Investment conditions in Turkey: Does the government support foreign investment?
Learn in detail about the conditions for investing in Turkey of all kinds. Conditions for real estate and agricultural investment and conditions for opening a shop in Turkey. Also, learn about encouraging investment in Turkey.
Table Of Contents
- Are there restrictions on investment in Turkey?
- What are the general conditions for investment in Turkey?
- Encouraging investment in Turkey
Are there restrictions on investment in Turkey?
There are no restrictions on investment in Turkey, given the high importance attached by the Turkish Government to encourage investors to enter the Turkish market with ease especially since the foreign direct investment laws in Turkey provide for equal treatment between foreign and local investors. This is in addition to the fact that Turkey has attractive advantages for investors in many sectors; the most prominent of these is the strategic location, the expansion of the local market, the appropriate investment environment, the comprehensive mechanisms that stimulate investment, and the ease of exporting to neighboring countries.
One of the most important incentives for investment in Turkey is the existence of a comprehensive incentive mechanism for investments, in coordination with the Ministry of Industry and Technology, related to the place and value of the investment and the sector in which the investment will be made.
In this context, it must be noted to those who wish to invest in Turkey that the State provides investors with opportunities such as VAT exemption, customs duty cuts, and tax exemption, investment space, and other opportunities and possibilities.
Since 2007, the Turkish Government has established the Investment Support and Promotion Agency and has launched a website in about 12 languages, including Arabic, as a bridge between Turkey and foreign investors.
What are the general conditions for investment in Turkey?
First, it must be clear that Turkish laws provide for equal treatment between foreign and domestic investors, so there are a variety of areas for investment in Turkey, such as real estate, tourism, industry, agriculture, food, public business, health care, and medicines, automotive industry, financial services, and others.
For example, if an investor is seeking to invest in real estate, and if he wants to invest in his own land in Turkey, he must inform the Ministry of Private Affairs of the quality of the project and take its approval. If the project is agricultural, he must inform the Ministry of Agriculture, and if he is an industrialist, and he must inform the Ministry of Industry, and this applies to all areas.
The investor must also observe international standards and bilateral trade agreements such as IIA and BIT. In particular, the Turkish Coordinating Council for Improving the Investment Environment (YOİKK) is discussing actions and steps to improve the investment environment and increase investment.
We note here that investment in Turkey through company registration and entrepreneurship leads to obtaining Turkish residency.
Therefore, at Imtilak Real Estate Company, we can help the investor realizing his investment dream from the moment it is established until his project sees the light in accordance with Turkish laws for each investment field.
Conditions for investment in Turkey for foreigners
Since the foreign investment law is based on the principle of reciprocity, and foreign investors enjoy the same rights and duties as local investors. Any type of company provided in the Turkish Trade Code can be established, just as Turkish citizens, be it a joint-stock company, a limited liability company, a cooperative company, or a solidarity company, and the foreign investor can choose from it in accordance with its operational needs.
Instead of establishing a new company; branch offices may be opened that are not representative of separate legal entities but are linked to the main company and do not require dedicated capital. Liaison offices may also be opened for foreign companies.
Turkey's commitment to double taxation prevention agreements that ensure that foreign investors do not suffer from double taxation has facilitated investment conditions, in addition to a clear legal basis for the transfer of assets, digitization of residence and work permit procedures, in addition to the great opportunity to obtain Turkish citizenship.
The amended Turkish laws provide striking facilities for foreign investors, giving newly established companies a six-month to one-year opportunity to arrange their trade before they are offered tax accountability and before they achieve the formula "five Turkish employees per foreign employee".
We note that Arab businessmen in Turkey are active in managing import and export companies and food products companies, as well as in managing investments in the stock market, the financial market, the real estate sector, and other areas, including energy and petrochemicals.
Conditions for real estate investment in Turkey
- Buying real estate with full title deed
- Choosing the city according to the purpose of the purchase, whether for residence or investment
- Verification of the specific proportion of foreign ownership of the real estate in the city
- The year of construction of the property must be checked
- Verifying the condition of the property, whether it is old or new
- Selection of the appropriate real estate agent
- The total area of the property should not exceed 30 hectares throughout Turkey in general
- The property must not be located in military or security areas, since there is a law prohibiting the sale of such properties to foreigners
- The property must not be mortgaged or subject to procedures preventing its sale
- Ensuring that the property owner (landlord) has the right to dispose of his property or not
- Obtaining sufficient information from the directorates of real estate records before signing any contracts with legal characteristics, as well as paying the price
- Not to start the process of selling and buying before the landlords or the companies responsible know it.
Given the sensitivity of the conditions for real estate investment, we at Imtilak Real Estate offer you the best experts and consultants who guarantee you the best real estate prices and meet all the legal requirements for foreign ownership in Turkey. For more details, you can contact us.
Conditions for agricultural investment in Turkey
The Turkish government is keen to overcome potential obstacles to investments in the agricultural sector and forest products and supports local and foreign investors by giving them equal rights and opportunities.
In order to encourage foreign investment in the agricultural sector, the Turkish Ministry of Agriculture and Forestry has established a platform for those wishing to invest in the agricultural sector in Turkey, given the availability of natural factors, the appropriate climate, fertile soil, the abundance of water and the abundance of arable land.
In this context, the total volume of international direct investments coming to Turkey in the sectors of agriculture, food and beverages, fishing, forestry products, and fisheries have reached $10 billion in the last 17 years.
Turkey is the first in Europe in terms of agricultural revenues, with $48.5 billion annually in 2019, and among the first ten countries in the world, as the agricultural and forestry products sector achieved a growth of 3.7% during 2019, and continued to grow by calculating the figures announced in the first three quarters of the year 2020.
Turkey also ranks first in the world in the production of many agricultural products, such as hazelnuts, apricots, figs, cherries, and quince, and among the first 5 countries in the production of watermelon, cantaloupe, lentils, pistachios, chestnuts, cucumbers, tomatoes, olives, tangerines, beans, spinach, chickpeas, walnuts, and others.
What makes attractive opportunities for local and foreign investors in the agricultural sector is the ease of conditions in this field, namely:
- Requiring agricultural investment companies to purchase agricultural land with an area of not less than 1,000 square meters, within cities determined by the Turkish state.
- Establishing a company with a capital of not less than 100,000 TL, provided that the project is registered in the name of this company.
- Submitting a feasibility study for a period of five years for the agricultural project that will be established, and this study must be approved by accredited consulting offices.
- Providing a source of irrigation by either laying water lines, or digging groundwater wells within the borders of Turkey's farmland
- The project must be in accordance with the Agricultural Investment Law in Turkey for foreigners
- If the foreign investor participates with the local Turkish investor, this gives him the right to government support of up to 50% of the value of the project.
Conditions for opening a shop in Turkey
Opening a shop by a foreign investor, in Turkey, requires the establishment of a business, through which it can engage in economic activity, and start an investment project in Turkey.
Therefore, we will show you the steps for establishing a trading company in Turkey, which are:
- A copy of the passport translated into Turkish and certified by the notary (Noter).
- Getting the company's tax number by going to the nearest tax center in your area.
- Deposit 25% of the capital value in the bank.
- Three personal photos.
If you want to start a business and get over all the obstacles that an investor faces when starting his new venture, we at Imtilak Real Estate Company have an expert lawyer who helps you implement the stages of incorporation very carefully and smoothly.
Encouraging investment in Turkey
The political and economic stability that Turkey has attained during the last two decades has made it a major center of attraction for foreign direct investment, and contributed to providing a stable investment environment, in addition to the huge leap achieved by its economy.
Several of Turkey's advantages have contributed to increasing the country's competitiveness as a destination for direct foreign investment, including the strategic location, the appropriate investment environment, comprehensive investment-stimulating mechanisms, the portability of neighboring countries, and the human wealth of Turkey, as well as the fact that Turkey is an important transit bridge to the markets of the Middle East, Central Asia, and Africa.
Foreign direct investment laws in Turkey also stipulate equal treatment between foreign investors and local investors.
Turkey has a comprehensive investment stimulus mechanism, in coordination with the Ministry of Industry and Technology, on the location and value of the investment and the sector in which investment will take place.
In this context, the State provides investors with opportunities such as VAT exemption, duty cuts, and tax exemption, investment space, and other opportunities and possibilities.
Speaking in numbers, Turkey's Foreign Direct Investment (FDI) volume exceeded $165 billion from January 2002 to November 2020.
During this period, 62.4% of these investments were made in the services sector, while 24.2% were in the manufacturing sector, 11%in the energy sector, and 4 percent in agriculture and mining.
Among the most directly invested subsectors of the services sector, the finance and insurance sector accounted for 32.9%, the telecommunications sector 8.8%, and retail and wholesale trade for 6.8% of total investment.
For the manufacturing subsectors, the food, chemical, and petroleum manufacturing sectors accounted for the largest share of direct investment.
Does the Turkish government support foreign investments?
The Turkish economy has not stopped recording positive numbers, as Turkey has maintained its position as a preferred destination for foreign direct investment, for two decades, supported by investment stimulus packages that attract foreign investors in the country.
Turkish President Recep Tayyip Erdogan confirmed that his country had risen 27 places over the past two years in the World Bank's Ease of Business 2020 ranking.
The government was also seeking to make Turkey a center of attraction for domestic and international investors with low risks, high confidence, and satisfactory profits, thanks to legal reforms and an improved investment climate.
In order to support investors and small earners, the Turkish Government approved the 2021 Investment Programme, signed by President Recep Tayyip Erdogan, which provided for the allocation of 138.3 billion TL (The dollar is about 7.5 TL) for 3,091 projects.
The transport and telecommunications sector received the main share of 30.7% of the budget allocated, followed by education with 14.3%, energy sector investments ranked third at 12.2%, mining 10.4%, agriculture 8.7%, and health 7.5%.
The percentage of spending on the remaining investments in other sectors such as industry, tourism, real estate, water, sanitation, technological research, and the environment, was 16.2%.
In view of the distribution of direct investments in Turkey in terms of investors, it is noted that the European Union has taken the largest share of direct investments in Turkey, in parallel with the trade and economic relations between Turkey and the European agglomeration.
Turkey has strengthened its position as a foreign capital attraction from various regions of the world, thanks to its long-term potential and opportunities for investors.
The investments of European Union countries ranked first in foreign direct investment in Turkey by 67%, with a value of $110.4 billion.
While Asian countries ranked second with 18%, with a value of $29.1 billion, and the countries of the American continent ranked third with 9%, with a value of $14.3 billion, from 2002 to 2020.
In terms of countries, the top 10 investors in Turkey are the Netherlands, the United States, Britain, Austria, Germany, Luxembourg, Spain, Belgium, France, and Azerbaijan.
Edited by Imtilak Real Estate©
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