#TURKEY IN BRIEF

#INVESTING IN TURKEY

 
 

 

 

                                        

  

INVESTING IN TURKEY

 

I.  INTRODUCTION

 

SITUATED AT THE CROSSROADS OF EUROPE, ASIA AND AFRICA TURKEY IS A PLURALISTIC, PARLIAMENTARY AND SECULAR DEMOCRACY, BORN FROM THE 700 YEARS LONG HERITAGE OF THE OTTOMAN EMPIRE.

 

MUSTAFA KEMAL ATATÜRK FOUNDED THE TURKISH REPUBLIC IN 1923. BEING PRESIDENT UNTIL HIS DEATH IN 1938, HE LINKED TURKEY’S FATE TO THE WEST THROUGH THE ADOPTION OF THE LATIN ALPHABET, WESTERN LEGAL SYSTEM AND MODERN LIFE STYLE.

 

WITHIN THE ISLAMIC HEMISPHERE TURKEY IS THE ONLY SECULAR DEMOCRACY, REPRESENTING A MODEL, THE IMPORTANCE OF WHICH IS HIGHLY APPRECIATED NOWADAYS.

 

TURKEY REMAINS STRONGLY TIED TO THE WEST THROUGH HER POSITION WITHIN NATO, RELATIONS WITH THE WORLD BANK AS WELL AS HER MEMBERSHIP IN THE EUROPEAN COUNCIL.

 

ÝNSPITE OF EVENTUAL SHORT-TERM POLITICAL TURBULENCES TURKEY HAS A STRONG AND STABLE REGIME AND IS PRESENTLY IMPLEMENTING SOCIAL, FISCAL, MONETARY AND ECONOMIC STRUCTURAL REFORMS TO PAVE THE WAY FOR A FULL EU MEMBERSHIP, TO WHICH SHE HAS ALREADY A CUSTOM’S UNION RELATION.

 

THE COUNTRY COVERS AN AREA ALMOST THE SIZE OF FRANCE AND GERMANY COMBINED WITH A POPULATION OF 68 MILLION, THE SECOND LARGEST AND MOST YOUTHFUL IN EUROPE.

 

TURKEY HAS A DIVERSIFIED GEOGRAPHY, RICH NATURAL RESOURCES, STRONG AGRICULTURE, AND RELATIVELY DEVELOPED INFRASTRUCTURE, MODERN AND ADVANCED INDUSTRY, SKILLED AND COMPETITIVE HUMAN CAPITAL.

 

THANKS TO THE MAJOR STRUCTURAL REFORMS IN THE EARLY 80’S, TURKEY HAS TODAY AN OPEN AND MARKET DRIVEN LIBERAL ECONOMY, FULLY INTEGRATED TO THE GLOBAL SYSTEM.

 

THE EXISTING LIBERAL FOREIGN INVESTMENT LEGISLATION REPRESENTS A WELL-SECURED, RELIABLE, STABLE AND ENVIRONMENT FOR FOREIGN CAPITAL, EXPERIENCED AND APPRECIATED BY MORE THAN 5500 FOREIGN CAPITAL FIRMS ALREADY.

  

II.         ADVANTAGES AND GOOD REASONS

 

IN AN ENVIRONMENT WHERE MANY EMERGING ECONOMICS COMPETE FOR THE ATTRACTION OF FOREIGN DIRECT INVESTMENT TURKEY OFFERS VARIOUS UNBEATABLE ADVANTAGES

 

üUNIQUE GEOGRAPHICAL AND GEOPOLITICAL LOCATION

 

TURKEY ENJOYS A UNIQUE LOCATION, BRIDGING EUROPE, ASIA AND AFRICA AND DOMINATES A VERY CRUCIAL GEOPOLITICAL POSITION. HER PROXIMITY TO THE EMERGING MARKETS IN THE BALKANS, BLACK SEA, MIDDLE EAST, NORTH AFRICA AND CENTRAL ASIA, AS WELL AS HER CULTURAL TIES WITH CENTRAL ASIAN COUNTRIES, CREATE LUCRATIVE BUSINESS OPPORTUNITIES. TURKEY IS THE LEADING INVESTOR IN CAUCASIAN AND CENTRAL ASIAN TURKIC REPUBLICS AND WITH HER PRIVILEGED ACCESS SHE CAN PROVIDE A PERFECT BASE TO DEVELOP BUSINESS WITH THESE COUNTRIES.

 

TURKEY IS LOCATED ADVANTAGEOUSLY IN TERMS OF NATURAL RESOURCES AS WELL.

 

AGRICULTURE, ORE RESERVES, TOURISTIC ATTRACTIONS AND RICH SWEET WATER POTENTIAL, WHICH WILL BECOME A STRATEGIC GOOD IN THE REGION, ARE IMPORTANT NATURAL RESOURCES, OPEN TO DEVELOPMENT.

 

üA HUGE DOMESTIC MARKET

 

WITH A POPULATION OF 68 MILLION TURKEY OFFERS A HUGE AND DYNAMIC DOMESTIC MARKET TO INVESTORS.

 

THE CONSUMPTION LEVELS HAVE BEEN INCREASING DUE TO RAPID WEALTH FORMATION, IMPROVING EDUCATION AND AWARENESS, DEVELOPING MARKETING TECHNIQUES AND A GROWING URBANIZATION RATE.

 

ALTHOUGH THE UNEVEN DISTRIBUTION OF WEALTH AMONG REGIONS AND INDIVIDUALS PROVIDES A HANDICAP, IT ALSO IMPLIES A LARGE SEGMENT OF THE POPULATION WHO ENJOY THE SAME HIGH LIVING STANDARDS AS PEOPLE IN MORE DEVELOPED COUNTRIES. ACCORDING TO CALCULATIONS BY ÝNVESTA A POPULATION OF AT LEAST 12 MILLION IN THE WESTERN PART OF THE COUNTRY ENJOY AN AVERAGE INCOME OF MORE THAN US $ 15.000 BASED ON PURCHASING POWER PARITY. THIS MAKES TURKEY MORE ATTRACTIVE THAN MANY MEDIUM-SIZED EUROPEAN MARKETS.

 

AS A RESULT OF PRESENT LOWER PER CAPITA CONSUMPTION, THE GROWTH RATES IN MANY INDUSTRIES IN TURKEY, SUCH AS PACKAGING, RETAIL, PLASTICS, WHITE GOODS, BUILDING MATERIALS, PROCESSED FOOD AND BEVERAGES, FAST-MOVING CONSUMER GOODS ARE MUCH HIGHER THAN THEIR COUNTERPARTS IN DEVELOPED COUNTRIES WHERE THE CONSUMPTION LEVELS ARE ALREADY SATURATED.

 

üEXPORT POTENTIAL

 

TURKEY’S IDEAL LOCATION AND RELATIONS WITHIN HER REGION, SUPPORTED BY GOVERNMENTAL INCENTIVES FOR EXPORTS, TURNS TURKEY INTO AN EXPORT BASE COVERING A MARKET WITH A POPULATION OF ALMOST 200 MILLION.

 

THE CUSTOMS UNION WITH EU PROVIDES AN EASY ACCESS INTO THE EUROPEAN DEVELOPED MARKETS, AND REPRESENTS A HIGHLY APPRECIATED ADVANTAGE TO OVERCOME TAX AND TARIFF BARRIERS FOR INVESTORS FROM THIRD COUNTRIES.

 

üA FAST DEVELOPING ECONOMY

 

THE ECONOMY GREW BY AN AVERAGE 6.8 PERCENT BETWEEN 1995 AND 2002, WHICH IS WELL ABOVE THE GROWTH RATE OF OECD COUNTRIES, SUGGESTING A DYNAMIC AND DEVELOPING ECONOMY. NEVERTHELESS, THE WORLD TRADE ORGANIZATION STATES THAT TURKEY IS AMONG THE 20 MOST DYNAMIC COUNTRIES IN TERMS OF WORLD TRADE.

 

MANY SERVICE AND MANUFACTURING SECTORS ENJOY TREMENDOUS GROWTH RATES IN TURKEY, PARTLY BECAUSE OF LOWER PENETRATION RATES THAN THOSE OF MORE DEVELOPED COUNTRIES ELSEWHERE IN EUROPE, AND THE APPETITE IS CORRESPONDINGLY GREATER.

 

üHIGH SKILLED HUMAN RESOURCES

 

TURKISH LABOUR FORCE IS WELL KNOWN WITH IT’S SKILLS AND LEARNING CAPACITY AS VOCATIONAL EDUCATION IS EMPHASIZED IN THE TURKISH EDUCATION SYSTEM.

 

INEXPENSIVE LABOUR RATES MAKING TURKEY HIGHLY COMPETITIVE WITH OTHER EMERGING MARKETS AS WELL AS WITH THE REST OF THE WORLD, OFFER CUTTING EDGE FOR INDUSTRIES.

 

ON THE OTHER HAND THE LEVEL OF WHITE-COLLAR EMPLOYEES AND PARTICULARLY THE EXECUTIVE LEVEL HAVE OUTSTANDING QUALIFICATIONS AND CAPACITIES COMPARABLE TO A DEGREE AS APPRECIATED ANYWHERE IN EUROPE AND USA.

 

FINALLY TURKISH ENTREPRENEURS, WITH THEIR INTELLECT AND DRIVING POWER ARE PLAYING NOW IN THE INTERNATIONAL LEAGUE AND REPRESENT RELIABLE PARTNERSHIP POTENTIAL FOR FOREIGN INVESTORS.

 

üHIGH QUALITY STANDARDS

 

THE NEW QUALITY ORIENTED GENERATION IN BOTH MANUFACTURING AND SERVICES SECTORS ENSURES HIGH QUALITY LEVELS: THIS IS ALSO PROVEN BY TURKISH COMPANIES WINNING THE EUROPEAN QUALITY AWARD SUCH AS: BRISA, BEKSA, NETAS, BEKO, ARCELIK, ECZACIBASI VITRA.

 

üDEVELOPED INFRASTRUCTURE

 

MOST RESIDENTIAL AREAS BENEFIT FROM SATISFACTORY ELECTRICITY, DRAINAGE, NATURAL GAS, TELECOMMUNICATIONS AND TRANSPORTATION SERVICES. MOREOVER, IN ADDITION TO LARGE FACTORIES, THE GOVERNMENT PROVIDES “FREE ZONES” AND SO-CALLED “ORGANIZED INDUSTRIAL ZONES” DESIGNED FOR SMALL AND MEDIUM-SIZED ENTERPRISES.

 

TURKEY HAS A RELATIVELY YOUNG AND EFFICIENT TELECOMMUNICATIONS NETWORK WITH THE LATEST TECHNOLOGY. MOBILE TELEPHONE COVERAGE HAS BEEN EXTENDED THROUGH THE COUNTRY.

 

THE TURKISH FINANCIAL SECTOR IS WELL DEVELOPED IN BOTH TECHNOLOGY AND LEGAL PROCEDURES. THE BANKING SYSTEM, WHICH UNDERWENT A RESTRUCTURING ALONG WITH IMF POLICIES, IS EFFICIENT AND THE ÝSTANBUL STOCK EXCHANGE (ISE) WHICH IS THE LARGEST AND THE MOST ACTIVE IN THE REGION, PROVIDES ADEQUATE LIQUIDITY TO 280 QUOTED STOCKS WITH A MARKET CAP OF 50 BILLION US. DOLLARS.

 

TURKISH GOVERNMENT AGENCIES SUCH AS THE STATE INSTITUTE OF STATISTICS, THE CENTRAL BANK, THE TREASURY, THE STATE PLANNING ORGANIZATION, AND THE ISE ARE MUCH MORE EFFICIENT AND TIMELY, IN PROVIDING DATA ON VITAL STATISTICS, THAN THE AGENCIES IN OTHER EMERGING COUNTRIES.

 

üTHE GATEWAY OF ENERGY RESOURCES

 

TURKEY IS PLACED AT THE CROSSROADS OF WORLD’S FUTURE ENERGY RESOURCES, NAMELY MIDDLE EASTERN AND CASPIAN OIL AS WELL AS RUSSIAN AND CENTRAL ASIAN NATURAL GAS THAT ARE LINKED THROUGH PIPELINES TO TURKISH MEDITERRANEAN HARBORS AND WESTERN COUNTRIES.

 

üLEGAL PROTECTION

 

TURKEY HAS ONE OF THE MOST FLEXIBLE AND UNRESTRICTED LEGAL REGIMES GOVERNING FOREIGN INVESTMENT, SUPPORTED ALSO BY THE FULL CONVERTIBILITY OF THE LOCAL CURRENCY.  THERE IS NO DISCRIMINATION AGAINST FOREIGN INVESTORS AT ANY STAGE OF AN INVESTMENT. TURKEY GRANTS ALL RIGHTS, INCENTIVES, EXEMPTIONS AND PRIVILEGES AVAILABLE TO DOMESTIC INVESTORS ALSO TO FOREIGNERS. THERE ARE NO RESTRICTIONS ON ACTIVITY AREAS, ON CAPITAL MOVEMENTS, ON TRANSFER OF PROFITS, ON CREDIT ACQUISITIONS, ON REPATRIATION OF CAPITAL IN CASE OF LIQUIDATION OR SALE AND ON EMPLOYMENT OF FOREIGNERS. THERE IS NO LIMIT ON EQUITY PARTICIPATION RATIOS, AND APPROVAL PROCEDURES FOR FOREIGN DIRECT INVESTMENT HAVE BEEN SIMPLIFIED.

 

APART FROM THE LIBERAL LEGISLATION, TURKEY PROVIDES ALSO A SECURE ENVIRONMENT FOR FOREIGN CAPITAL. THE LAW FOR THE PROTECTION OF COMPETITION HAS BEEN IN EFFECT SINCE 1994, INTERNATIONAL ARBITRATION IN GOVERNMENT TENDERS HAS BEEN ACCEPTED SINCE 2000 AND SUBSTANTIVE MEASURES FOR THE PROTECTION OF INTELLECTUAL PROPERTIES AND INDUSTRIAL RIGHTS HAVE BEEN TAKEN IN THE LAST YEARS.

 

üPRIVATIZATION OPPORTUNITIES

 

TURKEY IS INCREASING HER PRIVATIZATION EFFORTS TO TURN LOW PERFORMING GOVERNMENTAL ENTERPRISES INTO COMPETITIVE ECONOMIC ENTITIES.

 

THE PRIVATIZATION PROGRAMME OFFERS UNIQUE AND GREAT OPPORTUNITIES TO INVESTORS FOR ENTERING INTO HUGE ENERGY, TELECOMMUNICATION, TRANSPORTATION AND INFRASTRUCTURE INVESTMENTS WITH A CAPTURED MARKET.

 

III.   CHALLENGES TO FACE

 

! POLITICS AND BUREAUCRACY

 

DESPITE TURKEY’S 55 YEARS HISTORY OF PLURALISTIC DEMOCRACY, OCCASIONAL POLITICAL VOLATILITIES HAVE DISCOURAGED FOREIGN DIRECT INVESTMENT IN THE PAST. DUE TO THE WIDE SPECTRUM OF POLITICAL PARTIES AND IDEOLOGIES, THERE HAVE BEEN PERIODS WHERE FOREIGN DIRECT INVESTMENTS FACED PREJUDICES AND DIFFICULTIES.

 

HOWEVER IN THE RECENT YEARS THE POLITICAL AND ECONOMICAL IDEOLOGIES AMONG THE PARTIES ARE CONVERGING AND THIS OPENED THE GATE TO THE LONG AWAITED STRUCTURAL REFORMS IN BANKING, AGRICULTURE, PRIVATIZATION AND OTHER AREAS.

 

TODAY WITH HER STRONG ONE PARTY MAJORITY GOVERNMENT TURKEY HAS A VERY POSITIVE ATTITUDE TOWARDS FOREIGN DIRECT INVESTMENTS, HOWEVER COMPLEX REGULATIONS AND BUREAUCRACY COULD NOT HAVE BEEN FULLY SIMPLIFIED YET.

 

WHILE DOING BUSINESS IN TURKEY, FOREIGN INVESTORS MAY BE FORCED TO FOLLOW UP ISSUES AT VARIOUS GOVERNMENTAL AGENCIES SUCH AS;

 

- MINISTRY OF FINANCE

- MINISTRY OF INDUSTRY AND TRADE

- MINISTRY OF ENERGY

- MINISTRY OF TOURISM

- MINISTRY OF ENVIRONMENT

- MINISTRY OF LABOUR AND SOCIAL SECURITY

- CENTRAL BANK OF TURKEY

- UNDERSECRETARIAT OF TREASURY

- UNDERSECRETARIAT OF DEFENSE INDUSTRY

- UNDERSECRETARIAT OF CUSTOMS

- PRIVATIZATION ADMINISTRATION

- CHAMBER OF COMMERCE

- CHAMBER OF INDUSTRY

 

AND AT THE INDEPENDENT REGULATORY BODIES WHICH ARE

 

- THE CAPITAL MARKETS BOARD

- THE BANKING REGULATION AND

   SUPERVISION BOARD

- THE ELECTRICITY MARKET REGULATION

   BOARD

- THE PUBLIC TENDER SUPERVISION BOARD

- THE COMPETITION BOARD

- THE TELECOMMUNICATION BOARD

- THE SUGAR BOARD

- THE TOBACCO AND ALCOHOLIC

   BEVERAGES MARKET REGULATION BOARD

- THE RADIO TELEVISION BOARD

 

FACED WITH SUCH COMPLEX AND CONFUSED SITUATION FOREIGN INVESTORS HAVE FORMED AND ESTABLISHED YASED (FOREIGN CAPITAL ASSOCIATION) TO ACT COLLECTIVELY IN THE DIALOGUES TO IMPROVE THE ENVIRONMENT FOR FOREIGN DIRECT INVESTMENTS AND REDUCE RED TAPE.

 

IN SPITE OF THIS DISCOURAGING PICTURE, PROCEDURES CAN BE EXTREMELY ACCELERATED THROUGH CLOSE FOLLOW UP, PERSONAL RELATIONS AND DIALOGUE WITH THE RELATED POLITICAL LEVELS AND AGENCIES THAT SURPRISINGLY IN GENERAL ARE VERY HELPFUL TOWARDS FOREIGN CAPITAL.

 

THEREFORE FOREIGN INVESTORS IN TURKEY, MORE THAN ANYWHERE ELSE NEED LOCAL GUIDANCE FOR THEIR AND THEIR WAY THROUGH THE REGULATORY PROCEDURES AND POLITICAL DIALOGUES.

 

! UNREGISTERED ECONOMY

 

AS A REACTION AGAINST HIGH INFLATION OVER ALMOST TWO DECADES, AN IMPORTANT PORTION OF THE ECONOMY ESCAPED REGISTRATION. ALTHOUGH ILLEGAL THIS “PARALLEL ECONOMY” WHICH IS ESTIMATED TO BE 40% OF THE OVERALL ECONOMY, IS A FACT AND REPRESENTS NOT ONLY A SIGNIFICANT LOSS OF TAXES FOR THE FISCAL SYSTEM, BUT ALSO CREATES UNFAIR COMPETITION ON THE MARKET.

 

ON THE OTHER HAND AS, THESE UNREGISTERED ECONOMIC ACTIVITIES ARE NOT INCLUDED IN THE OFFICIAL STATISTICS; THESE DO NOT REPRESENT THE REAL SITUATION. THEREFORE IT CAN BE ASSUMED THAT THE REAL GDP AND CONSUME FIGURES ARE MUCH HIGHER THAN REFLECTED IN THE STATISTICS. THE EVALUATION OF THIS FACT IS IMPORTANT WHEN ACCESSING THE REAL MARKET POTENTIAL OF TURKEY.

 

THE GOVERNMENT, ALSO SUPPORTED BY THE DECREASING INFLATION, HAS LAUNCHED A DEDICATED PROGRAMME TO ELIMINATE THIS CRONICAL DISEASE, WHICH WILL HELP TO NORMALIZE THE SITUATION.

 

! LACK OF FINANCE

 

INCREASED GOVERNMENT BORROWING FROM 1990 ONWARDS HAS EXHAUSTED ALMOST ALL DOMESTIC SOURCES AND PRIVATE SECTOR COMPANIES FACE SERIOUS HANDICAPS TO COVER THEIR FINANCING FROM THE DOMESTIC BANKING SYSTEM OR THROUGH OTHER CAPITAL MARKET INSTRUMENTS.

 

SCARCELY AVAILABLE CREDITS ARE SHORT TERMED AND CARRY A VERY HIGH INTEREST BURDAIN.

 

THIS, FOR THE OVERALL ECONOMY UNLUCKLY SITUATION HOWEVER, CREATES GREAT ADVANTAGES FOR COMPANIES WITH FOREIGN DIRECT INVESTMENT, WHO THROUGH THE SUPPORT OF THEIR SHAREHOLDERS MAY HAVE EASY ACCESS TO COMPETITIVE INTERNATIONAL FINANCE SOURCES.

 

 

! MANAGEMENT PHILOSOPHY

 

WITH VERY FEW EXCEPTIONS, MOST TURKISH BUSINESS GROUPS AND COMPANIES ARE FAMILY CONTROLLED OPERATIONS.

 

THEREFORE WHEN COLLABORATING WITH A TURKISH PARTNER FOR A NEW VENTURE OR ACQUIRING SHARES IN AN EXISTING COMPANY, USUALLY DEPENDENCY TO THE FORMER OWNER FAMILY, INADEQUATE INSTITUTIONAL MANAGEMENT, INSUFFICIENT ACCOUNTING STANDARTS, IMPROPER INFORMATION SYSTEMS MAY BE EXPECTED AS PROBLEM AREAS. ARMS LENGTH RELATIONS BETWEEN COMPANY AND OWNER OR OWNER’S OTHER COMPANIES ARE ALSO QUITE USUAL AND PROBLEMATIC.

 

THE OVERCOMING OF THE GAP BETWEEN THE OWNER MANAGEMENT AND INSTITUTIONAL MANAGEMENT REQUIRES DELICACY AND TIME.

 

THE INVOLVEMENT OF CONSULTANTS OR TURKISH BOARD MEMBERS ALSO RESPECTED BY THE TURKISH COUNTERPART IS ALMOST A MUST AND VERY RECOMMENDABLE TO OVERCOME THE INITIAL PROBLEMS.

 

 

 

IV.  FORMS OF BUSINESS ORGANISATIONS

The Turkish Commercial Code recognises two distinct types of business enterprise;

Partnerships

Corporations

The legal differences between the two concern the allocation of liability and the legal identity of the entity. Corporations established by foreign joint venture partners with or without a Turkish partner are treated as Turkish corporations and are entitled to all rights available to Turkish companies under the Turkish commercial code.

Foreign investors may establish a corporation in either of these two forms:

Limited Liability Company (Limited Sirket - Ltd. Sti.)

Joint Stock Company (Anonim Sirket - A.S.)

These business types exist as separate legal entities and offer their shareholders limited liability. The most common type of business entity in Turkey is the joint stock company and generally foreign investors establish such corporations for doing business in Turkey.

Joint Stock Company

A joint stock company is defined as a corporation having its own trade name and a predetermined amount of capital divided by shares. The liability of the shareholder is limited to their capital.

The structure and organisation of joint stock companies are subject to regulation by the Turkish Commercial Code. However, the founders of joint stock companies are afforded significant flexibility in drafting the articles of association, thereby serving the needs of the specific venture. Capital Market Board regulations also apply to joint stock companies whose shareholders' number at least 250, or who have issued bonds or whose shares are quoted on the Istanbul Stock Exchange.

A minimum of five shareholders, who may be either real persons or legal entities, are required for the formation of a joint stock company. The overall share capital must be a minimum of 5 billion TL and the minimum capital contribution by each foreign shareholder is US $ 50,000.

The capital of a joint stock company is divided into shares of equal value which are treated as negotiable commercial paper. The shares may be issued in either registered or bearer form. Registered shares are freely transferable subject to approval by the board of the company, unless prohibited by the company's articles of association. Bearer shares are freely transferable under the Code of Obligations, unless otherwise agreed by the parties.

Decision making in a joint stock company is by majority vote; but the Turkish Commercial Code includes certain provisions to protect minority interests. Minority shareholders may also request the appointment of a special auditor on their behalf.

Limited Liability Company

Limited liability companies may be composed of real persons or legal entities and must consist of at least 2 and no more than 50 partners. The overall share capital must be a minimum of 500 million TL and the minimum capital contribution by each foreign shareholder is the TL equivalent of US $ 50,000. All partners are personally liable for the debts of the company up to a maximum of their contribution, however, partners are not held liable for the unpaid portions of others' contributions. They are also more directly exposed to the tax liabilities of the company, limited however to their own shares.

Shares held in a limited liability company are non-negotiable and may be transferred only with the approval of the other partners. Transfers must be approved by at least a 75% majority vote, with at least 75% of the total capital represented. Limited liability companies are also prohibited from engaging in banking or insurance business. A limited liability company differs from the joint stock company in that its capital is not divided into shares of stock nor represented by share certificates. There is no board of directors for a limited company. Instead, the appointed manager has authority to run the company.

Branches and Liaison Offices

Foreign companies may also operate through liaison offices or branches providing they are established in accordance with the relevant legislation. The income of a branch derived in Turkey is taxed in the same way as resident corporations.

Liaison offices may be used to establish a presence in Turkey, but may not carry on any commercial activity and must be funded by the parent company outside Turkey.

Employing Foreign PersonNel

Foreign personnel can be employed in Turkey with the permission of General Directorate of Foreign Investments. Companies can apply to employ foreign personnel, but a real person cannot make an application by himself.

The applications are made directly to the General Directorate of Foreign Investments and the applications are evaluated according to a specific criteria where the qualifications of the personnel and the performance of the company are taken into account.

 

V.  ROADMAP FOR ESTABLISHING A FOREIGN CAPITAL COMPANY IN TURKEY