Download Workshop - TURKEY

PROJECT BLACK SEA TRADENET
DOING BUSINESS WITH
TURKEY
ÖZGÜR OPSAR
ZONGULDAK CHAMBER OF COMMERCE AND INDUSTRY
WORKSHOP CONSTANTA, ROMANIA / 30-31 MAY 2012
COUNTRY PROFILE
Official name: TURKEY
Flag and coat of arms:
Legal system: Turkey is a republican parliamentary democracy and constitutional state. The
Turkish Grand National Assembly (“TGNA”) forms the unicameral legislature.
Geographical location: Turkey is situated in Anatolia
and the Balkans, bordering the Black Sea, between
Bulgaria and Georgia, and bordering the Aegean
Sea and the Mediterranean Sea, between Greece and
Syria.
Frontiers: The territory of Turkey is more than 1,600
kilometers long and 800 km wide, with a roughly
rectangular shape.
COUNTRY PROFILE
Natural resources: The geological structure it is sitting upon, our country is one of the rare
countries in the world that can supply a significant portion of its own raw material requirements
thanks to the diversity of its minerals.
Oficial language: Turkish is the official language of Turkey.
Time zone: Turkey is in the Eastern European Time Zone. Eastern European Standard Time
(EET) is 2 hours ahead of Greenwich Mean Time (GMT+2)
Religion: Turkey is officially a secular country with no official religion since the constitutional
amendment in 1924. Islam is the largest religion of Turkey. Around 99.8% of the population is
registered as Muslim (mostly Sunni), followed by other religions.
Currency: The Turkish currency is called Turkish Lira (TL 1)
Measuring system : The standard metric system has been accepted in 1931 within the law of
“Measurements and Adjustments” and being applied since 1933.
COUNTRY PROFILE
Administrative organisation :
The foundation and principles of the Turkish government are based on Central Administration
and Local Administration concepts. Accordingly, the administrative structure of the Turkish
Republic is divided into two, namely `Central Administration” and “Local Administrative
Institutions”.
Socio-economic profile
Population and structure of population :
Turkey had 78,785,548 inhabitants by 2011, July and it’s the 17th biggest population of the
world. The average age of the Turkish people is 28.5 years. 70% of the populations is living in
the cities.
LEGAL FRAMEWORK FOR DOING BUSSINESS
Types of Companies
Incorporated companies such as:
 Joint-stock company (A.S)
 Limited liability company (Ltd.)
 Commandite company
 Collective company
 Unincorporated companies such as:
 Joint-venture
 Business association
 Consortium
LEGAL FRAMEWORK FOR DOING BUSSINESS
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 is subject to regulation by
the Turkish Commercial Code. 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 TRL 50,000TL.
Limited Company
Limited liability companies may be composed of real persons or legal entities and must consist
of at least two and no more than 50 partners. The overall share capital must be a minimum of
TRL 5,000TL. 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.
Commandite Company
It is the company established to operate a commercial enterprise under a trade name. Whereas
the liability of some shareholders is limited to the capital subscribed and paid by the
shareholder (commanditer), for some shareholders there is no limitation of liability. Legal
entities can only be commanditer. No minimum capital is required. The rights and obligations of
the shareholders are determined by the articles of association.
LEGAL FRAMEWORK FOR DOING BUSSINESS
Collective Company It is the company established to operate a commercial enterprise under a trade
name and, the liability of none of the shareholders is limited only to the capital subscribed and paid
by the shareholder. No minimum capital is required. It is mandatory that all the shareholders be real
persons. The rights and obligations of the shareholders are determined by the articles of association.
Branches and Liaison Offices Foreign companies may also operate through liaison offices or
branches provided that they are established in accordance with the relevant legislation. The income
of a branch is taxed in the same way as resident corporations. Liaison offices may be used to
establish a presence in Turkey, but cannot be involved in any commercial activity and must be
funded by the parent company abroad.
Representative offices Representative offices should not have any commercial activities. The
salaries of the employees should be paid from abroad. A simple permission from the Treasury is
required to set up a Rep. Office.
LEGAL FRAMEWORK FOR DOING BUSSINESS
Joint Ventures or Consortia
A joint venture or a consortium may be set up for international contracts to be carried out in
Turkey. It is a simple formation of a special contract. It can be freely established based only on
the international contract signed. Without any obligation to establish a company, the joint
venture or the consortium can carry out the business activities. The only requirement would be
registration with the tax office and the Social Security Institution. When the contract is
completed, the Turkish joint venture dissolves.
Company Establishment procedures
To establish a company, the draft Articles of Associations is submitted to the Trade Registry
Office. Items of the Articles of Associations are examined and the title screening is conducted
for the articles of association. Articles of Associations approved for start-up shall be notarized
and an application shall be made to the Trade Registry Office for registration. Registration shall
be conducted within 15 (fifteen) days following the notarization.
LEGAL FRAMEWORK FOR DOING BUSSINESS
Documents to start-up a business
1)
2)
3)
4)
5)
6)
7)
8)
A Letter of Application addressing the Trade Registry Office
A letter of Application addressing the Chamber of Commerce and Industry
Articles of Association (whose text is already examined and approved) notarized (6 copies)
A Letter of Commitment
A Declaration of Chamber Registration
Certificates of Identity Register, Certificates of Residence and Authorized Signatory Lists of
the founding members of the company (if any, also those of managers appointed or proxies)
2 copies
Declaration of Establishment Forms (3 copies)
A petition on main area of operation
Documents and forms required are available for download at www.gumruk.gov.tr
INVESTING IN TURKEY
Why Invest In Turkey
Turkey is a country offering significant opportunities for foreign investors with its geographically
perfect position to function as a gateway between Europe, Middle East and Central Asia. The
opportunities exist not only in the dynamic domestic market, but also throughout the region.
Hospitality and tolerance being the traditional cornerstones of the Turkish way of life, the
country is open to foreign investors with many attractions to offer.
Successful Economy
• Booming economy (USD 230 billion to USD 736 billion of GDP from 2002 to 2010)
• Sustainable economic growth (4.8 percent annual average real GDP increase for the last 8
years)
• Promising economy with a bright future as it is expected to be the fastest growing economy
among the OECD members during 2011-2017 with an annual average real GDP growth rate of
6.7 percent
• 16th largest economy in the world and 6th largest economy compared with EU in 2010
• Institutionalized economy fueled by over USD 94 billion of FDI in the last 8 years and ranked
as the 15th most attractive FDI destination for 2008-2010 (UNCTAD)
INVESTING IN TURKEY
The Investment Incentive System in Turkey
The investment incentive scheme is continuously being amended to encourage investments in
manufacturing and services, the energy sector and exports. Local and foreign investors have
equal access to: the general investment incentive regime; incentives for large-scale;
investments; region and sector-based incentives; R&D support; support for SMEs; industrial
Thesis (SANTEZ) program ; loans for technology development projects; training support; state
aid for exports.
INVESTING IN TURKEY
A. General investment incentive regime
The general investment incentive regime is mainly a tax benefit program, in some cases with
credit possibilities. The implementation of the Turkish incentive regime varies depending on the
location, scale and subject of investments.
The major incentive instruments are:
1) Exemption from customs duties: Customs tax exemption for imported machinery and
equipment for projects with an incentive certificate
2) VAT exemption: VAT exemption for locally purchased or imported machinery and equipment
for projects with an incentive certificate
B. Incentives for large-scale investments
Corporate tax rates between 2-10 percent for investments started before 31.12.2011
Social security premium contribution for employers for up to 7 years for investments started
before 31.12.2011
C. Region and sector-based incentives
Corporate tax rates between 2-10 percent for investments started before 31.12.2011
Social security premium contribution for employers paid for up to 7 years for investments started
before 31.12.2011
INVESTING IN TURKEY
R&D support
The R&D Law provides special incentives for R&D investment projects in Turkey if a minimum of
50 personnel are employed in an R&D center. The incentives within the new law will remain in
effect until 2024 and include:
 100 percent deduction of R&D expenditure from the tax base if the number of researchers
exceeds 500, then in addition to the 100 percent deduction, half of the R&D expenditure
increase incurred in the operational year compared to the previous year will also be
deducted.
 Income withholding tax exemption for employees (this item will be effective until December
31, 2023.)
 50 percent of social security premium exemption for employers for a period of 5 years
 Stamp duty exemption for applicable documents
 Techno-initiative capital for new scientists up to TRY 100,000
 Deduction from the tax base of certain funds granted by public bodies and international
organizations
INVESTING IN TURKEY
Support for Technology Development Zones
• The advantages in Technology Development Zones are:
 Offices ready to rent, and infrastructure facilities provided.
 Profits derived from software development and R&D activities are exempt from income and
corporate taxes until 31.12.2023.
 Deliveries of application software produced exclusively in TDZs are exempt from VAT until
31.12.2023.
 Wages of researchers along with software and R&D personnel employed in the zone are
exempt from personal income tax until 31.12.2023.
 50 percent of the employer’s share of the social security premium will be paid by the
government for 5 years until 31.12.2024.
INVESTING IN TURKEY
TUBITAK (Scientific and Technological Research Council of Turkey) and TTGV (Turkish
Technology Development Foundation) both compensate or grant R&D related expenses and
capital loans for R&D projects.
• Projects eligible for TUBITAK incentives:
 Concept development
 Technological research & technical feasibility research
 Laboratory studies in the translation of a concept into a design
 Design and sketching studies
 Prototype production
 Construction of pilot facilities
 Test production
 Patent and license studies
• Activities concerning the removal of post-sale problems arising from product design
INVESTING IN TURKEY
Support for SMEs
Incentives granted to SMEs include:

Exemption from customs duties

VAT exemption for imported and domestically purchased machinery and equipment

Credit allocation from the budget

Credit guarantee support

In order to meet financial needs of SMEs, a TRY 1 billion fund was transferred to the Credit
Guarantee Fund (KGF) by the Treasury to create credit capacity worth TRY 10 billion. The
guarantee limit is TRY 1,000,000 per SME and TRY 1,500,000 for the risk group that the SME
related to. KGF covers up to 80 percent of the loan.
KOSGEB support to SMEs (www.kosgeb.gov.tr)
• The Small and Medium Sized Industry Development Organization (KOSGEB) makes significant
contributions to strengthening SMEs by various support instruments in financing, R&D,
common facilities, market research, investment site, marketing, export and training.
EXPORT AND IMPORT ACTIVITIES
Foreign trade
The Turkish economy has shown remarkable performance with its steady growth over the last
eight years.
Significant improvements in such a short period of time have registered Turkey on the world
economic scale as an exceptional emerging economy, the 16th largest economy in the world and
the 6th largest economy when compared with the EU countries, according to GDP figures (at PPP)
in 2010.
Prior to the recent global recession which hit all economies throughout the world, the Turkish
economy sustained strong economic growth for 27 quarters consecutively, making it one of the
fastest growing economies in Europe.
In 2008, Turkey’s exports and imports reached an all-time high; exports increased by 23
percent, reaching USD 132 billion, while imports rose by 19 percent, hitting USD 202 billion. In
2009, the year of the global financial crisis, Turkey managed to secure USD 102 billion of exports
and USD 141 billion of imports. In 2010 exports grew by 12 percent to reach USD 114 billion.
EXPORT AND IMPORT ACTIVITIES
Foreign Trade Statistics
USD million
2003
2004
2005
2006
2007
2008
2009
2010
Exports (FOB)
47,253
63,167
73,476
85,535
107,272
132,002
102,143
113,930
Imports (CIF)
69,340
97,540
116,774
139,576
170,063
201,961
140,929
185,493
Foreign
Volume
Trade
116,593
160,707
190,251
225,111
277,334
333,963
243,072
299,423
Foreign
Balance
Trade
-22,087
-34,373
-43,298
-54,041
-62,791
-69,959
-38,786
-71,563
68.1
64.8
62.9
61.3
63.1
65.4
72.5
61
Exports / GDP
(%)
15.5
16.2
15.3
16.2
16.5
17.8
16.5
NA
Imports / GDP
(%)
22.7
25.0
24.3
26.5
26.2
27.2
22.8
NA
Exports
Imports (%)
/
Source: Central Bank of the Republic of Turkey
EXPORT AND IMPORT ACTIVITIES
Exports
Exports by Economic Activity:
USD million
2003
2004
2005
2006
2007
2008
2009
2010
Agriculture
and Forestry
2,121
2,542
3,329
3,481
3,725
3,937
4,347
4,941
Fisheries
81
103
140
131
158
240
189
156
Mining and
Quarrying
469
649
810
1,146
1,661
2,155
1,683
2,677
Manufacturing
44,378
59,579
68,813
80,246
101,082
125,188
95,449
105,518
Other
204
294
384
531
646
507
474
63
Total
47,253
63,167
73,476
85,535
107,272
132,027
102,142
113,929
Source: Turkish Statistical Institute (TurkStat)
SOURCES OF FINANCING BUSINESS ACTIVITIES
General considerations, types of sources
Turkey provides various incentives and grants to the investors for the purpose of facilitating
larger investments and capital contributions by the local and foreign investors and eliminating
the regional imbalances.
Public sources – EU, international, national
EU FUNDS - From 2007 onwards, EU is channelling its pre-accession funding through one single
instrument called the Instrument for Pre-Accession Assistance (IPA). This new instrument is
drawn from the European Commission’s experience with previous enlargements and the needs of
candidate and potential candidate countries. IPA’s aim is to be a bridge between external
assistance and internal policies. IPA objectives are the following:

Support Turkey in its bid for membership, including the necessary economic, political and
social reforms

Help prepare the country for the management of structural funds
SOURCES OF FINANCING BUSINESS ACTIVITIES
GRANTS
•
KOSGEB (Small and Medium Enterprises Development Organization) - www.kosgeb.gov.tr
– Entrepreneur Support Programme – Objectives:
– SME Project Support Program
– R&D, Innovation and Industrial Application Support Program
•
•
•
TKDK (Agriculture and Rural Development Support Institution) - www.tkdk.gov.tr
Regional Development Agencies (RDA)
Turkish Technology Development Foundation (TTGV) – www.ttgv.org.tr
•
Technology and innovation funding programmes directorate (TEYDEB)
•
Industrial Thesis (San-Tez) Program http://sagm.sanayi.gov.tr
SOURCES OF FINANCING BUSINESS
ACTIVITIES
•
EU Programs
•
Research and Innovation
•
–
European Union Framework Programme FP7 http://www.fp7.org.tr/
–
Eureka Programme http://www.eureka.org.tr/
Human resources development
–
ISKUR Skills 10 support Programme http://bbs.beceri.org.tr/BBS/kurs.do
–
Life-Long Learning Programme
ENTREPRENEURIAL CULTURE
General considerations
Turkey offers quite a sophisticated platform for entrepreneurs. It has a diversified industrial base, a
relatively stable political and economic environment, a critical mass of willing early adopters, a
considerable talent pool, a strong domestic market and underserved neighbouring markets. Yet,
currently only 6 out of 100 people are entrepreneurs – a very low rate given the country’s level of
development.
Turkey has a lot of work to do to truly tap its entrepreneurial potential and reap the rewards of its
investment in R&D (according to the Legatum Prosperity report, Turkish investment in R&D ranks in
the top 30 worldwide). The good news is that there is recognition within the government about the
urgent need to remove barriers and create incentives. There is a tidal wave of 12 million youth
aged 15-24 about to enter the labour market and significant lay-offs during the economic crisis have
spurred new interest in entrepreneurial activity.
LOCAL RESOURCES FOR CROSS BORDER
BUSSINESS COOPERATION
Infrastructure
The Turkish infrastructure sector attracts more and
more investors every day, focusing on long-term
business opportunities.The
national and local
authorities in Turkey have been implementing
numerous infrastructure projects through Public and
Private Partnership (PPP) and they are also keen to
realize further infrastructure projects in education,
energy, defense, health, transportation and other
public services.
LOCAL RESOURCES FOR CROSS BORDER
BUSSINESS COOPERATION
The Information and communication Technologies
(ICT)
The Information and communication technologies (ICT)
sector has become an essential part of the economy, in
particular social life, since it is directly or indirectly
affecting the ever-changing business world. Turkey has
increased its interest in the ICT sector further, and
started the necessary studies so as to have a voice in
the sector in the future. The greatest indicators of
these efforts are the new initiatives and R&D Law
issued for the investors.
LOCAL RESOURCES FOR CROSS BORDER
BUSSINESS COOPERATION
Environmental Technologies
Investments in environmental technologies are highly supported by government in Turkey.
Attracting environmentally friendly investments is also a key objective of the Investment
Support and Promotion Agency of Turkey. Turkey’s primary energy sources include
hydropower, geothermal, wood, animal and plant waste, solar and wind energy. The
Renewable Energy Law was enacted in 2005 in order to encourage renewable energy
generation in competitive market conditions.
Support Centers
The fact that companies have started to give importance to customer relations, that retail
channels in the market have increased, that the personal banking is developing and that new
technologies are being integrated into business processes have, together, led to the
development of the call center sector. Within this framework, the number of personnel
working in call centers has significantly increased, and the customer relations field has
become more professional, with the result that companies are focusing on their primary line
of business by outsourcing their customer relations management activities.
LOCAL RESOURCES FOR CROSS BORDER
BUSSINESS COOPERATION
Energy
Turkey has become one of the fastest growing energy
markets in the world in parallel to its economic growth
registered in the last eight years and is rapidly gaining a
competitive
structure.
The
Turkish
Electricity
Transmission Company estimates that Turkey’s demand
for electricity will increase at an annual rate of six
percent between 2009 and 2023.
Financial Services
Turkey’s financial sector is still in the development stage,
with financial services ready for further expansion, driven
by solid economic growth along with declining interest
rates and inflation. According to the Turkish Banking
Regulation and Supervision Agency (BRSA), the Turkish
financial sector increased by approximately 20 percent of
CAGR between 2002 and 2010.
LOCAL RESOURCES FOR CROSS BORDER
BUSSINESS COOPERATION
Real Estate
The Turkish real estate sector, offering ever-greater opportunities for
investors every year, has come to prominence especially in the last
decade. While the reduction in demand and a downward trend in house
prices have been observed all over Europe, according to TurkStat
statistics the number of apartment units sold in Turkey in the second
quarter of 2011 increased by 18 percent compared with the same
period of 2010, which shows that the country has huge growth potential
in the real estate sector.
Machinery
The machine manufacturing industry holds strategic significance in the
development process of countries creating a multiplier effect in
economic development by defining the manufacturing skills of other
sectors through investment, intermediate goods and the services it
offers. The growth of the Turkish machinery sector is backed by highly
competitive and adaptable small and medium-sized businesses (SMEs),
which form the bulk of the industrial production in the country.
LOCAL RESOURCES FOR CROSS BORDER
BUSSINESS COOPERATION
Healthcare
The healthcare system in Turkey has entered a long period of development under the 2003-2013
Health Transformation Program. The purpose of the program is to increase the quality and efficiency
of the healthcare system and enhance access to healthcare facilities.
Transportation and Logistics
Turkey lies between Europe and Asia serving as a bridge geographically, culturally and economically.
In Turkey, investments in the transportation system are concentrated on land transportation
infrastructure, and the country has developed one of the largest land transportation fleets in Europe.
The network of highways has been developed significantly and the highway length now stands at
64,865 km, of which 2,080 km are motorways. At present 95 percent of passengers and 90 percent of
goods are conveyed by highway transport. Turkey has a competitive advantage in maritime transport
since it is surrounded by seas on three sides with the Mediterranean, the Aegean, and the Black Sea,
together with the straits of the Dardanelles and the Bosphorus. The length of Turkey’s coastal
borders is 8,333 km.
LOCAL RESOURCES FOR CROSS BORDER
BUSSINESS COOPERATION
Food and Beverage
Turkey’s food industry has registered a steady growth in
recent years, with the Turkish consumers becoming
increasingly demanding, driven by the multitude of choices
offered by mass grocery retail outlets. Rising disposable
income and changing consumption patterns, along with the
increase in the number of females in full-time
employment, have all led to an increase in interest as
regards packaged and processed food, such as ready-to-eat
meals and frozen food. As the sector is getting more
sophisticated, Turkey is becoming one of the largest
markets for baked goods with its bread - an important
element of the Turkish diet - leading to some of the
highest rates of per capita consumption in the world.
LOCAL RESOURCES FOR CROSS BORDER
BUSSINESS COOPERATION
Agriculture
With its favorable geographical conditions and climate,
Turkey is considered to be one of the leading countries in
the world in the field of agriculture and related industries.
This impressive position is best attested by rising exports in
almost every kind of agricultural products, placing the
country amongst the world’s largest producers. The
restructuring efforts that began in the early 1980s,
alongside a series of reforms such as privatizations and the
reduction of trade barriers in the agriculture sector,
resulted in a domestic market that is an integral part of
the world economy today. Subsequently, agricultural
exports, excluding processed food, increased to USD 5
billion in 2010, up from USD 1.7 billion in 2002.
LOCAL RESOURCES FOR CROSS BORDER
BUSSINESS COOPERATION
Tourism
As a country full of traces of various cultures that
have influenced their time and geography, Turkey has
a cultural heritage with roots going as deep as the
first civilizations ever recorded in history. Home to a
mosaic of people that have built empires, the
country’s riches are so extraordinarily diverse that
visitors can experience a modern way of life, while at
the same time catching a glimpse of the distant past.
LOCAL RESOURCES FOR CROSS BORDER
BUSSINESS COOPERATION
FOREIGN TRADE BY INTERNATIONAL INDUSTRY STANDARD CLASSIFICATION
Million Dolar
Export
YEAR
2008
2009
2010
2011
Agriculture and Forestry
3.937
4.347
4.935
5.169
Fishing
240
189
156
186
Mining and Quarrying
2.155
1.683
2.687
2.806
Manufacturing Industry
125.188
95.449
105.467
126.025
Others
507
474
639
786
TOTAL
132.027
102.143
113.883
134.972
Million Dolar
Import
Agriculture and Forestry
Fishing
YEAR
2008
2009
6.392
2010
4.594
2011
6.457
8.895
41
31
33
49
Mining and Quarrying
35.650
20.625
25.933
37.331
Manufacturing Industry
150.252
111.031
145.367
183.923
9.628
4.648
7.755
10.636
201.964
140.928
185.544
240.834
Others
TOTAL
Source: Ministry of Economy
Thank You For Your Attention
Özgür OPSAR
Zonguldak Chamber of Commerce & Industry
E-mail: [email protected]