Very little known to some of us, Turkey is the 5th closest trading partner of the EU[1] with its 78 million population[2] and unique geopolitical location allowing investors to open to the markets of the Middle East, Asia and Europe. Although the Turkish economy continues to face geopolitical disturbances and effects of the coup attempt in July, it has a long tradition to prove resilient to severe shocks.[3] ‘Its GDP growth is estimated to have slowed to under 3% in 2016, but is projected to pick up gradually to around 33 per cent by 2018.’[4] Turkey is still an attractive spot for tourists and foreign investors coming from all over the world.
The close partnership between Italy and Turkey
Italy and Turkey have remained close trade partners for decades. Today, Italy is considered as one of the most important partners of Turkey. Turkey imports 4.4% of its goods to Italy and exports 5.2% from Italy. Within the EU, Turkey imports 10.7% of its goods to Italy and exports 14.1% from Italy. There are 1.200 Italian firms operating in Turkey and there are several operational Italian-Turkish Trade Chambers helping Italian and Turkish companies to cooperate. There are also 35.000 Turkish citizens living in Italy. [5]
Why invest in Turkey
In addition to the information above, you can easily get many benefits by investing in Turkey. First of all, there are no limitations for foreign investment in Turkey. Foreign investors are free to make direct foreign investments (Direct Foreign Investments Law No. 4875) and will be subjected to the same treatment as the Turkish nationals. ‘Direct foreign investment’ refers to any of the following:
- Establishment of a new company or opening of a branch,
- Direct acquisition of capital shares except through Securities Exchange or acquiring at least 10% of a company’s shares or similar voting rights by a foreign investor using economic assets supplied from overseas or from the domestic market.[6]
It should also be noted that foreign investors are also allowed to open a liaison office, in order to build networks and evaluate the market conditions in Turkey.
Investment Incentives
In 2012, Turkey also brought extra beneficial incentives for all investors willing to make upscale investments all around the country but especially in underdeveloped regions. The incentives are given according to the amount and value of the investments made, investment sector and region. The incentives include:
- Value added tax exemptions,
- Customs tax exemptions,
- Tax reductions,
- Reductions on social security payments
- Assistance in finding a place for company premises and/or assignment the same,
- Interest rate subsidies
- Income tax subsidies,
- Insurance premium subsidies.[7]
Applications for incentives should be made to the Turkish Republic Ministry of Customs and Trade; the ministry evaluates all applications and provides an incentives document for successful applicants.
Minimum investment requirements
The minimum investment requirements and amount of incentives vary on the region, in which the company wishes to invest. The minimum requirement for general incentives vary between 500.000 to 1.000.000 Turkish Liras and the grantee may benefit from the incentive between 3 to 7 years as of the granting date of the incentive.[8]
If you wish to invest in Turkey and would like to receive more information about the subject or would like to learn if you would be entitled to any of those incentives, please contact our Istanbul office at istanbul@damianianddamiani.com
[1] <http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_113456.pdf> accessed 13 January 2017
[2] <http://www.tuik.gov.tr/UstMenu.do?metod=temelist> accessed 13 January 2017
[3] OECD Economic Outlook, 2016/2 (Preliminary Version)
[4] ibid
[5] <http://www.mfa.gov.tr/turkiye-italya-siyasi-iliskileri.tr.mfa> accessed 13 January 2017
[6] Direct Foreign Investments Law No. 4875, 2003, Art 2
[7] Decision Numbered 2012/3305 Regarding Subsidies for Investments; Implementing Communique numbered 2012/1
[8] ibid
