Ankara 06510 Turkey

12 Turkish Embassy – London – Setting up a company13 Turkish Embassy – London – Setting up a company


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2.2.2.1 Procedure and Documents Required for theEstablishment of a Branch Office

| First, the investing company appoints a fully authorised com-pany representative who is a resident of Turkey.

The following documents must be submitted to the Directorate

General of the Domestic Trade14 of the MoCI:

| A petition bearing signatures of the authorised representative

or the investing company’s stamp; the petition should includethe following details:

· Date of the set-up of the company

· Country of origin of the investing company

· The capital of the company

· Name, nationality and address of the representative who re-

sides in Turkey

· A letter of commitment stating that the authorised representa-

tive will adhere to all relevant regulations and laws, required

for operating in Turkey

· Branch office address

· Field of activity or activities undertaken by the branch

The following documents should also be attached to the petition:

| A document (both the original and a Turkish translation) prov-

ing that the decision to set up a branch office in Turkey was

made by the company’s authorised organs.

| The original copy of the Articles of Association and a translated

copy (in Turkish)

14 Addressed: Sanayi ve Ticaret Bakanligi, Iç Ticaret Genel Müdürlügü Eskisehir Yolu 7.Km. Ankara Turkey


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| The original copy and a Turkish translation of the Establish-

ment Document with information about the following:

· The company’s location

· The legal system followed by the company

| The original copy and a Turkish translation of the recent Activity

Status of the company

| The original and translated copies of the Power of Attorney,

made in the name of the company representative

| The representative should carry out activities, as defined by

the company’s Article of Association

· The representative will represent the company in all cases re-

sulting from the branch’s operations in the court of law as a

defendant, claimant or a third party

· In case a subordinate office is opened by the company, the

representative will assign the new representative for the sub-

ordinate office

· The newly assigned representative will have powers similar to

those enjoyed by the assigning representative. The above docu-

ments, other than the petition, should be ratified by the notary

public and approved by the Consulate General of Turkey in the

country of the company’s head office, or apostilled according

to the ‘Convention Abolishing the Requirement of Legislation

for Foreign Public Documents’.

After receiving approval from the MoCI, the following documents

are to be submitted to the TRO:

| Establishment petition and notice form

· The petition has to be in Turkish and bear the signatures of the

authorised person.· Where the company is nominating a representative, a copy of the

Power of Attorney translated into Turkish must be attached, too.


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· All the attached documents should be listed on the petition

that is filed.

· Five copies of the Establishment Petition and Notice Form,

signed by the authorised person, are to be submitted.

| Two notarised copies of the Power of Attorney, issued in the

name of a representative residing in Turkey

| Letter of approval, issued by the MoCI

| Special documents known as ‘Muzeyyel Bayanname ve ilani’,

provided by the MoCI to the company if the approval is granted

| A notarised copy of the identity proof (in case the authorised

person is a Turkish national)

| A notarised copy of the passport of the authorised person

| The authorised person’s notarised signature circular with in-

formation about the title of the person at the branch should

also be provided with the petition

| A Letter of Commitment proving that all the information pro-

vided is true; the letter should bear signatures of the author-

ised person

| A duly filled in Chamber Registry Declaration Form affixed with

passport-size photos of the person in charge of the branch; the

Chamber Registry Declaration Form can be obtained from the TRO

2.3 Unincorporated Company

2.3.1 Joint Venture15

The term Joint Venture was introduced to the Turkish legal sys-

tem following the enactment of Communiqué number 2009/2

by the Ministry of Industry and Commerce. According to the

Communiqué, a joint venture can be registered at the TRO if

required, by the founders of the joint venture.

15 HG. Org – Article - Newly Introduced Legislation in Relation to Joint Ventures –Turkey - 2009


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2.3.1.1 Procedure to Set up a Joint Venture16

The following points provide information about setting up a

joint venture:

The agreement made for establishing a joint venture should be

in writing and approved by the Turkish notary public. The agree-

ment should include the following information:

| Name of the joint venture

| Name of the trade to be carried out by the partners

| Leading partners in the company

| Registered addresses of the joint venture partners

| The extent of authorisation regarding the partners’ commit-

ment and representation to the joint venture

| A provision to the effect that the joint venture is set up to

operate a commercial enterprise

| An application for registry is submitted to the TRO of the place

where the joint venture will be established

The Joint Venture can be deregistered from the trade registryoffice where it was registered on submitting a petition regard-

ing the deregistration. The petition should bear the signatures

of the partners of the joint venture.

The following documents can be downloaded from this Link:

| Chamber Registration Statement for the legal entities

| Chamber Registration Statement for merchants

| Establishment Statement

| Letter of Commitment

16 Istanbul Chamber of Commerce – Article: Documents Required for Joint-StockCompany Registration


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2.4 Reforms in the FDI law17

The Turkish government has introduced reforms to its Foreign

Direct Investment Law. The new law removes various restrictions

and simplifies the investment procedure. Below are some of the

changes introduced to the FDI Law:

| The FDI screening and approval procedures, required in cases

of setting up of a new business and share transfers, have been

removed.

· According to the new law, the foreign investor will not be re-

quired to obtain approval from the business set-up and share

transfer, except in case of some specific sector.

· The conditions for the establishment of a business and share

transfers have been made uniform for local and internationalinvestors.

| Earlier, prior approval was required for certain transactions

of foreign investment companies; this requirement has been

waived.

| The earlier requirement regarding minimum capital invest-ment of EUR 33.430 (USD 50.000) by each foreign shareholder

has also been removed.

| Previously, foreign investors could only set up a joint stock

company or a limited company. Now, any form of company

existing, as stipulated by the Turkish Commercial Code, includ-

ing partnerships, can be established by foreign investors.

| The valuations done by the international credit agencies and

courts or competent authorities of the investor’s country will

also be accepted while determining the share value for market-

able securities contributed as capital in kind.

| The new foreign investment legislation is based on the principle

of equal treatment for both domestic and foreign investors.



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| Both foreign capital companies located in Turkey and domestic

investors now have similar rights with respect to the acquisi-

tion of real estate.

| The legal entities of a foreign country can hire foreign person-

nel in Turkey if the personnel have work permits, granted by

the Ministry of Labour and Social Security.

2.4.1 Turkish FDI Law Based on Equal Treatment Principle18

The Turkish law is based on equal treatment of national and

foreign business investors. Some principles of the Foreign Direct

Investment Law 4875 of Turkey are outlined below:

| Unless there is an international agreement or a special law,

foreign investors in Turkey have an equal right to make invest-

ments and participate in all types of companies and sectorswhich are open for investment to the domestic investors.19

| There will be no expropriation or nationalisation of FDI, except

in the following cases:

· If it is required for the interest of the general public

· If payment has to be made for compensation, according to the

law

| Investors are free to transfer their net profits, dividends, licence

fee, fees received for management or other similar arrange-

ment, etc. to other countries.

| Foreign investors can approach the authorised local courts,national or international arbitration, or any other means for

settlement of disputes arising from investment agreements,

public concession contracts and other conditions concluded

with the foreign investors. However, the related regulations

must be fulfilled and parties to the arbitration should have

mutually agreed to the settlement procedure.

18 Yased. Org – Foreign Direct Investment Law, 4875 – June 200319 HG. Org – Article: Newly Introduced Legislation in Relation to Joint Ventures -

Turkey


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2.5 Average Time Required for Setting up a Business

It is necessary to meet certain regulations such as registration of

the business before actually starting off with the operations of

a new business. The fewer the procedural hurdles, the less time

is required to set up a new business.

Table 2 gives an overview of the time and cost involved in starting

a new business in Turkey:

Table 2: Starting a Business in Turkey

DATA RELATED TO STARTING A BUSINESS YEAR 2012

Rank 61

Procedures (number) 6

Duration (number of days) 6

Cost (percent GNI per capita) 11,2

Minimum Capital Required(percent GNI per capita) 8,7

The World Bank Group - Doing Business Turkey 2012

Turkey follows a pro-business approach to attract FDI. The

country has very few investment-related procedures for start-

ing a new business. The Turkish government made reforms

to its FDI law in 2003 and removed the requirements for pre-

entry screening and the minimum capital investment.20

20 Istanbul 2009 Turkey – Turkish Business Environment – August 2009


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Figure 2 shows a comparison between the time and procedures

required for setting up a business in Turkey with that in some

other countries:

Figure 2: Obstacles in Starting Businessesin Various Countries (June 2011)

World Bank – Doing Business June 2011 –Turkey

Time Taken for Starting a Business

Time (days)

0 20 40 60 80 100 120

Hong KongOECD

Singapore

China

India

Russian Fed

Brazil

Procedures Essential for Starting a Business

Number of Procedures0 5 10

15

Hong Kong

OECD

Singapore

China

India

Russian Fed

Brazil


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3 Procedures for Immigration

Foreign nationals visiting Turkey should carry their visa and

passport while entering the country. The visa and work permit

regulations of the country are discussed in this section.

3.1 Visa Policy of Turkey21

The consul in the diplomatic or consular mission of Turkey makes

decisions regarding the granting of visas. Foreign nationals look-

ing to visit Turkey must obtain a visa from the Turkish embassy

in their country.

| Foreigners who wish to work in Turkey need to obtain a work visa.

| On entering Turkey, foreigners have 90 days to apply for and

secure the residence permit. Before obtaining the residence

permit, foreigners should carry documents such as a driving

licence and national passport for identification purposes.

| The visa and passport requirements for each country can be

accessed through this link.

Here is an overview of the different types of visas and the issuing

authority depending on the duration of stay:

| Foreigners who wish to stay in Turkey for less than 30 days can

obtain the visa at the foreign port of entry, including Turkish

airports.

| Foreign nationals who wish to stay in Turkey for more than

30 days can obtain a visa from the Turkish Embassy in their

country. A visa granted for more than 30 days is known as a

special visa.

· A person with a special visa has to obtain a residence permit

from the Turkish Security Directory.

21 Expat Forum.com – Article: Turkey visa, permit and immigration


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3.1.1 Overview of the Turkish Visa Policy

Some of the points regarding visa requirements in Turkey are

given below:22

| The visa application must be completed and submitted to the

Visa Officer. The visa form can be downloaded from the Turkish

Consulate website.

· The form can also be downloaded from this link or

· The form can be obtained from the Consulate General by send-

ing a letter of request along with a self-addressed and stamped

envelope.

| The passport of foreign nationals should be valid for at least

six months when they reach Turkey.

| The travel document holders should ensure that their travel

documents are valid for a minimum of one year from the date

of entry into Turkey.

| All payments for the visa and other administrative fees should

be paid in cash, by postal order or company cheque payable to

‘Turkish Consulate General’.

· Other modes of payment such as credit cards, debit cards and

personal cheques are not accepted.

· The visa fee varies depending on the nationality and type of

visa.

· The visa fee is non-refundable on refusal.

3.1.2 Types of Visas Issued by the Turkish Authorities23

The visas, issued by Turkish authorities, are divided into entry

visa and transit visa.

Table 3 shows different types of visas and the duration of stay

permitted by them:

22 Turkish Consulate – General Visa Information To Travel To Turkey23 ABGS – Legislation on Visa Policy and Practice – February 2006


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Table 3: Type of Visa and Length of Stay Permitted

Visa Type Duration Documents Required

SingleEntry Visa

3 months(maximum period)

· Original signed passportvalid for 6 months

· One blank visa page for visastamp

· A 2x2 inch passport sizephoto

· Required to pay USD 45 for

visa application

MultipleEntry Visa

More than onceduring the 12months(no limit on thenumber of entries)

· Original passport valid for 6months beyond the periodof intended stay

· One blank visa page for visastamp

· A 2x2 inch passport size

photo· Required to pay USD 150 forvisa application

Source: Expat Forum.com – Article: Turkey visa, permit and immigrationand US Passport Service Guide

| Single Transit Visa – This visa allows for only one transit through

Turkey.

| Double Transit Visa – This visa allows for two transits through

Turkey.

3.1.3 Visa Extension Policy24

If a foreign national wishes to stay in Turkey for a period longer

than what is permitted by the visa, he/she needs to apply tothe Ministry of Interior for an extension. Turkish law does not

have provisions for extending visa duration, but foreign nation-

als can obtain a residence permit to stay longer in the country.

The residence permit is also approved by the Ministry of Interior.

24 ABGS – Legislation on Visa Policy and Practice – February 2006


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3.2 Procedure for Obtaining a Residence Permit 25

Foreign nationals who wish to stay in the country for more than

30 days are required to obtain a residence permit. The residence

permit can be granted for a maximum period of one year. The

following points describe the procedure to be followed for ob-

taining a residence permit in Turkey:

| The foreigner should file an application to the Turkish consulate

and embassy for a residence permit.| The visa application of foreign nationals must include informa-

tion regarding the desired duration of stay.

| The visa must be obtained before entering Turkey.

| If the government has denied a visa to a person, he/she also

becomes ineligible for the residence permit.

| If a foreign national wishes to extend the duration of his/her

residence permit, he/she should approach the local security

authorities with a valid reason for extending their stay.

3.2.1.1 Documents Required for Obtaining the Residence Permit

| Educational certificate

| Five passport size photos

| A copy of the passport with the visa

| Residence permit fee

3.3 Procedures for Work Permit26

The work permit of foreign personnel employed in companies,

branches or liaison offices is governed by the Department of

Work Permit. The Turkish law regarding work permits differen-

tiates between the special direct foreign investment and non-

direct foreign investment and the key personnel.

According to the law, a company or branch will be treated as

‘special direct foreign investment’ upon fulfilment of certainconditions, some of which are provided below:

25 Expat Forum.com – Article: Turkey visa, permit and immigration26 Ministry of Labour and Social Security – Direct Foreign Investment


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| The last recorded annual turnover of the company or branch

must be at least EUR 2.625 million (61,04 million Turkish Lira).

| The last exports of the company or branch must be at leastEUR 0,515 million (USD 1 million).

| The branch or company should employ at least 250 personnel

registered with the Social Securities Institution.

| Foreign shareholders should have a share capital of at least EUR

349,279 million (812,277 million Turkish Lira) in the company.

According to the law, a person shall be treated as key personnel upon

fulfillment of certain conditions, some of which are provided below:

| The person should be an executive or in senior management.

| He/She should be responsible for managing the company or

a part of it.

| He/She should supervise or check the work done by the com-

pany’s auditors, administrative or technical personnel.

| He/She should have the right to hire and terminate personnel,

or should have rights to make suggestions in this regard.

If a company specifies the conditions for special direct foreign

investments, and the foreign national specifies the conditionsfor becoming key personnel, they need to submit documents

of proof showing that they meet the necessary requirements.

3.3.1 Documents to be Submitted by the Foreign National

| A work permit application made to the Ministry of Labour and

Social Security| Four copies of the application form, bearing recent photo-

graphs of the foreign national, duly signed by the employer

and the foreign personnel

| A copy of the passport and diploma translated in Turkish duly

notarised or approved by the consulate of Turkey

| A notarised copy of the residence permit – the residence permit,

other than for education purposes, has to be valid for six months

and the application has to be made within this period.


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· If a person fails to comply with these conditions, he/she may

be required to apply to the Foreign Representative of Turkey

in his/her country.

| A copy of the CV, prepared in Turkish.

· The CV form can be downloaded from this link.

| The status document informing whether the applicant is a partner

representative or a key personnel – the status document must be pro-

vided by the employer and approved by the competent authority.If the foreign national wants to apply for work permit within the

framework of professional services, he/she should submit the

following additional documents:

| A Diploma Equality Certificate, obtained by the Regulations for

Equality of Foreign

Higher Education Diplomas according to Articles 3 and 7/p of

Law 2547 – if the foreign national is pursuing education in a

foreign country

| A certificate from the professional institution of the foreign

country establishing the fact that

· The foreign national is pursuing his/her profession in the country.

· He/She is a member of a professional organisation and has

not been forbidden from carrying out his/her profession.

| If the foreign national is carrying out consultancy and technical

instruction work, he/she should also submit the certificate of

work description and copy of agreement between the firms orbetween the firm and the person.

| If the foreign national is an engineer, architect or urban planner

providing consultancy and technical instruction of any kind, or

has prepared projects for an international tender issued by public

institutions and establishments, and worked as authorised sig-

natories, he/she should submit a covenant establishing the fact.

· The covenant should be duly certified by the notary public or

consulate.


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Information regarding the additional documents, required to

be submitted by the professional can be accessed through the

website Department of Work Permit for Foreigners – Direct For-eign Investment.

3.3.2 Documents Required to be Submitted by the Employer

| A work permit application made to the Ministry of Labour and

Social Security.

| Documents establishing the fact that the company follows

Article 4 of Regulations on ‘The Employment of Personnel of

Foreign Nationality in Direct Foreign Investment’.

| Last year’s balance sheet and statement of profit and loss, duly

certified by the tax administration or a chartered accountant.

| If the institution applying for a work permit is a company with

foreign capital, it should submit the Turkish Trade Registry Ga-

zette or an approved copy of the same including information

about the last capital and the partnership structure.

| If the foreign national is covered by the country’s social security

system, he should submit a document to the effect, issued bythe public authorities of the foreign country – the document

should be translated into Turkish and duly notarised.

| The list of last month’s insured service provided to the Turkish

and foreign staff should also be submitted.

3.4 Work Permit for a person other than Key Personnel

The type of work permit issued to a person other than key per-

sonnel and the terms and conditions pertaining to the same

are given below:

3.4.1 Work Permit for a Definite Period of Time

It is issued for a maximum of one year (except in cases where

differing terms are provided by bilateral or multi-lateral agree-

ments signed by Turkey).


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| The visa may be extended for a duration of three years on

application.

· The extension is subject to the condition that the person will

continue to work in the same workplace, job or enterprise.

3.4.2 Work Permit for an Indefinite Period of Time

| Foreign nationals who have been lawfully residing in Turkey

for the past eight years or have been working in the country

for the past six years can be granted a visa for an indefinite

period of time.

| The eight-year residence in Turkey does not include the period

of education for the applicant.

· The person applying for a work permit has to submit a certifi-

cate and the required documents to the Ministry.

· The certificate is issued by the police authorities. This certificate

establishes the fact that the person had a legal and uninter-

rupted residence in the country.

| If the applicant has been working in the country for the past

six years, he has to submit a certificate and the required docu-

ments to the Ministry of Labour and Social Security.

· The certificate establishes the fact that the person has worked

in Turkey for the past six years. It is issued by the relevant

authorities.

The duration of the residence permit for nationals who are is-sued a work permit for an indefinite period is determined by the

Ministry of Internal Affairs, according to the rules relating to the

foreigner’s residence and travel in Turkey.

3.4.3 Independent Work Permit

| The independent work permit is issued to the following foreignnationals:


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· Who will work independently

· Who have been residing in Turkey lawfully for the last five years

· The period of five years does not include the applicant’s dura-

tion of education.

· The work of the applicant shall help increase the employment

and economic development of the country.

| The applicant has to submit a certificate along with the re-

quired documents to the Ministry.

· The certificate establishes the fact that the applicant had

stayed in the country lawfully for the last five years.

· The certificate is issued by the police authorities.

· The duration of the residence permit for nationals who are

issued an independent work permit is determined by the Min-

istry of Internal Affairs, according to the rules relating to the

foreigner’s residence and travel in Turkey.

The exceptions to the above conditions regarding work permit

can be accessed through the website Department of Work Per-

mit for Foreigners.

3.5 Average Living Costs for Expatriates27

The cost of living is reasonable in Turkey, compared with other

European nations such as Germany and France. Property owners

in the country have to pay a ‘council tax’, normally about EUR 25,2

(50 YTL) a year. The average electricity and water bill is about EUR

251,5 per year. Most families in Turkey spend an average of EUR

10,1 per week on food items, while eating out costs about EUR

18,8 per person per day. The country’s retail sector is characterised

by both small local shops and big national and international

superstores, giving plenty of choice for consumers.

27 The Global Property Group – Article: Living and Cost of Living in Turkey – July 2008


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Turkey’s purchasing power index in July 2009 was 73,3. The con-

sumer price index rose by 10,1 percent in 2008, with the biggest

rise seen in the price of food and non-alcoholic beverages. Pricesin this category rose by 11,9 percent in 2008.28

3.6 Average Rent for Office Space in Turkey29

According to a report published by Jones Lang LaSalle, the prime

rental levels in 2011 were stable around EUR 4,5-5,0 per square

metre per month.

28 Turkish Statistical Institute - Facts and Figures 2009 - September 200929 Jones Lang LaSalle – Turkey Real Estate Overview January 2012


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4 Social Security System in Turkey

4.1 Overview30

According to Article 60 of the Turkish Constitution, everyone in Tur-

key has the right to social security. The social security system in the

country is composed of the following three major organisations:

| Social Insurance Institution (SSK)

| Pension Fund for Civil Servants (Emekli Sandigi)

| Social Security Institution for the Self-Employed (Bag-Kur)

The following is an overview of the organisations, involved in

the social security system of Turkey:

4.1.1 Social Insurance Institution

SSK is responsible for the welfare of workers in the private sectorand blue-collar workers employed in the public sector.

| The organisation provides social insurance and healthcare in-

surance to all workers operating under the service contract.

| The members of SSK are insured for work injuries, professional

job diseases, medical care, illness, disability and maternity care.

| For healthcare security, the payment scheme for drugs is based

on a co-payment system. For instance, an outpatient buying

drugs would pay 10 percent of the cost if he/she is retired and

20 percent of the cost if he/she is employed.

| Members are entitled to the old age pension when they reacha specified age and have paid their regular contributions.

30 All about Turkey – Article: Health Care in Turkey


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4.1.2 Pension Fund for Civil Servants (Emekli Sandigi)

Emekli Sandigi is a government-operated retirement fund for re-

tired civil servants. It also provides benefits for members’ health

insurance. The benefits of the fund are as follows:

| If a retired civil servant purchases drugs, he/she has to pay 10

percent of the cost of the drug and the remainder is paid by

the fund.

| The civil servants are not supposed to pay health insurance pre-

miums; the entire expenditure is funded by the government.

| Other privileges include retirement pension, retirement bonus

and a death grant, payable to the survivors of a pensioner.

4.1.3 Social Security Institution for the Self-employed

(Bag-Kur)

Bag-Kur covers self-employed people who are not covered by

the Social Insurance Institution. The members include crafts-

men, artisans, technical and professional workers (affiliated to a

chamber or professional association), shareholders of companies

other than co-operatives and joint stock companies, and thoseself-employed in agricultural activities. The members of Bag-Kur

have to make varied contributions to the healthcare fund (on a

scale of 1 to 24 ; 1 being the lowest contribution), depending on

their financial health.


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4.2 Social Security Schemes in Turkey31

Turkey has the following social security schemes:

| Old age

| Invalidity

| Survivorship

| Work accident and occupational diseases

| Healthcare| Unemployment

| Non-contributory payments

Table 4 shows the contribution made by individuals, their em-

ployers and the Turkish government to the schemes:

31 Council of Europe – Social Security System in Turkey


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Table 4: Overview of the Various Categories of Insurance

BRANCH OF INSURANCE PERCENTAGECONTRIBUTION BY

THE EMPLOYED

InvalidityOld ageSurvivorship

9

Short-term insurance(covers employment injuries, occupationaldiseases, sickness, maternity)

No contribution

Universal health insurance 5

Unemployment 1

Table 5 provides an overview of the categories of people covered

by the schemes and the benefits availed by them:32

Table 5: Overview of the various Categories of PeopleCovered by the Schemes

NAME OF THE SCHEME PERSON COVERED BY THE SCHEME

Old-age pension · People aged 65 years or above

Invalidity · People who lost at least 60percent of the working andearning capacity after beinginsured

32 Council of Europe – Social Security System in Turkey


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Council of Europe – Social Security System in Turkey

PERCENTAGECONTRIBUTION BY

THE EMPLOYER

PERCENTAGEOF TOTAL

CONTRIBUTION

CONTRIBUTION BYTHE GOVERNMENT

11 20 One-fourth ofthe total annual

contribution

1–6,5 1–6,5

7,5 12,5

2 3 1

PERIOD OF CONTRIBUTION BENEFIT

Civil servants and self-employed – 9.000 daysWorkers – 7.200 days

Old age pensionLumpsum Payment

At least 10 years of employmentbeing insured with 1.800premium daysException: if a person needs regularcare of others, then the law does notrequire him/her to serve 10 yearsof employment. The self-employedshould not have any insurancepremium debts.

Invalidity pension


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NAME OF THE SCHEME PERSON COVERED BY THE SCHEME

Duty invalidity · Civil servants

Survivorship · Widow· Widower· Parents of employed· Children of employed

Healthcare · Citizens of Turkey living in thecountry

· People employed in Turkeytransferred to a foreign countryfor business requirement

· Refugees

· Stateless people· Foreigners residing in Turkey, notcovered by the insurance schemeof their country


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PERIOD OF CONTRIBUTION BENEFIT

A person working in the publicsector is treated as duty invalidin the following cases:· Invalidity occurred while

protecting his/her institution· Invalidity occurred while

travelling to and from theworkplace

Duty invalidity pension

Workers, civil servants andself-employed – 1.800 days.The survivors of a worker areeligible for the pension if thedeceased was insured forthe past five years and had apremium payment period of900 days, excluding the debt

period.

Old age pensionLumpsum paymentMarriage paymentFuneral payment

Minimum 30 days ofcontribution in the preceding

year with no debt in thepreceding 60 days

Old age pensionLumpsum paymentMarriage paymentFuneral payment


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5 Special Investment Zones in Turkey33

5.1 Introduction

Turkey has three types of special investment zones – Technology

Development Zones – Technoparks, Organized Industrial Zones

(OIZs) and Free Zones classified on the basis of their function,

aim, geographical factors, applicable benefits and minimum

investment requirement. Below is a brief description of each

of these three zones:

5.2 Technology Development Zones – Techno parks

Technology Development Zones (TDZs) are areas developed to

promote R&D activities, fuelling investment in high-technology

fields. Currently, there are 39 such TDZs, 27 of which are opera-

tional and the remaining 12 have been approved and are under

construction. Six TDZs are located in Ankara, five in Istanbul and

three in Kocaeli. More TDZs located in other provinces.

Table 6: TDZs in Turkey*

S. NO. TDZ LOCATION

1 METU Technopolis (METUTECH) Ankara

2 TUBITAK Marmara Research Centre Kocaeli

3 Izmir Technology Development Zone Izmir

4 Ankara Cyberpark Ankara

5 GOSB Technopark Kocaeli

6 ITU Ari Technopolis Istanbul

33 Invest In Turkey


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5.2.1 Incentives Offered in TDZs

| Offices are immediately available for rent.

| The necessary infrastructure is readily arranged on office premises.

| Any profit earned through R&D or software is subject to exemp-

tion from income and corporate taxes until 31 December 2023.

| Exemption from VAT is also valid until 31 December 2023 for

deliveries of application software, developed exclusively in TDZs.

| This covers software for systems management, data manage-

ment, business applications, the Internet, mobile phones and

military usage.

| Researchers including R&D or software personnel, employed

in the zone, are exempted from paying taxes on their salary

until 31 December 2023.

| For IT-specific sectors, there are provisions for VAT exemption,

applicable until 31 December 2023.

Invest In Turkey – Special Investment Zones*Note: The list is not exhaustive. Please access the entire list of TDZs in Turkey here

STATUS WEBSITE

Operational www.metutech.metu.edu.tr

Operational www.mam.gov.tr

Operational http://iztekgeb.iyte.edu.tr

Operational www.cyberpark.com.tr/eng

Operational www.gosbteknopark.com/English

Operational www.ariteknokent.com.tr


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5.3 Organized Industrial Zones (OIZs)

OIZs are areas, designed with readily available infrastructure and

social facilities, creating an investor-friendly environment. Infra-

structure facilities in these zones include roads, water, natural

gas, electricity, communications, waste treatment, etc. Currently,

there are 263 such OIZs in 80 provinces, 148 of which are in opera-

tion while the remaining 115 are under construction.

Table 7: OIZs in Turkey*

S. NO. OIZ LOCATION

1 Adana Haci SabanciKozan

Adana

2 AdiyamanBesniGolbasi

Adiyaman

3 AfyonkarahisarIscehisar Mermer

Afyonkarahisar

4 Aksaray Aksaray

5 AmasyaMerzifon

Amasya

6 OstimIvedikPolatliAso I.Baskent

Ankara


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Invest In Turkey – Organized Industrial Zones*Note: The list is not exhaustive. Please access the entire list of OIZs in Turkey here

STATUS WEBSITE

Operational http://www.adanaorganize.org.tr/

Operational http://www.besniosb.org.tr/

Operational http://www.afyonosb.org.tr/

Operational http://www.aksarayosb.org.tr/

Operational http://www.ostim.org.tr/

Operational http://www.antalyaosb.org.tr/


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5.3.1 Incentives Offered in OIZs

Besides enjoying the regular investment incentive schemes such

as the general, large scale, region- and sector-based incentives

and employment incentives, investors within OIZs can benefit

in the following ways:

| Land acquisition is exempted from VAT. Real estate duty is waived

for a five-year period, beginning after plant construction.

| Water, natural gas and telecommunication costs are low.

| Tax is waived for unification and/or separation of plots (which

is roughly 0,54 percent of the total costs).

Municipality tax is waived for construction and usage of the

plant. Exemption is also granted on solid waste if the OIZ does

not benefit from municipality service.

5.4 Industrial Zones

Industrial zones are allocated areas, suitably designed for large-

scale and technology-sensitive investments. The investment sites

are evaluated by the Ministry of Industry and Trade, after which the

Council of Ministers grants approval for industrial zones. The mini-mum amount of area for an investment site must be 1,500 m2. Invest-

ments must also be made in high-technology sectors. All benefits

applicable to OIZs are also sanctioned for industrial zones.

5.5 Free Zones

Free zones are special areas within the political borders of Tur-key, but considered outside the customs area. These areas are

allocated with the aim of encouraging export-oriented invest-

ment. Any legal or administrative regulations in the commercial,

financial or economic fields, applicable within a customs area are

either completely null and void or partially implemented in such

zones. There are currently 20 operational free zones in Turkey,situated close to the EU and Middle East markets, and adjacent

to major Turkish ports on the Mediterranean, Aegean and Black

seas, providing easy access to international trade routes.


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Table 8: Free Zones in Turkey*

S. NO. FREE ZONE LOCATION

1 Adana Yumurtalik Free Trade Zone Ceyhan/Adana

2 Antalya Free Trade Zone Yeniliman/Antalya

3 Bursa Free Zone Gemlik/Bursa

4 Denizli Free Zone Cardak/Denizli

5 Gaziantep Free Zone Gaziantep

6 Istanbul Ataturk Airport Free Zone Yesilkoy/Istanbul

Invest In Turkey – Free Zones*Note: the list is not exhaustive. Please access the entire list of Free Zones in Turkey here

5.5.1 Incentives Offered in Free ZonesThe following are the incentives applicable for the free zones

in Turkey:

| Full waiver of customs duties and other assorted duties

| Full waiver of corporate income tax for all manufacturing com-

panies| Full waiver of VAT and special consumption tax

| Full waiver of income tax on employees’ salaries (for companies

that export a minimum of 85 percent of the FOB value of the

goods they produce in such free zones; the goods can remain

in free zones for an infinite time period)| Freedom for companies to allocate their profits, earned from

the operations in Free Zones to Turkey or abroad


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6 Overview of the Banking Sector34

6.1 Introduction

The Turkish financial system is dominated by the banking sec-

tor, as most transactions or activities involving money and the

capital markets are handled by banks. State banks were estab-

lished mainly to finance particular industries (e.g. Ziraat Bank

for agriculture); however, private banks in the country have close

ties with large industrial groups and holdings.

In the early 1930s, the Central Bank was founded and given regu-

lar bank responsibilities, such as to protect the currency, issue

bank notes, and regulate the banking system and credit. It was

only after 1983 that the bank reduced its lending and started

strengthening its supervisory roles.In 1980, only four foreign banks were present in Turkey, but their

number has increased rapidly to almost 50 after the liberalisa-

tion of the economy.

All banks in Turkey come under the jurisdiction of the Banks Act

and the provisions of other laws regarding banks. The new laws

led to the creation of the Banking Regulation and Supervision

Agency (BRSA or Turkish BDDK) to protect the rights and benefits

of depositors. The Banks Association of Turkey (BAT, or Turkish

TBB) was founded to protect and promote the professional in-

terests of its members and is considered the representative body

of banking in the industry.35

A total of 45 banks with 9.441 branches in Turkey and 63 branches

abroad are operating, as of January 2011.

34 Turkish Embassy - London35 All about Turkey - Banks in Turkey


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Table 9: Banking Structure in Turkey

CATEGORY OFTHE BANK

SUBCATEGORY NUMBEROF BANKS

NUMBEROF BANKS

CommercialBanks

32

Banks under theDeposit InsuranceFund

1

Foreign BanksForeign banksfounded in Turkey– (11)Foreign banks withbranches in Turkey– (6)

17

Privately-ownedCommercial Banks

11

State-ownedCommercial Banks

3

Non-depository

Banks

13

Foreign Non-depository Banks

4

Privately-ownedNon-depositoryBanks

6

State-owned Non-depository Banks

3

Total Banks 45

All About Turkey

The list of major banks covered under each subcategory and

their websites are provided in the Appendix.


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6.2 Procedure for Opening a Bank Account36

The following is the guideline to open a bank account in Turkey:

| First, a tax number must be obtained from the local tax office.

| While applying for a tax number, a valid passport and local

address must be presented. It is advisable to keep photocopies

of these documents.

| Using the tax number, one may open an account with any bank.

| A nominal tax fee is charged for opening an account.

In addition, Turkish residents may possess or purchase foreign

currency without limitation from banks, authorised institu-

tions and private financial institutions. Foreign currency can be

transferred abroad or deposited in local bank accounts. Turkish

residents can obtain operating credit from foreign sources to run

a business. Capital may be transferred abroad for commercial

activities or investment purposes, which is subject to a maxi-

mum limit in the amount. A higher amount may be transferred

on approval by the concerned authorities.

36 expatfocus.com


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7 Recruitment of Local Staff

There are various recruitment channels available in Turkey,

including online recruitment, headhunting agencies, media

advertisements (newspapers, brochures, magazines, TV and

broadcasting), on-site recruiting, job fairs, internal references

and ‘walk-in’ interviews.

7.1 Major Recruitment Agencies and Websites

The table below shows major recruitment agencies in Turkey

and their websites:

Table 10: Major Recruitment Agencies and Websites

MAJOR RECRUITMENT

AGENCIES

WEBSITES

Karier.net http://www.kariyer.net/

Kelly Services Turkey http://www.kellyservices.com.tr/

Manpower Turkey http://www.manpower.com.tr/

Randstad Turkey www.randstad.com.tr

Leading HeadhuntINGagencies

One World Consulting http://www.oneworldconsulting.com/

Antal International Turkey http://www.atlanticresearch.com/

regions/turkiye.htm

http://www.newswiretoday.com/news/46907/ ;http://www.manpower.com.tr/

http://www.oneworldconsulting.com/;http://www.atlanticresearch.com/regions/turkiye.htm ;

http://www.kellyservices.com.tr/


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7.2 Brief Overview of Labour Laws37

Turkey has a significant advantage in the form of low labour

costs. This factor, coupled with a developing market and invest-

ment incentives, make Turkey an attractive destination for for-

eign investors. The range of labour skills varies widely from the

unskilled, through the semi-skilled and up to a highly skilled

labour force. The workforce consists of a plethora of unqualified,

semi-qualified and qualified workers. The highly qualified work-ers have a good command of multiple languages.

7.2.1 Labour Law

The Turkish Labour Legislation covers a number of acts such as

the Labour Act (effective from 2003), the Maritime Labour Act,

the Act Concerning Labour/Management Relations in the Press,the Trade Unions Act, the Collective Agreements, Strikes and Lock-

Outs Act, the Social Insurance and Unemployment Insurance Act,

the Labour Courts Act, the National Holiday and General Vaca-

tions Act, the Weekend Holiday Act, the Employment Services

Act, the Labour Office’s Act, the Apprentice, Artisan and Master

Workmen Act, the Civil Servants’ Trade Union Act and Employ-

ment of Foreign Employees’ Act. The most significant among

these is the Labour Act, the application of which covers a majority

of the workforce.

7.2.1.1 New Labour Act

This act came into force in June 2003 and covers the relationships

between employers and employees. It is completely in line with

the regulations, specified by the International Labour Organisa-

tion and the European Union (EU). The act is more protective

towards employee interests.

Its salient features are listed below:

37 ELFI International - Investment Guide for Turkey


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7.2.1.1.1 The Principle of Equality

This aspect covers all prohibitions on discrimination, based on

language, race, gender, political opinion, religion, philosophical

viewpoints, etc. It is also inclusive of discrimination, based on

the employee’s sex or whether the employee is employed full/

part-time.

7.2.1.1.2 Employment Contracts

This section covers matters pertaining to contracts signed be-

tween the employer and the employee along with the obliga-

tions associated with each. Employment contracts cover three

main areas:

| Temporary/Permanent work

| Definite/Indefinite period

| Part-time/Work upon call

7.2.1.1.3 Principal Employer / Sub-Employer Relation

This section pertains to the conditions required to hire a subem-

ployer. It also has provisions to protect the interests of employ-ees working for the sub-employer, holding both the principal

employer and sub-employer accountable.

7.2.1.1.4 Probationary Period

This section pertains to details regarding an employee’s proba-

tionary period, the maximum duration of the probation and themaximum extension available under different contract types

along with the terms and conditions of termination.

7.2.1.1.5 Termination of Employment Contract

Under this section, different conditions of termination of con-

tracts, followed by obligations on each party are specified indetail. The main categories for termination of employment

contracts are listed below:


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| Termination of Employment Contracts for Definite Period

| Termination of Employment Contracts for Indefinite Period

· Termination of Contract with Notification

· Termination of Contract without Notification on Justifiable

Grounds

| Severance Pay

| Collective Dismissal of Employees7.2.1.1.6 Working Conditions

Working conditions pertain to issues regarding wages and sala-

ries, bonuses and other extra payments, working hours, overtime

work, compensating work, break hours, annual vacation and ma-

ternity leave, among others.

7.2.1.1.7 Obligations to Employ Disabled Persons, Ex-Offendersand Victims of Terrorism

The obligations on employers to hire disabled people and ex-

offenders are specified. According to the Law, companies em-

ploying more than 50 workers have to hire disabled people andex-offenders. The terms of their employment are considered,

based on their professional capacity, psychological and physi-

cal condition. The number of employees to be hired for each

category is also specified.

7.2.2 Employment of Foreigners

This law pertains to the work permits, issued to expatriates, and

came into effect in September 2003. It cites the conditions for a

foreign national to be employed in Turkey, covering issues such

as work permits, visas and residence permits. Step-by-step proce-

dures for issuing a work permit, obtaining a visa, etc., have been

specified along with information on the maximum duration for

each type and the regulatory authority concerned.


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7.3 Average Salary Range

The median salary ranges (per year) by job, employer type, years

of experience, city and company size in Turkey in 2009, as per

PayScale, are presented in Tables 11-15

Table 11: Median Salary by Job in Turkey as on 11 April 2012

JOB MEDIAN SALARY(IN EUR)

Software Engineer 27.336,91

Software Developer 25.748,2

Senior Software Engineer/Developer/Programmer

36.612,9

Project Manager – Information Technology (IT) NA

Mechanical Engineer 23.313,8

Country Manager – General Operations 76.469,27

Marketing Manager NA

Finance Manager NA

Payscale 2012


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Table 12: Median Salary by Employer Type in Turkey as on

11 April 2012

EMPLOYER TYPE MEDIAN SALARY(IN EUR)

Company 33.963,85

Private Practice/Firm 28.845,22

College/University 19.373,97

Government – State and Local 17.404,05

Other Organisations 37.485,87

Foundation/Trust 24.982,92

Non-profit Organisation 62.511,86

Hospital 36.933,8

Government – Federal 33.725,51

Franchise 22.972,8

Self-employed 17.528,96

Contract 28.217,06

Team 13.418,27

School/School District 16.994,13

Payscale 2012


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Table 13: Median Salary by Years of Experience in Turkey as on

11 April 2012

EXPERIENCE MEDIAN SALARY (IN EUR)

Less than 1 year 16.725,63

1–4 years 20.408,46

5–9 years 33.122,47

10–19 years 50.826,6

20 years or more 71.453,3

Payscale 2012

Table 14: Median Salary by City in Turkey as on 11 April 2012

CITY MEDIAN SALARY (IN EUR)

Istanbul 33.828,88

Adana 21.537

Angora NA

Payscale 2012

Table 15: Median Salary by Company Size in Turkey as on

11 April 2012

NUMBER OF EMPLOYEES MEDIAN SALARY (IN EUR)

1–9 23.664,14

10–49 25.676,41

50–199 33.867,65200–599 34.269,67

600–1,999 36.802,43

2,000–4,999 35.154,85

5,000–19,999 46.030,31

20,000–49,999 46.686,47

50,000+ 47.779,83

Payscale 2012


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8 Taxation

8.1 Tax System in Turkey

The tax system in Turkey can be classified into three main cat-

egories––income taxes, taxes on expenditure and taxes on

wealth. The corporate tax rates in Turkey are the most competi-

tive among the OECD (Organisation for Economic Co-operation

and Development) member nations. On 21 June 2006, a new

Corporate Tax Law was enacted, making significant amendmentsto the current applications, while simultaneously incorporating

new concepts in the tax legislation.38

8.2 Tax Rates

8.2.1 Income Tax

All individuals, whether domestic or foreign, along with corpo-

rations residing in Turkey, are liable to pay income tax on all

income sources. Any non-resident earning an income in Turkey

through the channels of employment, ownership of property,

business transactions or any other income-generating activity is

also liable to pay taxes, but only on the income, earned in Turkey.

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8.2.1.1 Corporate Income Taxes

The basic corporate income tax rate, levied on any business profit

is 20 percent.

Table 16: Tax Withholdment on Select Payments of TurkishResident Corporations

CATEGORY SUBJECT TO(PERCENT)

Dividends 15

Interest on treasury bill and treasury bonds 0

Interest on other bonds and bills 0

Bank deposits 15

Profit shares paid by participation banks inconsideration of participation accounts

15

REPO agreements 15

Invest in Turkey

Table 17: Tax Withholding on Select Payments ofNon-Resident Corporations

CATEGORY SUBJECT TO(PERCENT)

Dividends 15

Interest on treasury bill and treasury bonds 0

Interest on other bonds and bills 0

Bank deposits 15

Profit shares paid by participation banks inconsideration of participation accounts

15

REPO agreements 15

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8.2.1.1 Individual Income Taxes

Income tax rate on a personal basis varies from 15 percent to

35 percent. Income tax rates applicable for the year 2009 are

as follows:

Table 18: Income Tax Rates

INCOME SALES IN EUR (TRY) RATE (PERCENT)

Up to 4.042 (9.400) 15

4.024,43 – 9.890 (9.401 – 23.000) 20

9.890,43 – 22.790 (23.001 – 53.000) 27

22.790,43 (53.001 and over) 35

Invest in Turkey

8.2.1.3 Social Security

Social security is viewed not as a tax, but as a payroll cost to the

employer. Contributions are made by both the employer and the

employee towards a social security system, covering areas such

as sick pay, work-related accidents, unemployment coverage,pensions and other such programmes.

Table 19: Contribution Rates

CONTRIBUTION ON BEHALF OF RATE (PERCENT)

Employer 19,5

Employee 14

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8.2.2 Taxes on Expenditure

8.2.2.1 Value-Added Tax (VAT)

All commercial, industrial, agricultural, independent professional

goods and services, imported goods and services and their deliv-

eries caused by other activities are subject to VAT. The applicable

rates are as follows:

Table 20: VAT Rates

CATEGORY RATE (PERCENT)

General 18

Financial leasing services, etc.Depends on the VAT on

the leased item

Basic foodstuffs, textile products, etc. 8

Certain agricultural products 1

Invest in Turkey

8.2.2.2 Special Consumption Tax (SCT)39

Different tax rates are applicable on four main product groupsunder this category:

| Petroleum products, natural gas, lubricating oil, solvents and

derivatives of solvents: specific tax rates

| Automobiles and other vehicles, motorcycles, planes, helicop-

ters, yachts: 1 percent to 84 percent| Tobacco and tobacco products, alcoholic beverages: 25 percent

to 275,6 percent

| Luxury products: 6,7 percent to 20 percent

SCT is charged only once, unlike VAT which is applicable on each

delivery.

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8.2.2.3 Banking and Insurance Transaction Tax

This tax is levied on banking and insurance company transac-

tions (which remain exempted from VAT). Income earned by

banks, such as on loan interest, is subject to this form of tax.

Table 21: Tax Rates

CATEGORY RATE (PERCENT)

General 18

Financial leasing services, etc. Depends on the VATon the leased item

Basic foodstuffs, textile products, etc. 8

Certain agricultural products 1

Invest in Turkey

8.2.2.4 Stamp Duty

Stamp duty is levied as a percentage of the value of the docu-

ment at rates ranging from 0,165% to 0,825%Taxes on Wealth

Taxes on Wealth40

These taxes are classified into three categories:

| Inheritance and gift taxes: 1–30 percent

| Property taxes

| Motor vehicle tax: revised annually

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Real estate tax is applicable to buildings and land owned in Tur-

key, at the rates given below:

| Buildings: 0.1–0.4 percent

| Land: 0.1–0.6 percent

8.3 Tax Incentives41

Tax incentives are offered on a varied basis for separate classes

of geographical areas and different sectors of expertise such asR&D, educational corporations, cultural investments and enter-

prises. Special incentives are offered to the four categories of

special investment zones in Turkey, as explained earlier.

Explained below are the VAT exemptions inclusive of, but not

limited to the transactions listed below:

| Exports pertaining to goods and services

| Roaming services offered in Turkey for non-resident clients (i.e.

located outside Turkey), on a par with international roaming

agreements, with a reciprocity condition, duly in place

| All petroleum exploration ventures

| Global transportation

| Any delivery made to a diplomatic representative, consulate or

international organisation with a tax exemption status includ-

ing their employees

| Supplies of machinery and equipment, inclusive of imports for

people or corporations that have valid investment certificates,

issued by the authorities concerned and also happening to be

VAT payers

| All services employed at airports or harbours for aircraft or

vessels

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| Deliveries made to governments or other related organisations

for health, cultural, educational and other services (social and

other exemptions)

| Banking and insurance transactions (subject to the Banking

and Insurance Transactions Tax 5 percent and hence exempted

from VAT)

| Earnings of corporations derived from their branches abroad or

both their domestic and foreign ventures, on meeting specifiedcriteria

| R&D allowances

| Corporations claiming expenditures pertaining to certain do-

nations, aid or sponsorships for sports activities (entitled to

deductions from tax)

8.4 Investment Incentive System or Tax Incentives42

Turkey’s Investment Incentive System comprises various tax in-

centive schemes, continuously amended to enhance investments

in manufacturing, services, energy, exports, etc. Both local and

foreign investors have equal access to the following schemes:

| General investment incentive scheme

| Incentives for large-scale investments

| Regional and sector-based incentives

| Incentives on employment

| R&D support

| Support for SMEs

| Industrial Thesis (SANTEZ) programme

| Loans for technical development projects

| Training support| State aid for exports

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8.4.1 General Investment Incentive Scheme

This is mainly a tax benefit programme with some credit pos-

sibilities in particular cases. The investments vary, depending on

factors such as location, scale and subject of investment. The

major incentives are:

| Waiver of customs duties on imported machinery and equip-

ment for projects possessing an incentive certificate

| VAT waiver on local purchase or import of machinery andequipment for projects with an incentive certificate

8.4.2 Incentives for Large-Scale Investments

| For investments made before 31 December 2011, the corporate tax

rates applicable would be between 2 percent and 10 percent.

| For investments made after 31 December 2010, rates applicable

would be between 4 percent and 15 percent.

| Employers’ contribution towards the social security premium is

covered subject to a maximum of seven years for investments

started before 31 December 2011.

| Allocation of state land

| Investments are invited in sectors such as chemicals, oil, transit

pipeline services, automotive, railways, ports, electronics, phar-

maceuticals and medicine, aviation, machinery and mining,

among others.

*Note: further details regarding this topic can be found here

8.4.3 Region- and Sector-based Incentives

| For investments made before 31 December 2011, the corporate tax

rates applicable would be between 2 percent and 10 percent.

| For investments beginning after 31 December 2010, rates ap-

plicable would be between 4 percent and 15 percent.| Employers’ contribution towards social security premium is

covered subject to a maximum of seven years for investments

made before 31 December 2011.


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| Allocation state land.

| Incentives are allotted according to different geographical

zones, with each zone inviting a specific type of industry.

| The industries include electronics, pharmaceuticals, machinery,

automotive, medicine, textile, paper, food and beverages, agri-

culture and agriculture-based manufacturing, plastics, rubber,

metal, tourism, health and education, among others.

| Some additional sectors are offered incentives, irrespective of

their geographical location.

· These include investment types, covered by Speci