Turkey country profile

Turchia Scheda Paese - Country Profile

Turkey country profile


Official name: Turkey
Surface: 783.562 km2
Population: 79.6 million (2012) Labour force 26.7 million
GDP: 751.3 billion $ (2012)
GDP per capita: 9.562 $ (2012)
Expected GDP growth: 5% (currently 16th world economy)
Capital: Ankara
Other important cities: Istanbul (13.9 million), Izmir (4 million), Bursa (2.7 million), Adana (2.1 million)
Government: Unitary parliamentary constitutional democracy
Religions: Muslim, Christian and Jewish minorities
Language: Turkish, other minorities
Currency: Turkish lira



- Government stability
- Economic and political reforms
- Start of EU accession negotiations in 2005
- Redrafting soldiers role in politics
- Strategic depth and “zero problems with neighbours”
- Regional assertiveness
- Soft power/ mediator
- Intensification and diversification of foreign relations


- Democracy “in progress”
- Freedom of expression
- Kurdish question
- Weak opposition
- Gezi Park protests
- EU access negotiations deadlock
- Cyprus problem
- Deterioration of relations with Israel


With more than 75 million people (more than a half between 25 and 35 years old) and a growing GDP, Turkey is an interesting country for foreign investments. Indeed, after the term BRICS, famous economists have created a new term to indicate new emerging economies MINT (Malaysia, Indonesia, Nigeria, Turkey).
Turkey has a fast-growing economy in a balanced political and economic context , a liberalised market and a reliable investments field with excellent infrastructures. Moreover there are advanced transport and telecommunication networks and new incentives to support a growing domestic market. Turkey has a highly qualified competitive and low cost labour market. Furthermore it is near to important markets and it has strong relations with Caucasus region, Central Asia, Middle East and Africa.

Other important aspects:

- The comparison between foreign trade volume and GDP was 49.5% in 2012; Turkey is perfectly integrated in the international trade system.
- Liberal model:Turkey has approached to a liberal economy which supports foreign investments, through targeted structural reforms and new liberal policies.
- A strong bank system: Foreign banks in main Turkish banks capital (Yapi Kredi – Unicredit, Teb-BNP Paribas, Oyak – ING);
- Incentives for foreign investors: Erdogan package, Free zones, International organisations, etc…;
- Economic dependence: Turkey has a negative balance of trade, especially in energy sector (recently it has been started a process in order to reduce economic dependence).


- Economic stability and attractiveness;
- Structural reforms;
- Strong economic fundamentals;
- Geographical position;
- Diversification and possibility to access in different markets ( 1.5 billion people);
- Young population and growing domestic market;
- Energy corridor through Europe;
- Sixth travel destination (35.7 million visitors), Turkish Airlines: 241 destinations in 104 countries.


- Dependence on foreign capital flows and investors confidence;
- Dependence on foreign energy supply;
- Current account deficit.


- 2nd (after China) in terms of best construction companies (31 Turkish companies out of 225 best construction companies of the world);
- 2nd largest flat glass producer;
- 3rd largest mega yacht builder;
- 4th largest producer of ceramics and natural stones;
- 5th largest jewellery producer;
- 5th largest dried fruit producer;
- 5th largest ships builder;
- 6th largest cement producer;
- 10th largest producer of steel and iron;
- 16th largest car producer.

In Europe:

- Largest textile producer;
- Largest producer of fertilizers, televisions and buses
- 2nd largest steel and iron producer
- 4th largest communications market
- 4th largest producer of cars and accessories


CAR SECTOR (16th in the world)

- Because of its proximity to Europe and Asia, Turkey is one of the most important car producer;
- Turkey is the largest commercial vehicles producer and exporter in Europe;
- 17 main national and foreign companies, 4.000 secondary companies, 300.000 qualified employers;
- Lower labour costs compared to Europe, qualified labour force;
- Three families out of four do not own a car, therefore there are great market growth opportunities;
- The forecasted increase of the GDP per capita will boost the consumers purchasing power;
- Increasing opportunities in car parts industry.





- Turkey is one of the fastest-growing energy markets in the world;
- It has been forecasted an annual 6% increase in electricity demand from 2009 to 2023;
- The total investments amount forecasted until 2023 is 130 billion dollar;
- Renewable energies will increase by 30%;
- Well structured and organised legal framework in the energy field;
- The authority for energy market regulation (EPDK) works as an independent market regulator;
- “Feed-in tariff” to incentive investments in renewable energies.


- The biggest and fast-growing medical equipments sector, in the region;
- Healthcare transformation plan in order to improve the healthcare system quality and efficiency;
- Pharmaceutical market income was around 9.2 billion dollars in 2010;
- There are significant growth possibilities, because of the increasing population and a low consumption rate;
- Recently it has been created a new R&D law, in order to boost investments;
- Healthcare sector reforms such as centralised healthcare insurance, will increase and improve the access to healthcare services.


- New initiatives and R&D law to increase investments;
- Turkish ICT sector in 2011 has passed 30 billion dollars;
- Increasing demand for high-tech telecommunication services;
- There is an enormous growth potential, taking into into consideration the young population compared with west countries;
- Increasing budget allocated by the government for ICT public investments;
- High education for young qualified computer engineers and software developers;


- 20% growth from 1990
- Small and medium enterprises are competitive and versatile;
- Machinery imports volume (21.3 billion dollars in 2010) is bigger than exports (9.4 billion dollars), this underlines an increasing machinery demand.


- Turkish families had a high consumption rate, 27% in 2010;
- Constant growth during last years. Turkish consumers are guided by large retail sector;
- Food and beverages consumption is increasing because of the young and numerous population;
- Turkey food industry has important export opportunities thanks to different agricultural products available in the country;
- Turkey is becoming one of the largest baking products market;
- In the last 10 years this sector has attracted over 4 billion dollars;
- There are many opportunities for new emerging products in Turkey.


2023 GOAL:

- GDP: 2.000 billion $
- GDP per capita: 25.000 $
- Export: 500 billion $
- 10th world economy



- To start a new business in Turkey you need 6 days, and one day to create a society;
- We will help you starting a new equality-based business with local investors, according to the new Turkish Commercial Code;
- Every type of business entity is allowed;
- There are many costs and time advantages compared with other countries of this region.


Boost foreign direct investments, safeguard foreign investors, create an investment “registration” instead of the earlier “approval”;
- Fundamental principals of the law 4875;
- Fair treatment;
- No pre-accession and pre-founding monitoring;
- No obligation imposed on action property;
- No obligation imposed on types of business entity;


There are different kinds of direct investments, for example a Joint Venture association or commercial Joint Venture. They are individual entities with variable legal independence (low for a representation office, high for legal persons i.e. limited companies). Most common societies for foreign direct investments in Turkey are: representative office, branch, limited liability companies, joint-stock companies.


It is the cheapest legal form investors, indeed it is not legally independent form its parent company. It represents a legal entity in Turkey, its role is to “explore the market”.


- At least one associate (natural persons, juridical persons);
- Minimum share profit 50.000 TL;
- (¼ to immediately deposit and the remains in 24 months);
- Signatory administrators are responsible for company tax debts, except for the prior enforcement duty of share profit;
- Important: the working authorisation requires a 100.000 TL share profit and 1:5 ratio (foreign: local).


- At least one associate (natural persons, juridical persons);
- Minimum share profit 10.000 TL (¼ to immediately deposit and the remains in 24 months);
- Every associate have representation powers. Associates can elect one or more administrators (associate or third party) but at least one associate must have the representation power;
- Associates are responsible for company debts, according to their participation quotas, there is the obligation of prior enforcement duty of share profit;
- Important: the working authorisation requires a 100.000 TL share profit and 1:5 ratio (foreign: local).


Turkey has four different special zones for investments:

- Technological development zones (TDZ)
- Organised industrial zones
- Industrial zones
- Free trade zones


- 20% corporate tax;
- In case of profits distribution, the law provides that 15% is withhold;
- Natural persons income tax of 15-35%
- VAT 18%
- Transfer piercing
- “Transfer piercing” regulation is mentioned in the society tax legislation and implementing regulation of 2007 and 2008. It follows the international OECD principals and in particular the “arm’s length”.


Civil Law: the legal system is similar to the Swiss Code and the Italian criminal Code. Regarding types of business entity, there are:

a) Limited partnership (Komandit Sirketi Kom. Sti)
b) General partnership (Kollektif Sirketi Koll. Sti)
c) Limited reliability company (Limited Sirketi)
d)Limited company (Anonime Sirketi)

Limited companies are the most common type of business in Turkey, which require 3-4 days to be established.


- The main subsidies promoted by the Government are:

- No custom taxes: total exemption from the payment of custom taxes on machineries coming from non-european countries;

- No VAT: total exemption from the payment of vat on machineries imported or bought and used for investments, provided by the “investment incentive certificate”;

- Reduction of corporate tax: reduction from 50% to 90% according to the investment value and the geographical area that covers;

- Reduction of employers social security contributions: subsidies for employers that have to pay social security contributions to their employees. These subsidies can be provided for 2 to 10 years;

- Public concession: The Ministry of Finance can allow the use of a land, for 49 years;

- Subsidies to help paying interests on loans: The government can pay interests on loans used for investments, only when are subsidies are expected.

- VAT refund: It is used only for investments on a prearranged area.

- Bilateral investment treaties with 85 countries;
- Double taxation agreements with 76 countries;
- Customs union with EU;
- Free trade agreements with 19 countries;
- Investments promotion and protection (L. 27 October 2003, n. 294)
- Agreement to avoid double taxation (L. 7 June 1993, n. 195)


1. EFTA (Norway, Switzerland, Iceland, Liechtenstein)
2. Israel
3. Macedonia
4. Bosnia-Herzegovina
5. Palestine
6. Tunisia
7. Morocco
8. Syria
9. Egypt
10. Albania
11. Georgia
12. Montenegro
13. Serbia
14. Chile
15. Jordan
16. South Korea
17. Lebanon
18. Mauritius*
19. Kosovo*
(*) These agreements have to be approved


SACE insurance conditions, without sovereign risk, bank risk, private risk and possibility to transfer the insurance registration SACE for export or foreign direct investment in the country.