Doing Business in Turkey - RSM International

Doing business 

in Turkey

Foreword 

Foreword 

This guide has been prepared to assist those interested in doing business in Turkey. 

It is intended as a general guide to answer certain key questions that may arise. As 

legislation and business practices are subject to change and reinterpretations, it is 

sensible to seek local advice from appropriately qualified professional sources to deal 

with specific matters. 

The material included in this guide was compiled on the basis of data and information 

available at March 2011. 

About Kapital Karden/RSM International 

Kapital Karden is the Turkish member firm of RSM International (RSM) and may 

be contacted through any of the member and correspondent RSM firms around the 

world. The firm’s main service lines include: assurance and business advisory, tax 

and corporate services and back office. Kapital Karden offers financially focused 

services from four offices, located in the business centre of Istanbul and offices in 

Ankara, Bursa and Baku. We have ten highly qualified and experienced partners and 

56 professional staff 

RSM International is one of the largest network of independent accounting and 

consulting firms each of which is independently owned and managed and practices 

in its own right. Member firms of RSM International are driven by a common vision 

of providing high quality professional services, both in their domestic markets and in 

serving the international professional service needs of their client base. Member firms 

have a common work ethic of innovative thinking to develop and deliver high quality 

and timely results for their clients, backed by high skills and world class standards. 

RSM International has member firms in over 80 countries and is represented in each 

of the top 40 major business centres throughout the world. The combined organisation 

has more than 32,500 staff in more than 700 offices, placing it amongst the top sixth 

international accounting organisations world-wide. 

DOING BUSINESS IN TURKEY

In a world of 

different cultures, 

it’s good to have 

advisors who 

are consistent 

everywhere. 

RSM International is sixth largest network of 

independent accounting and consulting firms 

worldwide. RSM International is represented in 

83 countries and brings together the talents 

of 32,500 individuals. RSM member firms are 

driven by a common vision of providing high 

quality professional services to ambitious and 

growing organisations. 

4 General 

8 Types of Business Entities 

15 Foreign Exchange Controls 

19 Taxation 

40 Employment 

44 Accounting 

50 Intellectual Property Rights 

55 Investing in Turkey 

59 Listing Rules in Turkey 

61 About RSM International/About Kapital Karden 

Contents 

DOING BUSINESS IN TURKEY

1 General 

Country Information 

Turkey spans two continents, with part of the country located on the Anatolian 

peninsula in western Asia and the rest in Europe’s Balkan region. Istanbul is situated 

on the border of these two continents, making it the only transcontinental city in the 

world. 

Turkey has land area of 814.000 sq.km, surrounded by a long coastline, the Black Sea 

in the north, the Marmara Sea and the Aegean Sea in the West and the Mediterranean 

in the South. To the East Turkey has borders with Georgia, Armenia, Iran, Iraq and 

to the South East with Syria. Bulgaria and Greece borders the Thrace region in the 

North West. 

Geographically, Turkey is generally divided into seven regions. These are the Black 

Sea region, the Marmara region, the Aegean, the Mediterranean, Central Anatolia, the 

East Anatolian and Southeast Anatolia regions. 

Political environment 

Turkey is a republic based on secular, democratic, and pluralistic principles. The Turkish 

Republic was established in 1923 and has a parliamentary system of government. As 

a result, Turkey has the divisions of power that one would expect: judicial, legislative, 

and executive. In 1945 Turkey joined the UN, and in 1952 it became a member of 

NATO. Turkey is also a founding member of the Black Sea Economic Cooperation 

Organization, the European Council, the Islamic Conference Association, and an 

associate member of the European Union. 

Social environment 

Turkey is projected to continue to constitute one of the largest populations in the 

Middle East and Eastern Europe. The domestic market is predominantly urban, with 

at least 17 major cities having a population in excess of one million, led by Istanbul, 

Ankara and Izmir. The population is much younger than European countries, with over 

60% of the population below the age of 35. The improving consumption patterns and 

purchasing power, with a growing middle class, are important features of the domestic 

market. 

Economy 

Turkey is at the center of an economic and political area known as “Eurasia”, where 

three regions of the world, Europe, the former Soviet Union and the Middle East 

intersect. The proximity to the Balkans and the rest of Europe as well as to the 

growing emerging markets in Central Asia, the Middle East and North Africa creates 

unique business opportunities. The experience of more than 7000 foreign capital 

establishments, including over 100 of the Fortune Top 500 companies, confirms 

Turkey as a predominant investment location and export platform. 

Turkey is the main investor in Caucasian and Central Asian Turkic Republics. Due to 

its strong cultural and historic ties, Turkey provides privileged access and a perfect 

base to develop business with these countries. 

The international image of Turkey in terms of a destination for investment is generally 

shaped by the diverse market opportunities, both domestic and export-oriented, that 

Turkey offers. The potential of these markets covers over one billion consumers, 

including: 

• A huge and growing domestic market (approx. 76 million) 

• High-income European markets (approx. 600 million) 

• Emerging Russia, Caucasia and Central Asia markets (approx. 250 million), 

• Diverse and expanding Middle East and North Africa markets (approx. 160 

million) 

Turkey’s major export products include clothes, electronics, automobiles and 

agricultural products. Other major products exported from Turkey include iron and 

steel, mineral fuels and oil, precious stones and tobacco. On the other hand, the major 

import commodities for Turkey include electrical equipment, mechanical appliances, 

optical instruments, iron and steel, and pharmaceutical products. Turkey’s major 

import partners are the USA, Russia, Germany, Italy, France, Switzerland and the UK. 

Turkey has started to explore alternative markets to counter the effects of the financial 

crisis. Exports to countries in Africa and Central Asia have increased tremendously. 

Trade with the Organization of Islamic Countries (OIC) has jumped by more than 50% 

in 2008. FDI from the Middle East countries increased to almost $2 billion in 2008. 

Exports to Iraq increased by 75% in Q1 2009, and trade relations with Africa are 

expected to strengthen in 2010. 

According to the Goldman Sach: 

• Turkey offers strong long-term growth potential, equal to that of many other 

N-11 and BRIC economies. Our projections suggest that by 2050 Turkey could 

become a $6trn economy, making it the third-largest in Europe after Russia and 

the UK. 

• Turkey could also rapidly narrow the income gap with the EU. It has the potential 

to reach the per capita income standards of most new EU member states within 

the next 15 years. By 2050 it could achieve a per capita GDP level of $60,000, or 

75% of the projected EU average. 

• It seems no economic reason to prevent Turkey from joining the EU in the next few 

4 

DOING BUSINESS IN TURKEY 

DOING BUSINESS IN TURKEY 5

decades, although political and cultural factors may delay full EU membership; 

and, even if it does not join the EU, Turkey’s per capita income convergence is 

likely to remain fairly robust. 

• Turkey currently faces strong cyclical headwinds: the global credit crisis has 

brought about a deep correction in asset prices and in the currency, which could 

potentially lead to output losses. It may also prove difficult to avoid a deeper 

correction, as we move further into the credit crunch. 

Useful Information 

Time 

Turkey has only one time zone, which is GMT +2. The nation observes daylight savings 

time, which begins annually at the end of March when clocks are set ahead one hour. 

At the end of October, daylight savings time ends, and clocks are set back one hour. 

Currency/Exchange Rates 

Turkey currently uses the New Turkish Lira (TRY) as its national currency. 

The average exchange rate of TRY per USD in 2011 is 1.5750 as of 20 March 2011. 

Exchange rates fluctuate on a daily basis. 

Work Hours 

The standard work week in Turkey is 45 hours Monday through Friday. Business hours 

are generally from 8:00 a.m. to 5:00 p.m., with some businesses having partial work 

schedules on Saturdays. 

Ramazan/Seker Bayrami – Religious holiday for three days after the end of Ramadan; 

moveable dates for ten days each year 

Kurban Bayrami – 70 days after Ramadan Bayramı 

Telephone 

Phone numbers in Turkey consist of a three-digit area code and a seven-digit phone 

number. The country code is 90. 

To place a call from the United States to Turkey, you must first dial your access code, 

then Turkey’s access code (90), followed by the area code and seven-digit phone 

number. 

Calling internationally from Turkey is similar. The access code for Turkey is 00. This 

means that a call from Turkey would have the format of 00 + your country code + area 

code + telephone number. 

To call a city in Turkey from another area of the country requires only the area code 

+ telephone number. Within the same city, only the seven-digit telephone number is 

needed. 

Cell Phones 

Cellular phones are commonly used and work in the same way as landlines. Turkey 

offers three GSM operators: Turkcell, Telsim and Avea. Check to see if your cellular 

service provider offers phone coverage in Turkey. If it does, you should be able to use 

your own phone for communications. 

Weights & Measures 

Turkey uses the International System of Units (SI), also known as the Metric System, 

as its main system of weights and measures. 

Holidays 

Businesses will be closed and traffic will be heavier on the following dates: 

New Year’s Day – January 1 

National Independence and Children’s Day – April 23 

Atatürk Commemoration and Youth Day – May 19 

Victory Day – August 30 

Republic Day – October 28-29 

6 



2 Types of Business Entities 

International companies may set up their activities in Turkey in various forms 

depending on the investors’ development strategies. 

Types of companies 

The most common types of legal entities in Turkey are: 

• Joint-stock company (A.S.) 

• Limited liability company (Ltd. Sti.) 

• Branch office 

• Liaison office 

The main company types in Turkey are Joint Stock companies, Limited companies and 

Unlimited liability Companies (Partnerships of collective and commandite companies). 

Sole proprietors can be established. All business are can be 100% foreign owned. 

Foreign businesses can also open a Liaison Office or a Branch Office in Turkey. 

Participation to a previously established company can be done in two ways, through 

either share transfer or contribution to the companies’ capital increase. 

Joint Stock Companies - Anonim Sirket (A.S) 

A joint stock company is established with the participation of a minimum of five real or 

legal persons as shareholders. The minimum capital requirement for the establishment 

of a joint stock company is TRL 50,000 (31,645-USD- as of 20 March 2011 ). The 

nominal value of each share shall not be below 0.01 TRL. 

A joint stock company may be defined as a type of company having a specific business 

title and a capital, which covers an amount that has been determined before, and 

which has been divided into shares. The structuring and organization of joint stock 

companies are subject to the regulations set forth in the Turkish Commercial Code. 

Joint stock companies having more than 250 shareholders, or who issue stocks and 

bonds that are quoted in the stock exchange, are subject to the provisions of the 

Capital Market Board. 

The capital of joint stock companies is divided into shares each having equal value. 

Share certificates having the nature of negotiable instruments can be issued for 

representing the capital of a joint stock company. Such share certificates may be 

bearer certificates or registered certificates. Unless a specific provision is incorporated 

in the articles of association prohibiting transfer of registered share certificates, such 

certificates are transferable upon the approval of the board of directors. Meanwhile, 

bearer share certificates may be transferred without any restrictions, subject to the 

provisions of the Turkish Commercial Code. 

In joint stock companies, resolutions are passed with a majority affirmative vote. 

However, the Turkish Commercial Code contains certain provisions, which protect the 

rights of minority shareholders. 

In joint stock companies, the Board of Directors has been granted the authority to 

represent and bind the company. The Board of Directors consists of at least three 

members. However, dividend distribution, appointment of board of directors and 

auditors, amendment of articles of association, capital increases, and other important 

issues to be determined by the articles of association are subject to the approval of the 

General Assembly of Shareholders’ resolution. 

Joint stock companies should appoint a statutory auditor. However, there are no 

specific functions of the auditor other than submitting some reports to the shareholders 

of the company in annual general meetings. 

There are two types of legal reserves. The first legal reserve is 5% of the after tax 

profits. The first legal reserve is set-aside until the accumulated first legal reserve 

reaches 20% of the company’s paid-up capital. The second type of legal reserve is 

calculated only in case of dividend distribution. Ten percent of the amount distributed 

to shareholders is allocated to a second legal reserve. There is no maximum limit for 

this type of legal reserve. 

Limited Companies - Limited Sirket (Ltd. Sti) 

Limited liability companies may be formed by real persons or legal entities and consist 

of minimum of two and maximum of 50 partners. The minimum capital must be TRL 

5000 ( 3.165-USD as of 20 March 2011). Each partner shall subscribe at least 25 TL 

or its multiples as a capital. 

Limited companies can not be active in the banking and insurance sectors. 

Corporate organs of limited companies consist of the meeting of partners and 

manager(s). It is possible to delegate the responsibility of management and 

representation of the company to manager(s). Auditor(s) are appointed in limited 

companies provided that the company has more than 20 partners. 

The appointed manager has the authority to manage the company. The managers 

occupy a similar position like the members of the board of directors in joint stock 

companies. Amendment of the articles of association, appointment and dismissal of 

managers and auditors, and profit distribution requires a decision of the meeting of 

partners. 

No share certificates are issued in a limited liability company. Transfer of share 

interests requires the approval of at least 75% of partners, representing at least 75% 

of the company’s capital. 

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Branch Offices of Foreign Companies – Sube 

A branch office of a foreign entity does not constitute a separate legal entity. The 

name of the branch office must include the term “branch office”. Special rules apply to 

branches of foreign banks and insurance companies. 

No minimum capital requirements apply, however the head office shall allocate certain 

funds as necessary for the operation of the branch office. The liability of the branch 

office extends to cover the assets of the head office. 

A branch office may only operate in the areas of activities of the head office. It has 

no corporate organs but is managed by a representative residing in Turkey, who is 

appointed to this effect by a power of attorney issued by the head office which defines 

the representative’s powers and authorizations. 

Liaison Offices 

Liaison offices have a special status in Turkey. They are not allowed to carry on any 

commercial activities. Their activities in Turkey are limited mainly to accumulate 

information about investment opportunities in Turkey, and to conduct market research 

and feasibility studies. 

Special permission can be granted by the Directorate General of Foreign investments 

for Liaison Office status. The office cannot issue invoices or generate revenue but 

solely acts as a sales and marketing office. Orders for goods are placed with the 

related entity abroad. Liaison offices have all their expenses such as rental, utilities, 

car leasing met from abroad. The liaison office permission is renewable on application 

every three years. An annual statement is sent to the Foreign Ministry to show all 

expenditures have been met by the foreign capital. Liaison office employees receive 

their salary in foreign currency sent from abroad and are not liable to income tax. 

The employer is liable to meet the social security costs of those liable employees in 

Turkey. However, many foreign nationals working in Turkey can apply for exemption if 

they continue to pay social insurance in their home country. 

Unlimited liability Companies (Partnerships) 

There are ordinary partnerships (consortiums) and commercial partnerships (Komandit 

Sirket and Kollektif Sirket). 

An ordinary partnership is not a legal entity, but a group of entrepreneurs like a 

consortium. Two or more individuals may form an ordinary partnership by entering 

into an agreement. Ordinary partnerships may not have their own trade name, nor 

may they appear in the Register of Commerce or the Register of Title Deeds. All 

partners have equal rights and they are jointly and severally liable for all the debts and 

obligations. No statutory rules provide a detailed legal framework for the management 

or operation of ordinary partnerships. 

A commercial partnership is a legal entity with a legal personality independent from its 

partners, and may be either a limited or general partnership. In a limited partnership 

(Komandit Sirket), the general partners are fully liable for the debts of partnership, but 

there are also one or more limited partners liable for the debts only up to the amount 

of the capital contributions they have made to the partnership. This type of business 

organization is rarely used. 

General Rules for Establishment of Companies by 

Foreign Shareholders 

1. Permission from the Foreign Investment Directorate (FID): As a result of the 

changes made in the Turkish Foreign Investment Legislation in June 2003, there 

is no longer a permission requirement from the FID of the UT. 

2. Permission from the Ministry Industry and Commerce (MIC): Permission from 

the MIC is no longer required for establishment of both corporations and limited 

liability companies. However, the establishment of following types of corporations 

is still subject to the permission of the MIC: 

• Contribution Banks (formerly “Special Finance Institutions”) 

• Banks 

• Holdings 

• Insurance Companies 

• Financial Leasing Companies 

• Factoring Companies 

• Companies providing services in the field of consumer finance and credit 

cards 

• Asset management companies 

• Companies operating as licensed warehouses 

• Companies operating as licensed agricultural warehouses 

• Companies to be listed in the Merchantile Exchange 

• Corporations authorized in trading of foreign currencies (foreign exchange 

dealers) 

• Corporations subject to the regulations of the Capital Market Board 

• Corporations that will operate as Department Stores 

• Corporations established as the Founder and Operator of a Turkish Free 

Trade Zone 

3. Minimum Capital Requirement: There is no longer a minimum capital requirement 

for foreign investors (previously, there was a minimum capital requirement of 

USD 50,000 per each foreign investor). The relevant rules of TCC are applicable 

with respect to the minimum capital required for establishment. 

10 



4. Types of Activities: No limitation unless prohibited by Law. 

5. Limitation for Foreign Shareholding Percentage: There is no limitation with 

regard to percentage of share held by foreign shareholder. There are certain 

limitations only for specific sectors like telecommunication, operation of ports etc 

Foreign Direct Investment 

Foreign natural and legal persons can make investments freely in Turkey without 

any foreign exchange controls. Foreigners can bring their equities in the form of 

convertible currencies, financial securities, machines and equipment, and industrial 

and intellectual property rights. 

Without the existence of a public interest, and provision of full compensation, private 

properties can not be subject to nationalization or confiscation. Hence, expropriations 

are unlawful in Turkey. 

In Turkish enterprises equity share portions of foreign investors have no limitation. 

Thus foreign investors can own shares of up to 100% of resident companies. 

Foreign investors can, without any limitation, transfer net profits, dividends, repatriate 

capital and revenue from liquidation, license fees, and principal of foreign credits and 

their interest abroad via financial institutions. The only limitation is the payment of 

income taxes whenever an income arises. But the taxation depends on the relevant 

provisions of domestic legislation and the tax treaties. 

Foreign investors can freely obtain immovable assets or usufruct of rights under the 

same conditions with Turkish nationals. 

As well as national competent courts, international and national arbitration or dispute 

settlement procedures are available if the necessary conditions exist and the parties 

to the dispute agreed so. 

Foreign persons can be employed with obtaining the work permits provided from the 

Ministry of Labor and Social Security. These personnel are immune from the restriction 

that a foreigner can only be employed if a Turkish national with the necessary 

qualifications can not fill the post in four weeks. 

Procedures to Set Up a Bussines 

Step one: 

Submit the following documents to the General Directorate of Foreign Investments, for 

legal entities residing abroad: 

• Previous year Activity Report. For real persons residing abroad 

• Copy of passport (certified by the notary public) 

• Detailed commercial and industrial background and verifying documents 

• Letter of intent stating that each foreign partner will bring at least 50,000 

USD to Turkey as company capital 

2. Draft articles of the company to be established 

3. Power of attorney given by shareholders to the person who will be the contact 

person in course of the application procedure 

4. Application form prepared in accordance with the attached sample 

Step two: 

For publishing the establishment of the company, applications should be made to the 

Ministry of Industry and Trade. 

Step three: 

For endorsing permission certificate (red paper), apply the GDFI with the following 

documents: 

1. Original of the permission certificate 

2. Trade Registry Gazette in which the establishment of the company is published 

3. If the foreign exchanges brought as foreign capital is converted in to Turkish 

Liras, Foreign Exchange Purchase Receipt or if they are kept in foreign exchange 

deposit account, related bank document should be submitted. (Foreign Exchange 

Purchase Receipt or relating bank document should include the name of foreign 

capital company and foreign partner, the country from which the foreign exchange 

transferred, currency amount, USD equivalent, TL equivalent and state that the 

currency was brought as company capital.) 

Time frame to obtain the following permits: 

• Land use permits 1-15 days 

• Planning permits 1-15 days 

• Building permits 1-15 days 

The cost of receiving the above permits is negligible. 

1. Certificate of Activity (certified by the related Turkish Consulate or in accordance 

with the provisions of the Abolition of the Requirement for Approval of Foreign 

Official Documents Agreement) 

12 



Audit Requirements 

Although the Turkish Commercial Code requires all companies to appoint an auditor 

in practice this requirement is not strictly followed. The companies, which are under 

the Capital Market Board regulations must present audited financial statements each 

year. The Capital Market Board lists Independent Auditing Firms who are entitled 

to carry out such independent audits. All financial statements presented to Capital 

Market Board are required to-be prepared in form of IFRSs. 

On the other hand, Board of Banking Regulation and Supervision determines the 

authorized audit companies for the audit of banks and The Undersecretariat of 

Treasury determines the authorized audit companies for Insurance companies. 

Generally, the companies who are qualified and authorized for Capital Market Board 

audits are also authorized for bank audits. 

Closing a Business 

Liquidation requires the appointment of a clerk who will be responsible for closing the 

business and, if there are no legal or tax issues, this may take up to 13 months. 

Annual Statutory Filling 

Turkey tax year is calendar year or fiscal year. It is also possible to obtain permission 

from the Ministry of Finance to use a special accounting period. 

Turkey does not allow tax consolidation. Each company in a group must file its own 

corporate tax return. The corporate tax return must be filed by the 25th day (i.e. 

between the first and 25th day) of the fourth month after the end of the company’s 

accounting period. 

Corporate income tax is payable by the end of the month in which the tax return is due 

(i.e. by the end of April for companies using the calendar year). 

Corporations are required to pay advance corporate tax based on their quarterly 

profits at the rate of 20%. Advance corporate tax payments made during the year are 

offset against the ultimate corporate tax liability, which is determined in the annual 

corporate income tax return. Advance corporate tax returns must be submitted by the 

14th day of the second month following the quarterly period and the tax is payable 

by the 17th of the same month (the Ministry of Finance may extend the deadline for 

submission of quarterly advance tax returns). 

3 Foreign Exchange Controls 

Exchange Rate Regime 

Turkey has a liberal exchange control regime. The protection of the value of the 

Turkish currency legislation guarantees the free transfer of profits, fees and royalties. 

The transfer of profits, dividends, proceeds of sale and liquidation, license, know-how, 

technical assistance fees, repayment of loans and interests is unrestricted. 

Turkish Lira is fully convertible. The supply of foreign exchange is not limited and 

banks may open foreign exchange deposit accounts for both the residents and the 

non-residents. Principal and interests of non-residents can be transferred through 

the investor’s bank. Non-residents may sell and buy securities at the Istanbul Stock 

Exchange, without being subject to any limitation and/or approval. 

There are no restrictions on foreign portfolio investors trading in the Turkish capital 

markets. Decree No. 32 passed in August 1989, removes all restrictions on overseas 

institutional and individual investment in securities. 

Real persons and legal entities residing abroad (including investment trusts and 

investment funds abroad) can freely purchase and sell all sorts of securities and other 

capital market instruments. 

A foreign institutional or individual investor should use a Turkish intermediary 

institution for securities activities. (Such as, buying and selling securities, repo, 

reverse repo, portfolio management, investment consultancy, underwriting, margin 

trading, securities lending etc.) 

Also a foreign investor can hedge currency risk by trading at ISE Derivative Market. 

Issue and management of currency, exchange rate, ForEx registration: 

• Importation of foreign exchange to Turkey is free 

• Travelers may freely take foreign currency banknotes with them abroad up to 

USD 5.000 or its equivalent 

• Non-residents and Turkish citizens working abroad who are also considered as 

residents in Turkey may freely take foreign currency banknotes abroad on their 

person in an amount exceeding USD 5.000,- or an equivalent amount in another 

currency, provided that a declaration is made upon entry to Turkey. Meanwhile, 

the same is valid also for residents in Turkey, in case they prove that the foreign 

currency banknotes have been purchased from banks within the framework of 

invisible transactions. 

14 



• Non-residents are allowed to purchase foreign exchange from banks, authorized 

establishments, PTT, precious metals brokerage institutions and intermediary 

institutions. 

• Residents in Turkey may freely keep foreign exchange; purchase foreign 

exchange from banks, authorized establishments, PTT and precious metal 

brokerage institutions; hold foreign exchange in their foreign exchange accounts 

with banks; use foreign currency banknotes and make deposits in banks in 

Turkey and abroad. 

• Residents in Turkey are allowed to accept payment in foreign currency from nonresidents 

for the transactions that they conduct in Turkey in favor of such nonresidents. 

• Residents in Turkey and non-residents may freely transfer foreign exchange 

abroad through banks. Banks shall inform the authorities to be determined by the 

Ministry about foreign exchange transfers abroad (including transfers made from 

foreign exchange deposit accounts), excluding payments for exports, imports 

and invisible transactions that are above USD 50.000 or its equivalent in another 

foreign currency within a 30-day period starting from the date of transfer. 

Main principles of the foreign investment policy in Turkey 

• Equal treatment: For the purpose of making investments and carrying out 

commercial activities, to establish a joint stock or limited liability company is 

necessary. For establishing a company or opening a branch office, minimum 

capital requirement (per real or legal person) is USD 50,000. Companies with 

foreign capital have the same rights and obligations as the domestic capital. 

• No limitation in participation of foreign capital, except broadcasting where 

the equity participation ratio of foreign shareholders is restricted to 20% 

(Establishment and Broadcasting of Radio and Television Law No. 3984); and 

aviation, maritime transportation and ports where the equity participation of 

foreign shareholders are restricted to 49%. 

• Free transfer of profits, fees and royalties and repatriation of capital in the event 

of liquidation or sale are also guaranteed. 

• Open field of activity: Almost all sectors which are open to the private domestic 

investors are open to foreign participation. Investment by foreigners in the field 

of real estate is restricted, and establishments in the financial, petroleum and 

mining sectors require special permission according to appropriate Laws. 

• Employment of foreigners: There is no limitation for assigning expatriates as 

managers and technical staff. 

• There is no condition of approval of foreign credit acquisition. 

• There is no condition of approval of license, know-how, technical assistance 

and management agreements. Only a registration of these agreements is done 

through Undersecretariat. 

• The Foreign exchanges (including effective) brought from abroad for the purpose 

of establishing corporations, increasing capital or buying the shares of existing 

Turkish companies can be blocked in Foreign Exchange Deposits Account. 

• The involvement of international investors are highly encouraged in the massive 

privatization program and the participation of private sector in huge energy, 

telecommunication and infrastructure projects, especially after the adoption of 

the amendments to the Turkish Constitution in order to allow the international 

arbitration, which removes an important disincentive for foreign direct investment. 

Form of Capital 

Foreign capital to be brought in to Turkey can be in the form of: 

• Capital in cash in the form of convertible or effective foreign currency bought and 

sold by Central Bank of Turkey 

• Machinery, equipment, tools and similar goods approved by Under secretariat of 

Treasury (UT), General Directorate of Foreign Investments (GDFI) 

• Assets and receivable of foreign nationals under Foreign Exchange Legislation 

approved by GDFI 

• Intellectual property such as patent rights and trademarks approved by GDFI 

Minimum Capital Requirement: Real and legal persons resident abroad must bring 

a minimum USD 50.000 per person to establish corporations, become partners in 

existing companies and opening branch offices. In the case of that, the number of 

foreign shareholders is above one, the participation amounts of foreign partners in 

total capital can be arranged freely. If it is requested, the foreign exchanges transferred 

from abroad, without being converted into Turkish Liras, can be kept in Banks at the 

foreign exchange deposits accounts to be opened in the name of the company to be 

established or the shareholders who transfers his/her shares or the company which 

increases its capital and, can be paid to the beneficiary as foreign partner’s capital 

share. 

Opening a Turkish bank account 

In order to open an account a Tax Number is needed. Most banks will require a 

residency permit before opening an account in Turkish lira, but some may make 

exceptions for customers making larger investments. 

If you do not have a residency permit and ca not make a special arrangement with the 

bank staff, remember that most banks will be happy to open you an account in Euros, 

16 



British pounds or US dollars. The disadvantage to foreign currency accounts is that 

they pay little to no interest. 

Usually you will have to fill out an application form and present your tax number, at 

which point you´ll be issued an account. 

You will probably want to open a current account first. Current accounts allow you 

to store and transfer money. Most support online banking, and you can arrange 

automatic bill payment for your telecom and utility bills. 

You may also choose to open a savings account, but be aware that these accounts 

must remain open for a minimum of one month and that all interest earned is subject 

to a 15 % withholding tax. The interest rates quoted by your bank will usually include 

the withholding tax. 

Remittance of funds out of Turkey - dividends, profit, interest, 

capital e.t.c 

There are several ways on how to transfer or remit money from Turkey. 

Money can be sent through bank transfer. There are several banks that offer convenient 

and secure expat banking services for foreign nationals who are working and living in 

Turkey. Some banks offer expatriate banking program which provide internet banking, 

an ATM service and telephone banking through the English language. 

You could use wire transfer services to send your funds. These money transfer 

businesses have branch offices in Turkey or may have business connections to 

certain banks in Turkey. You could also check other reliable websites that may offer 

this kind of transfer services through the internet. 

The name of your recipient that you used when filling-out the money transfer form 

should be the same on the ID that your receiver will present once he or she will collect 

the money that you had sent. You may also be required to provide a valid ID when 

sending your funds to your recipient although this will depend on the money transfer 

service that you’ll be using. 

4 Taxation 

Turkish Tax System 

Turkish direct taxation system consists of two main taxes; income tax and corporate 

tax. An individual is subject to the income tax on his income and earnings, in contrast 

to a company which is subject to corporate tax on its income and earnings. The 

rules of taxation for individual income and earnings are provided in the Income Tax 

Law. Likewise, the rules concerning the taxation of corporations are contained in the 

Corporation Tax Law. Despite the fact that each is governed by a different legislation, 

Personal Income Tax 

The personal income tax covers the income from business and agricultural activities; 

professional services, as well as salaries and wages; rental, interest, and dividend 

income. The personal income tax also covers the income from temporary business 

and professional activities as well as income from capital gains. 

The system is based on the taxation of individual’s annual total income from above 

sources. But it is difficult to describe the income tax system as unitary. Since the 

existence of considerable exceptions and different treatments of various income 

sources, even exclusion of some of them from being declared in an annual tax return; 

Turkish income tax system can be considered as a hybrid of unitary and scheduler 

tax systems. 

There are two major types of paying personal income tax. One is the self assessment, 

and the other is withholding tax systems. The general rule is that the individual’s being 

registered as a tax payer, and making a declaration by filing in a tax return. Those tax 

payers of involving in business, agricultural, and professional activities are obliged to 

regularly submit annual tax returns even when there is no taxable income to declare 

from these activities. 

The individuals can deduct the taxes withheld by the payer of the revenue from their 

final tax liability calculated in the tax return as a tax credit. In these cases income 

subjected to withholding is to be included into the tax return with its gross amount to 

calculate the total tax liability. Even in some circumstances, the income being subject 

to withholding can not be included in the annual tax return at all. 

Individuals residing in Turkey, are liable to pay income tax on the basis of their worldwide 

income. Individuals having domicile or staying more then six month in a calendar year 

in Turkey are considered as being resident. Nonresident individuals pay income tax 

only for their income sourced from Turkey. Origination of an income in Turkey has 

been defined very broadly in the Personal Income Tax Law. This gives a chance to 

the tax administration to tax a considerable number of payments made to foreigners 

on behalf of the payers in a withholding tax system. Therefore, consideration of the 

18 



elevant tax treaties, which usually restrict the taxing right of the Turkish tax authorities 

on the income of nonresidents, is essential for avoiding unnecessary fiscal burdens. 

The resident taxpayers who have income from abroad can enjoy a tax credit system 

for the taxes being paid abroad. But the tax credit is limited with the amount of the tax 

payable for the foreign income. However, some types of income from foreign sources 

are exempt from corporate income tax. 

The taxable income from business activities is to be calculated on accrual basis. 

Therefore, receivables are to be considered as revenue when payables are 

considered as expense. However, professional services income is to be calculated on 

a cash basis. Rental income is also calculated in cash basis; though the advance cash 

collections for future periods would be considered as taxable income of the related 

periods. 

Income tax treatment of business income is explained in the Corporation Income Tax 

System publication. 

Tax Brackets of Personal Income Tax System 

The current income tax brackets are presented below: 

Income Level % 

Income up to TL 9,400 15 

Income between TL 9,400 and TL 23,000 20 

Income between TL 23,000 and TL 53,000 27 

Income over TL 53,000 35 

As previously mentioned the maximum rate for salary and wage earners is 27%. 

Royalties 

Royalties are considerations received for the “use of” or the “right to use”, any 

copyrights of literary, artistic or scientific work including cinematograph films, any 

patent, trade mark, design or model, plan, secret formula or process, or for information 

concerning industrial, commercial or scientific experience. 

In the Turkish income tax system, royalties are treated differently under different 

circumstances. The royalty income from copyrights and patents is not included into the 

annual tax returns of the resident natural persons or their inheritors if these persons 

are the creator or inventor of the copyright or patent. However, the royalty income is 

subject to a withholding tax of a 17% which represents the final taxation of this type 

of income. 

If the income from copyrights and patents are incurred by those natural persons 

other than the creators or inventors, and their inheritors then it is subject to a 20% 

withholding tax. The same applies for all other types of royalties as well. 

Capital Gains 

In the Turkish income tax system the following are considered as taxable capital gains: 

• Profits incurred from the alienation of financial instruments (excluding the gains 

from alienation of stock certificates that were acquired as inheritance or held for 

more than two years). 

• Gains from the alienation of exploration, operation, and concession licenses and 

rights, cinematograph films, any trade mark, trade name, design or model, plan, 

secret formula or process, or for information concerning industrial, commercial 

or scientific experience. 

• Alienation of the copyrights and patents by their creators or inventors, or their 

inheritors is exempt from personal income tax. But the income incurred from the 

alienation of them by other natural persons is considered as capital gains and 

taxed accordingly. 

If the acquirers are nonresidents then the gains from the alienation of copyrights 

and patents by resident individuals are subject to 20% withholding tax which also 

represents the final taxation of that income. 

• Profits incurred from the alienation of equity securities without certificates. 

• Gains from the alienation of an enterprise (i.e. a sole proprietorship or partnership) 

which is ceased its operations and alienated as a whole or partially. 

• Gains from the alienation of immovable properties and rights related with them 

and held for more than five years, other than inherited immovable properties and 

rights, are taxed as capital gains as well. 

• Gains from the alienation of the immovable properties and rights that are being 

used in business as fixed asset are part of the business income and the taxable 

income is to be determined on accrual basis. However, these gains are subject 

to some specific regulations making the taxation of this type of gain some what 

different from the general application. 

Salaries and wages 

Remunerations received by individuals in the capacity of being members of the boards 

of directors, or audit committees are also treated as salaries or wages (income from 

dependent services). But the dividends paid to the members of boards of directors are 

not considered as salaries or wages, but to be taxed as dividend income. 

20 



Salaries and wages paid in a foreign currency to the personnel of the branches and 

liaison offices of nonresidents out of the funds existing abroad are exempt from 

income tax. 

The general taxation of salaries and wages including the fringe benefits is based on 

withholding the tax by the employer. Obligation of declaring that income by submitting 

a tax return is only limited with receiving salaries and wages from more than one 

employer and exceeding certain threshold amounts. 

Actual travel expenses are not part of the salary and wage income. Unless it exceeds 

certain thresholds, per diems paid for traveling to employee are not included into the 

salary income of the employee. Company directors and managers are also subject 

to the same rules in this respect. But these exempt employee incomes still to be 

considered as deductible business expense during the calculation of the taxable 

income of the business enterprise. 

Meals provided at the business premises of the employer are not part of the salary 

or wage, but to be treated as business expense. Those meals provided out of the 

business premises are exempt from income tax only up to a certain threshold. 

Termination indemnity and other compensations paid to employees are part of 

business expenses of enterprises; but the employees are exempt from income tax for 

these payments. 

The pension received by an employee who works at a permanent establishment of a 

nonresident is exempt from income tax, if the payment is being made from the funds 

established abroad and paid in foreign currency. 

Dividends 

Company income is subject to 20% flat rate of corporation income tax. Companies 

withhold an additional income tax on behalf of shareholders when a profit distribution 

takes place. Withholding rate is 15% for resident and nonresident individuals. 

There is no obligation to declare the dividends which were subjected to withholding 

up to certain threshold levels of gross dividends. If the taxpayer has the obligation 

to submit a tax return, normally the dividend income is to be excluded from the 

declaration. However, if the individual is obliged to include the dividend income into 

the tax return, then only 50% of the dividend income is going to be included. But the 

whole amount of the tax previously withheld will be deductible from the tax liability in 

the tax return. 

The income after tax of branch offices of foreign companies is subject to a withholding 

tax of 10%. 

Establishment of the Tax Liability 

Turkish income tax is based on self-assessment system. The tax payer submits his/ 

her declaration of the total income from different sources by filing in an annual tax 

return. However, there are some exceptions to this practice. 

Individuals involving in business, professional, or agricultural activities are obliged to 

submit an annual tax return even when they have no taxable income to declare. For 

other individuals, income tax declaration is limited with certain conditions. 

Computation and declaration of the taxable income, namely tax assessment, is the 

responsibility of the tax payer. The tax office determines the tax liability based on the 

information provided by the tax payer. 

For personal income tax purposes, normally the tax period corresponds to a calendar 

year. Therefore the tax payer performs the tax assessment by declaring the total 

taxable income of the previous year. In general, the due date of submitting an annual 

tax return for the income of the previous year is between 1-25 March of the current 

year. Tax payers can submit their tax returns electronically by acquiring an ID number. 

Tax payers pay their tax liability in two installments, one in March, and the other in July 

of the declaration year. They can use banking system for their payments. 

Nevertheless, the tax administration prefer to collect as much of tax liabilities as 

possible in the current year. Tax withholding and pay-as-you-go systems are two 

major methods used by the tax administration for this purpose. 

Withholding Income Tax 

Business enterprises, including the professional service providers, are usually obliged 

to withhold income tax from their payments made for services rendered and goods 

provided from individuals and to pay the same amount to the tax office on monthly 

basis with a withholding tax return. The withholding rates differ according to the nature 

of the payment. 

The major income payments that are subject to withholding are: 

• Salaries and wages 

• Interest 

• Dividends 

• Professional service fees 

• Constructions and building projects extending beyond a calendar year 

• Payments for rents, including royalty payments 

• Sales of copyrights, and patents to nonresidents 

• After tax financial income of the branch offices of nonresidents 

• Agricultural gross receipts 

22 



Withholding is the form of final taxation of salaries and wages with a few exceptions. 

It is also the case for some interest, dividend and rent payments. 

In those cases that the withholding is considered as the final taxation then the tax 

return of the payee will not include the income subjected to withholding. 

Nonresident individuals, whose income of professional fees, salaries and wages, 

interest and dividend payments were subject to withholding then they are exempt 

from submitting a tax return. 

In other cases, the amounts withheld by the payer can be deducted from the tax 

liability of the payee when he/she declares the gross amount of the payment in his/ 

her tax return in the following calendar year. If the withheld amount exceeds the final 

liability then the tax payer enjoys a tax refund for the exceeding amount. 

The current major withholding rates for natural persons are as follows: 

Building, construction and installation projects extending beyond a 

calendar year 

Professional service fees 20 

Income from alienation or royalty of copyrights, concessions, patents, 17 

trade marks, trade names, etc. to non residents by original owners 

Dividends 15 

Rents from business premises 20 

Interests from Treasury Bills and Bonds 10 

Interests from Turkish Eurobonds 0 

Income from alienation of Treasury Bills and Bonds excluding 10 

Eurobonds 

Interest from bank deposits and repos (repurchase agreements) 15 

Alienation of equity securities other than shares of securities investment 0 

trusts 

Income from hedging and derivatives based on securities 0 

Income from hedging and derivatives based on items other than 10 

securities 

Pay-As-You-Go System (Gecici Vergi) 

Those people who involve in business or professional activities are obliged to pay their 

income taxes in the current year according to the quarterly data from their accounting 

books. This advance payment of tax is deductible from the final tax liability of the tax 

% 

3 

payer. If the advance payment exceeds the final tax, the exceeding amount can be 

refundable to the tax payer. 

The same system is valid also for those tax payers that subject to the Corporate 

Income Tax. 

Taxation of Nonresident Individuals 

Nonresidents can conduct business by setting up a permanent establishment in 

Turkey. Existence of a permanent establishment does not always necessitate a fixed 

place of business. In spite of not having a fixed place of business, having employees 

authorized to conclude business contract in the name of the nonresident person, the 

nonresident deemed to have a permanent establishment in Turkey. 

A nonresident whose business activity in the permanent establishment is limited with 

purchasing or producing goods in Turkey solely for exporting abroad is exempt from 

income tax. The same applies for nonresident companies as well. 

In Turkish domestic law the criteria for the existence of a fixed place of business 

is substantially larger than those of in Turkish tax treaties. Therefore, taking into 

consideration of Article 5 of the related tax treaty is essential for avoiding controversies 

with the tax administration. 

In accordance with the domestic income tax legislation, income from employment of 

nonresident individuals i.e. those who do not have a domicile and be present less 

than six month in a calendar year in Turkey is subject to income tax if the employment 

actually exercised, or the salary or wage paid in Turkey. 

Nevertheless, this treatment may change according to the provisions of the related 

tax treaty. In most of the cases, according to the Turkish tax treaties income from 

employment of nonresident individuals is not taxable in Turkey if: 

a) The recipient is present in Turkey for a period not exceeding in the aggregate 

183 days in any twelve month period commencing or ending in the fiscal year 

concerned; and 

b) The remuneration is paid by or on behalf of, an employer who is not a resident of 

Turkey; and 

c) The remuneration is not borne by a permanent establishment which the employer 

has in Turkey. 

Therefore, in order for the nonresident employee to become liable for income taxation, 

he/she must be on the payroll in Turkey. 

If the nonresident employee works at the permanent establishment of a nonresident 

employer for less than 183 days, but the remuneration paid him/her is borne by the 

permanent establishment then the income of the employee becomes taxable in Turkey. 

24 



Activities of nonresident individuals necessitate submitting annual tax returns are: 

• business income 

• agricultural income 

• professional services rendered to other than business enterprises and 

professionals 

As previously explained, nonresident individuals, whose professional fees, salaries 

and wages, interest and dividends payments were subject to withholding then they are 

exempt from submitting a tax return. Nonresidents who are obliged to submit annual 

tax returns do not include the income from these sources to their tax returns. 

Nonresident individuals who are accruing capital gains are obliged to submit a special 

tax return (munferit beyanname) and pay the liability to the tax office in 15 days after 

the realization of the gain. 

Self assessment by a special tax return is optional for nonresidents whose income 

consists of solely the alienation of copyrights, or patents that previously subject to 

withholding. 

Set-off and carry forward losses 

Turkish personal income tax system permits an inter-declaration set-off of losses 

incurred in one income source from the other income sources, except the capital 

losses of the same year. The remaining amount of loss after the set-off can be carried 

forward for a maximum period of five years in order to be offset against profits made in 

these years. There is no possibility of loss carry back in Turkish tax system. 

In passive income sources, namely interest, dividends, and rents, the only possibility 

of incurring a loss can originate when the expenses exceeds the revenue. Otherwise 

the loss is considered as a capital loss and can not be set-off against the other income 

sources. 

Losses incurred by resident taxpayers in foreign countries can also be set-off against 

the income from domestic sources. But in order to enjoy the set-off, the accounting 

records related with the activities abroad must be regularly audited by competent audit 

bodies. Financial statements related with the activity also have to be authenticated by 

the local authorities. But only the losses that are not from the tax exempt sources of 

income in Turkey can enjoy this set-off possibility. 

Deductions from the taxable income 

Individuals can deduct the following expenses from their declared income in their 

annual tax return to compute the taxable income: 

a) Personal insurance premiums of the family members of the tax payer not 

exceeding 10% of the declared income and the amount of annual minimum wage 

of the year 

b) Education and health expenses of the tax payer and the family members not 

exceeding 10% of the declared income 

c) Certain charitable donations not exceeding 5% of the declared income 

d) Expenses or contributions made for building schools, kinder gardens, hospitals, 

nursing homes, e.t.c 

e) Sponsoring expenses for sports (100% for amateurs and 50% for professionals) 

f) 100% of R&D expenses made 

g) Donations made to victims of natural disasters 

h) Donations made to the Red Crescent Organization 

Corporation Income Tax 

Annual profits of state enterprises, joint stock companies (anonim sirket), private 

limited companies (limited sirket), limited partnerships with share capital (hisseli 

komandit sirket), cooperatives, foundations, and business enterprises of associations 

are subject to corporate income tax. 

Having a legal status of a juridical person that is separate from the owners is the 

general character of these entities. 

Joint ventures have an option to choose to be taxed as a separate entity than the 

partners. But when they choose to be separate taxpayer than their partners, they lose 

the chance of being able to deduct their final losses that would be realized at the end 

of the project from their partners’ income. 

Scope of Corporation Income 

Business profits of the tax payers mentioned above subject to corporation income tax. 

The business profit is the financial income of the entity. In order to reach to the taxable 

income, certain additions to and subtractions from the financial income are necessary. 

Business income includes all the income sources that are in the scope of the personal 

income tax law. 

As in the personal income tax law, self assessment and withholding tax systems have 

incorporated into the corporation income tax. But unlike the personal income tax, all 

the entities liable to pay corporate income tax are obliged to be registered as tax 

payer. Withholding system can not replace the self assessment system. Therefore, tax 

payers submit annual tax returns and set off the amount of the tax withheld from the 

liability computed for the total income. The excess amount withheld can be refundable 

to the tax payer. 

26 



Corporations whose place of incorporation or management is in Turkey are to be 

considered as resident corporations and they are liable to pay the tax from their 

worldwide income. Those corporations that have neither the place of incorporation nor 

that of management in Turkey can only be liable to pay tax for the income originally 

arises in Turkey. 

In domestic tax law, the basic criteria for determining whether the income originates 

from Turkey have been set so largely that it covers nearly any type of payment made 

to nonresidents. As it is the case for the personal income tax, the tax payers liable to 

pay corporate income tax and those tax payers who make payments to nonresidents 

should closely study the relevant tax treaty to avoid unnecessary fiscal burden. 

As it is the case for personal income tax, the resident taxpayers who have income 

arising from abroad can enjoy a tax relief in the form of a tax credit. But again the 

amount of the tax credit is limited with the amount of the tax payable for the foreign 

income in Turkey. However, some incomes from foreign sources are exempt from 

corporate income tax. But it should be kept in mind that expenses related with the 

exempt income are nondeductible during the calculation of the taxable income. 

Corporate Tax Return 

Like income tax, the corporate tax is also assessed on the base declared through tax 

returns filled annually by taxpayers. Tax returns contain the results of related taxation 

period. In principle, every taxpayer is required to file only one single tax return, even 

if he has derived the income through different business places or branches and those 

places and branches have their own accounting and allocated capital. 

The corporate tax return is filled until the 25th day evening of the fourth month of the 

year following the month in which the fiscal year ends and the assessed taxes are paid 

until the end of that month. However, if a limited liable taxpayer leaves the country for 

sure the corporate tax return has to be submitted to the authorized tax office in the 15 

days preceding. In such case, taxes are paid in the same period of time as forth for 

the declaration. 

If the income earned by the foreign companies which are subject to the limited liability 

in respect to the corporate tax, consists of capital gains and non-recurring income 

discussed in the preceding sections (except for income earned from sale and transfer 

of intangible rights like license, know-how, and royalty), then the income is declared 

to the authorized tax offices those taxpayers (or the persons acting on behalf of them) 

in the fifteen days after the income has been earned. This procedure is called “special 

declaration”. 

If there is no presence in Turkey, withholding tax will generally be charged on income 

earned. For example income earned from sale and transfer of intangible rights like 

license, know-how, and royalty, income from movable and immovable property and 

income from independent professional services provided in Turkey. However, if there 

is an avoidance of double taxation treaty, reduced rates of withholding tax may apply. 

Corporation Income Tax Rates 

Corporate income tax is applied at 20% rate on the corporate earnings. 

Taxpayers (only for income from commercial activities and agriculture in limited tax 

liability cases) pay provisional tax at the rate of corporate tax, these payments are 

deducted from corporate tax of current period. 

Withholding Tax 

Some payments made to corporate income tax payers are to be withheld by the 

payers. As well as the final payments made, advance payments are also subject to 

withholding. 

In order to withhold tax there is no need to make an actual payment, the accrual of the 

remuneration is enough for the beginning of a withholding obligation for the payee. 

Major withholding obligations and the rates to be applied are presented below. 

Payments made for construction works exceeding beyond a calendar 

year 

Dividend payments of participant banking 15 

Interest payments of treasury bonds and some state enterprises’ bonds 0 

Interest payments of other bonds 10 

Interest payment of bank deposits 15 

Turkish Eurobonds 0 

Deposits 10 

Payments for Repurchase Agreements 15 

Taxation Of Non Resident Limited Liability Companies 

The business entities that have the place of neither incorporation, nor management 

can only be liable to pay income tax for their income arises in Turkey. 

Normally in order to be liable for corporation income tax, the nonresident company 

must have a permanent establishment in Turkey. 

However, in accordance with the law, even when there is no permanent establishments, 

payments made to nonresidents by tax payers in Turkey are subject to corporation 

income tax withholding. The withholding rates are determined according to the 

personal income tax schedules. 

% 

3 

28 



The current withholding rates are presented below: 

Building, construction and installation projects exceeding beyond a 

calendar year 

Professional service fees (for oil explorations) 5 

Professional service fees other than oil explorations 20 

Financial leasing 1 

Rental income including royalties 20 

Alienation of equity securities 0 

Interests from Treasury Bills and Bonds 0 

Income from alienation of Treasury Bills and Bonds 0 

Income from hedging and derivatives based on securities 0 

Bank deposits and repos (repurchase agreements) 15 

Alienation of copyrights, concessions, patents, trade name, trade mark 20 

etc. 

Before deductions and exemptions but after tax financial income of 15 

nonresident companies 

During the computation of the non residents’ taxable income the following payments 

can not be considered as deductible: 

• Payment made as commission, interest, etc. to the headquarters or its other 

permanent establishments abroad for the sales and purchases made on behalf 

of them. 

• Profits assigned to participating the general administrative expenses or financial 

losses of the head offices, or other permanent establishments abroad. 

Taxation of non resident transportation firms 

Nonresidents’ profits from the operation of ships, aircrafts, or road vehicles are subject 

to specific rules for income taxation purposes. These rules are applicable for both 

nonresident individuals and companies. Taxation of these operations is based on 

applying the rates of 12% for land transportation, 15% for shipping, and 5% for air 

transport to the revenue from operations. 

However, the Turkish tax treaties have generally different rules for taxation of the 

international transportation profits. According to the tax treaties, income from 

transportation can be taxed in the country of the enterprise. Nevertheless, the income 

to be taxed according to the tax treaties is limited with transportation income raised in 

“international traffic” i.e. traffic between Turkey and other countries. Therefore, income 

arises from transportation operations of nonresidents that solely taken place in Turkey 

is subject to above mentioned income tax law rules instead of tax treaties. 

% 

3 

Major Characteristics Of Turkish Income Tax Treaties 

Turkey has concluded 74 income tax treaties with different countries so far. These 

treaties generally follow the OECD Model Tax Convention principles. Though there 

are slight differences from one treaty to the other. Hence, in each case the relevant 

treaty must be taken into account. Some general information about the treaties is 

presented below. 1 

In general, the business income can be taxed in the source country only if a permanent 

establishment exists there. For construction works a permanent establishment can 

exists if the works continue more than a certain period which is determined in each 

treaty. The duration of the work changes from one treaty to the other. However, the 

minimum period for the existence of a permanent establishment in the source country 

is not less than six months in any treaty. 

In these treaties income from dividends, interest, and royalties 2 are subject to limited 

taxation in the source country. Usually dividend income from subsidiaries is subject to 

lower rates than the portfolio investments. 

Royalty payments include remunerations received for the alienation of literary and 

artistic properties in addition to letting them. Therefore, remunerations provided from 

the alienation of intellectual property rights are usually subject to a withholding tax in 

accordance with Article 12. 

Payments for the use of, or the right to use, industrial, commercial or scientific 

equipment are mostly considered as royalty and usually subject to withholding tax in 

the source country. 

Generally, in Turkey, elimination of double taxation created by the taxation in the 

source country takes the form of providing a tax credit for the taxes paid in that country. 

Nevertheless, in a number of the tax treaties, especially for dividend income, instead 

of credit method, Turkey has accepted an exemption system for the elimination of 

double taxation. 

In some treaties Turkey reserves her right to withhold tax from services rendered by 

business entities as a professional service fee. 

Since tax treaties have the status of International Convention, in any case of conflict 

between the tax treaty and domestic legislation, the provisions of tax treaties have 

priority over the domestic legislation. Thus in a case of a conflict between a tax treaty 

and the domestic legislation, the provisions of the one that is more favorable to the 

tax payer will be applied. Therefore, the tax payers should pay attention to the related 

treaty provisions in each case. 

1 

N.B. the German tax treaty has been terminated by the initiative of the German side beginning from the date 

of 01.01.2011. Since, a new treaty has not been entered into force so far. Only the domestic provisions are 

applicable to the taxation matters between Turkey and Germany. 2 Article 12 of the Treaties about the royalties is 

based on the UN Model Tax Convention. 

30 



Transfer Pricing Rules 

Turkish transfer pricing regime is not confined only with the transfer prices realized 

between the associated companies. Also the special relationship between the parties 

or between them and some other persons, like relationship by blood or marriage, are 

included into the transfer pricing regime. Therefore whenever there is a suspicion of a 

lack of conflict of interest between the parties, then the transfer pricing rules become 

applicable. Therefore, in the application of transfer pricing rules, the parties may be 

associated companies or one of them might be a natural person. 

Transactions include sales, rents, borrowings and any other payments. 

Resident and non resident persons are equally subject to transfer pricing rules. 

Transfer pricing rules are applicable to business income of natural persons as well 

as corporations. 

The profits of a company are included in to the taxable income of the tax payer if 

the profits so included are profits which would have accrued to the tax payer if the 

conditions made between the parties had been those which would have been made 

between independent parties. Hence, the profits realized in transactions must not be 

different from the profits provided in arm’s length transactions. 

Also the amounts received by one of the parties that otherwise would have not been 

received in an arm’s length transaction are considered as an actual profit distribution 

and to be taxed accordingly. 

Application of transfer pricing rules to the transactions that had taken place between 

the resident companies and permanent establishments of non residents will not be 

initiated unless there is a tax revenue loss in total for the tax administration. 

Tax payers have an option to formally initiate Advance Pricing Arrangements with the 

tax administration for up to three years. An Advance Pricing Arrangement determines, 

in advance of controlled transactions, an appropriate set of criteria (e.g. method, 

comparables and appropriate adjustments thereto, critical assumptions as to future 

events) for the determination of the transfer pricing for those transactions over a 

period of three years. All the tax payers that conduct controlled transactions with non 

residents are able to apply for setting up an Advance Pricing Arrangement. 

Tax payers are obliged to file a form showing all the transactions conducted with related 

parties as an annex to their income tax returns. Also the businesses conducting crossborder 

controlled transactions are obliged to submit annual transfer pricing reports 

about the transactions conducted. 

Thin capitalization rules 

If the credits provided by the shareholders or the related persons to the shareholders 

exceed the 300% of the shareholders’ equity then the credits will be treated under 

the thin capitalization rules. Therefore, the interest payments for these credits are not 

deductible for taxation purposes and the income provided from the credits are not 

considered as interest, but dividend income received by the payee. 

The companies whose at least 10% of the capital or voting rights are owned or 

controlled directly or indirectly by the shareholders are considered as related persons 

of the shareholders. It is also the case for those who hold a stake in the related 

company of at least 10%. 

CFC Rules (Controlled foreign corporation) 

Profits of foreign subsidiaries of resident companies are subject to the CFC rules. The 

resident companies that own at least 50% of the capital, or dividends, or voting rights 

of their subsidiaries and at least 25% of the financial income of these subsidiaries 

consists of so called passive income (i.e. interest, rents and royalties, dividends 

etc.) that has not more than 10% foreign effective tax rate, then the profits of these 

subsidiaries, either distributed or not, will be attributed to the shareholders in Turkey 

and taxed accordingly. 

Resident companies may own their shares in the subsidiaries either directly or 

indirectly. The 50% shareholding limit is to be calculated by taking into account the 

total shares of all the resident companies in that subsidiary. 

The companies with foreign subsidiaries are obliged to file a form about their relations 

with these subsidiaries as an annex to the annual income tax return. 

Payments to Tax Havens 

Any types of payments that are made by resident tax payers to the companies based 

in tax havens are subject to 30% withholding tax. 

The jurisdictions that are considered as tax havens are going to be determined by the 

tax administration. During this evaluation process of the tax administration, tax burden 

in and the possibility of exchange of information from these jurisdictions are going to 

be taken into account. 

The tax administration has not declared any jurisdiction as a tax haven so far. 

Investment Incentives 

In order to benefit from the incentives, investors need to acquire Investment Incentive 

Certificate from the Undersecretariat of Treasury for their investment projects that 

exceed certain threshold amounts. 

The incentive system consists of three components. One is General Incentives; the 

other is Regional Incentives, and the last one is the Incentives for Large Investments. 

32 



The General Incentive includes the exemption of VAT and Customs Duties. The VAT 

exemption covers the VAT payable for purchases of the machines and equipment 

needed for the investment. The investors are immune from the Custom Duties to be 

levied from the imported machines and equipment related with the investment. 

In addition to the exemption of VAT, and Customs Duties, the Regional Incentives 

include support for interest and Social Security payments, reduced income tax rates, 

and providing land for investments 

The Incentives for Large Investments include the same incentives with the Regional 

Incentives, except the support for interest payments. 

Some agricultural activities and industries and services are excluded from the 

incentive system. 

Invoicing And Enforcement 

In order to fight against the underground economy, the tax administration sets up strict 

invoicing rules and severe punishments for violation of these rules. Therefore, it is 

crucial to have an understanding of the enforcement regime in Turkey. 

Relatively high taxes, especially indirect taxes, and the existence of black economy, 

cause large extent of using false invoices and documents in daily business. 

Tax payers should pay attention to issuing proper invoices in order to be able to 

enjoy the advantages provided by the tax law. They must pay also an attention to the 

vendors’ invoices. Any inconsistency may cause high fiscal burden even imprisonment 

not only for the issuer but the receiver of the source documents as well. 

Business enterprises are obliged to issue an invoice and forward one copy to the 

customer. Currently, the sales of not exceeding TL 700 to the final consumers can 

be documented by the source documents other than invoice like receipts etc. But 

the customer request otherwise or the purchaser is another business or professional 

service provider then the sale must be documented by issuing an invoice. 

The invoice must be issued, at the latest, seven days after the delivery of goods 

or rendering the service. The invoices issued after the completion of the seven day 

period are not considered as valid invoices. The issuer must make sure the validity of 

the name, the tax identification number and the tax office of the purchaser. 

Invoices are either notarized or printed by special printing offices assigned for this 

purpose. 

If the goods are transferred before issuing the invoice then a bill of lading (sevk 

irsaliyesi) is to accompany the goods. 

Invoices provided from abroad by foreign vendors are also valid for recording for 

taxation purposes, and there is no translation requirement, unless the tax inspectors 

request otherwise during tax examinations. 

Legal Representation In Taxation 

Tax payers are under certain obligations to fulfill to the tax administration. These 

obligations are: 

• Reporting certain events like commencing trade, address changes etc. 

• Keeping records and accounting books 

• Issuing and receiving source documents 

• Keeping accounting records for five years, and presenting them when it is 

required 

• Providing information to the tax administration whenever requested to do so 

The legal responsibility to pay for the tax arrears falls on the tax payer himself whether 

that person is under guardianship or not. The responsibility to pay the arrears for legal 

entities belongs to the legal entity itself. In both cases, the tax liability that can not be 

collected from the taxable person can be claimed from the legal representatives of 

the tax payers. The legal representatives of legal entities are the members of board of 

directors, or management. 

If the arrears are a result of the negligence of the legal representative then the tax and 

its accessories can be claimed from him/her. 

The responsibility of paying the fines charged by the tax administration falls on the 

legal representatives of the persons under guardianship. For legal entities the same 

responsibility falls on the legal entity itself. But the fine that can not be collected 

from the entity will be charged to the legal representatives of the entity i.e. the board 

members, or management. 

For fiscally transparent partnerships, the tax arrears must be asked from the partners; 

while the fines asked from the partnership. 

Tax arrears are the result of the following: 

• Tax liability is not established timely 

• Tax liability is not established in full amount 

• Taxes are refunded without proper reason for it 

• Misleading information has been provided on the marital status. 

VAT 

VAT system in Turkey is mostly parallel to the EU regulations on VAT. The standard 

VAT rate is 18%. There are also reduced rates of 1% for some agricultural products, 

and 8% for some limited number of goods and services like some basic foodstuff, 

medicines, etc. 

34 



Turkey has a “consumption type VAT”. Thus, the tax payers who charge output VAT at 

their sales remit the residual amount of tax to the Tax Office, after crediting the input 

tax, including the tax on investment goods purchased, paid during the same month. 

From the production to the sale to the final consumer, transactions in each stage of the 

supply chain are subject to VAT. 

Each tax payer charges output tax at the specified rate on each sale and passes to 

the purchaser an invoice showing the amount of thus charged. Therefore, an invoice 

credit method is being used. 

Like the EU countries, the VAT is based on the “destination principle”, hence exports 

exempt from the VAT while VAT is levied on imports. 

VAT charged as input tax can be offset against the tax charged as output tax. 

The Charges to VAT 

The following are subject to the VAT: 

• Supplies of goods and services made in the context of business, agricultural and 

professional activities 

• Importation of goods and services 

• Some other specific types of supplies of goods and services, including the 

leasing of business assets, other than immovable assets 

Tax Payers 

Those who are tax payers of income taxes for their business, agricultural, or 

professional service activities are to be registered as VAT tax payers. A taxable person 

is the party who supplies goods or renders services in a transaction which is subject 

to the VAT. 

Importers of goods and services are also considered as taxable persons. 

Withholding VAT 

If the goods or services provider is a non resident person who does not have a 

permanent establishment in Turkey, the payee, if he is a registered tax payer, has 

the responsibility to withhold the related VAT and pay the same amount to the tax 

administration on behalf of the non resident. 

Also the Ministry of Finance has brought withholding obligation for certain other cases 

like rents paid by the registered VAT tax payers to non registered persons, other than 

the rents paid for immovable assets. 

Taxable Amount 

The taxable amount is the consideration received for the goods and services provided. 

It also includes the expenses incurred by the seller like transportation and unloading 

the goods at the buyers’ premises as well as the packaging, insurance, commissions, 

and the charges made by the supplier under the title of taxes, duties, etc. Charges 

made by the supplier as sales credits, interest, premium, and so on are also included 

in the taxable amount. 

In importation, the taxable amount is the customs value of the imported goods. If the 

goods are exempt from customs duties then the CIF value of the goods, including 

insurance and freight make up the taxable amount. 

Normal discounts made and indicated on the invoice is not part of the taxable income. 

Prices in foreign currencies are to be converted into Turkish Lira, with the exchange 

rates of the transaction date. 

VAT Exemptions 

One type of VAT exemption is the zero rate applications in which input tax is refundable. 

In the second type of exemption, input tax is not refundable but to be included in the 

accounting records as a deductible expense. 

The major supply of goods and services that are subject to VAT exemption by zero 

rate application are as follows: 

• Exportation of goods and services 

• Transit transportation and some transportation between Turkey and foreign 

countries 

• Supply of sea, air, and railroad vehicles for business usage 

• Services supplied for sea and air vehicles at airports and seaports 

• Supply of goods and services for those involved in gold, silver, platinum 

processing, enrichment, and refinement 

• Oil explorations conducted in accordance with the Petroleum Law 

• Importation of the investment goods that are included in the Investment Incentive 

Certificates 

• Supply of goods and services for construction and modernization of pipelines 

• The financial services provided by banks and insurance companies that subject 

to Banking and Insurance Transactions Tax 

• Supply of certain goods and services to the national security agencies 

• Supply of goods and services to diplomats 

36 



• Alienation of the company assets in the form of stock investments and immovable 

properties that held for more than two years 

The input VAT incurred for the above mentioned exemptions can be credited against 

the VAT of taxable transactions of the tax payers. The remaining amount of input 

tax, at first, is to be credited against the other liabilities of the tax payer, and only the 

excess credit is eligible for refunding. 

The tax payers involved in the business of selling the goods that are subject to reduced 

rates can also enjoy the refunding. 

Refunding usually necessitates a report complied by a Sworn Financial Advisor. 

Some charitable expenses and supplies of military factories are exempt from the VAT. 

But in these cases, the input tax incurred for the exempt transactions can not be 

credited or refunded. The amount of input tax is to be taken into account either as an 

expense or cost in calculation of the profit of the entity. 

Crediting the input VAT against the output VAT, is to be done whenever there is enough 

amount of output VAT. Input VAT which was not credited against the existing output 

VAT of the related period can not be credited later on. 

Input VAT of passenger vehicles can not be credited against the output VAT. Also the 

VAT paid for nondeductible expenses of income taxes can not be credited. 

Tax payers submit VAT tax returns monthly to declare their output VAT collected from 

customers. The VAT payable is to be paid to the Tax Office by the 26th of the following 

month. 

Special Consumption Tax 

Tobacco, alcoholic and nonalcoholic beverages, mineral oil as well as motor vehicles, 

and some luxury goods like caviar and perfumes are subject to an excise duty of 

Special Consumption Tax. 

The tax is levied at the first stage of the supply chain or importation of taxable goods. 

Stamp Duty 

Stamp Duty has a very important place in the Turkish tax system. Stamp Duty is to be 

levied from many official, notarized documents like contracts, promissory notes and 

tax returns. These documents include those that can be submitted as proofs of certain 

legal and commercial claims and they usually carry signature. 

The tax payers are the ones who sign the documents. Each original copy of the 

document is taxed separately. 

The tax is charged either as proportional to the amount included in the document or as 

a fixed amount for per document. 

The taxable event is to either issuing these documents in Turkey or submitting them to 

the relevant authorities for benefiting from their provisions in Turkey. The Stamp Duty 

rates vary in the range of 0.165% to 0.825%. 

Some examples of rates are as follows: 

% 

Contracts 0.825 

Rental contracts 0.165 

Guaranties 0.825 

Gross salaries and wages 0.660 

Banking And Insurance Transactions Tax 

Bankers and financial institutions like banks, and insurance companies are obliged 

to charge the tax whenever they collect cash or accrue revenue for their own benefit 

from the customers. 

Financial transactions are subject to the Banking and Insurance Transactions Tax 

instead of the VAT. 

The tax rate is 15% of the gross transaction amount. The tax rate for foreign exchange 

transactions is 0.1%. 

Customs Duty 

Goods imported from abroad are the subject of customs duty tax. Taxable events 

are free circulation of goods, registration of customs declaration, and temporary 

importation in case of partial exemption. 

The taxpayer is the principal person who declares to the customs office. 

Customs duties are assessed on written declaration by the taxpayer and paid within 

ten days dating from communication. 

Fees 

There are different types of fees: Judgment Fees, Notary Fees, Tax Judgment 

Fees, Title Deed Fees, Consulate Fees, Ship and Harbor Fees, Permit of License 

and Certificate Fees, Traffic Fees, Passport, Visa and Ministry of Foreign Affairs. 

Certification Fees. 

38 



5 Employment 

Foreign visa 

To get a visa: 

• Passports should be valid at least 90 days longer than the expiry date of the 

requested visa for tourists. 

• If you are going to study or work in Turkey, you must obtain appropriate visa from 

Turkish diplomatic/consular missions, prior to proceeding to Turkey. 

• Visa regime for truck drivers of a country may differ from the overall visa regime 

effective for citizens of that particular country. For further information, please 

contact the nearest Turkish mission. 

• All visa requirement, should obtain their visas at the Turkish missions. Those 

foreigners, who can obtain sticker type visas at the Turkish border gates, may 

also have their visas at the Turkish missions, alternatively. 

• If you have a valid visa, you do not need a residence permit up to 90 days. On the 

other hand, foreigners who shall reside, work or study in Turkey, should register 

themselves at the nearest local police department upon their arrival in Turkey, 

regardless of the validity of their visa. 

Information on Work Visa 

To work in Turkey you must apply to the nearest Turkish mission to obtain a work 

permit and visa. Your passport, visa application form and a letter from your employer 

are needed for your application. Other documents should be submitted to the Turkish 

Ministry of Labour and Social Security (MLSS) by your employer within ten working 

days after your application. 

You may find the list of those documents in the MLSS’s website (http://www.csgb.gov. 

tr). Applications are finalised by the MLSS within thirty days at the latest. Right after 

your arrival in Turkey (before starting to work), you should be registered at the local 

police department within one month to obtain the necessary residence permit. 

Foreigners with a valid residence permit (valid for a minimum of six months, except for 

residence permits for educational purposes) can apply directly to the Ministry of Labor 

and Social Security. 

Employment Procedures 

Employment in Turkey is mainly governed by Turkish Labor Law and Trade Union 

Law. 

Under the Turkish Labor Law, there are four different types of job contract: 

a) Job contracts for “temporary” and “permanent” work 

b) Job contracts for a “definite period” or an “indefinite period” 

c) Job contracts for “part-time” work 

d) Job contracts for “work-upon-call” 

Job contracts do not have to be concluded in a specific format. However, if a job 

contract is signed for a definite period, it must be concluded in writing. Job contracts 

are exempt from stamp tax and other duties. 

Any kind of discrimination among employees with respect to language, race, gender, 

political opinion, philosophical approach, religion or similar criteria is prohibited by law. 

Discrimination based on the gender of an employee is prohibited when determining the 

amount of remuneration for employees working in the same or equivalent jobs. Should 

the principle of equality be violated, the employee who is subject to discrimination can 

request monetary compensation. 

Labour Law 

The Labour Law that entered into force in June 2003, governs the relations between 

employers and employees. The Law contains several provisions in conformity with the 

international regulations of the International Labour Organization and the European 

Union. 

Employment Contracts 

An employment contract may be concluded for a definite period of time or for an 

indefinite period. An employment contract that covers a definite period exceeding oneyear, 

as well as the contracts for temporary work and on-call work must be in writing. 

The law does not require a special form for the employment contracts. Employment 

contracts are exempted from duties, levies and stamp tax. The Law stipulates a trial 

period of maximum two months, which can be extended up to four months under the 

provisions of a collective labor agreement. The contract can be terminated within the 

trial period, without providing any notice or indemnity. The rights of the employee 

related to the wages and other benefits for the days worked thereby shall be reserved. 

Principal Employer - Sub-Contractor Relation 

Hiring a sub-contractor is subject to certain conditions pursuant to the new Labour 

Law. In accordance with the new rules, only the works that are of secondary nature 

comparing to the main subject of the principal employer, like an auxiliary work or a 

part of the main work can be sub-contracted, like cleaning, loading, unloading and 

construction works. 

40 



In such a relation, the principal employer is jointly responsible against the employees 

of the sub-contractor with respect to the liabilities arising from the Labour Law, the 

employment contract and the collective agreements, to which the sub-contractor is 

a party. Sub-contractors are obliged to notify hires made by them on behalf of the 

principal employer with the competent Labour Regional Directorate within a period of 

one month. According to recent amendments, in the event of any fictitious transactions, 

the employees of the sub-contractor are deemed to be the employees of the principal 

employer. 

Notification Period 

If a party, either employer or the employee, wishes to terminate an indefinite period 

employment contract, the terminating party is required to give an advance notice 

to the other party, before actually terminating the contract. The notice periods are 

proportional to the length of the employment and range between two to eight weeks. In 

case of failure to comply, the party in default shall be obliged to pay as compensation 

an amount equal to the allowances corresponding to the above notice periods. 

Working Hours 

In general, the working hours shall not exceed forty-five hours in a week. Upon 

mutual agreement between the parties, the standard hours of work in a week may 

be distributed irregularly among the days of the week, provided that the total hours of 

work do not exceed eleven hours in a day. An employer shall be entitled to make the 

compensation work to be performed for hours not worked in a period of two months 

in certain cases. 

Dismissal of the Employees 

There are two types of termination for a job contract: 

1) Termination with notification 

2) Termination without notification based on justifiable reasons 

“Force majeure” events that prevent the employee from working for a period exceeding 

one week. 

Cost of employment 

Minimum Monthly Wage (gross ad net) 

USD 

Net Minimum Wage 

+ Gross Minimum Wage 506 

- Social security premium payment (14%) 71 

- Payment into unemployment insurance fund (1%) 5 

- Income tax (15%) 64 

- Mimimum living allowance* 38 

- Stamp tax (0.66%) 3 

Total Deduction 106 

Net Minimum Wage 400 

Cost for Employer 

- Gross minimum wage 506 

- Employer’s share of social security premium (19.5%)** 99 

- Employer’s payment into unemployment insurance fund (2%) 10 

+ Total Cost for Employer 615 

* For single individuals without children and may vary according to marital status 

and number of children. 

** info needed 

Both the employee and the employer may terminate a job contract concluded for an 

indefinite period. The employer may terminate a job contract by paying the salary of the 

employee corresponding to the notification period. However, the employee covered 

by the labor security preserves the right to subject the validity of the termination of 

employment to judicial review. 

Both the employer and employee have the right to terminate a job contract without 

notification under the following conditions: 

• Reasons of health 

• Cases arising from misconduct and similar reasons 

42 



6 Accounting 

Accounting Regulations And Standards 

In March 2006, the Turkish Accounting Standards (TAS) has been published by 

Turkish Accounting Standards Board. The legal requirements to apply TAS has been 

referred to in the Turkish Commercial Code. Accordingly, companies follow the existing 

Turkish Commercial Code, Turkish Procedural Tax Law and the communiqué issued 

by Ministry of Finance in 1992 applicable to all Turkish entities (excluding financial 

institutions) in preparing the statutory financial statements. 

Turkish Accounting Standards Board translated IFRSs into Turkish in 2006. Since 

2006 Turkish companies listed in Istanbul Stock Exchange are required to prepare 

IFRSs reports. 

Financial Reporting Framework in Turkey 

All companies listed on the Istanbul Stock Exchange are required to follow IFRSs. 

Communique Serial: XI No:25 allows an option to follow IFRSs in one of two ways due 

to delays in translating IFRSs into Turkish: 

• A listed company can follow the official English version of IFRSs as published 

by the IASB, in which case the audit report and basis of presentation footnote 

make an explicit statement of compliance with International Financial Reporting 

Standards. 

• A listed company can follow the Turkish translation of IFRSs. Because of the 

translation delay, the audit report and basis of presentation footnote state that the 

financial statements comply with “IFRSs as adopted for use in Turkey”. 

Under Capital Markets Board (CMB) regulations, all listed companies, financial 

intermediaries, mutual funds, investment partnerships, and companies not listed but 

considered as public are subject to CMB regulations. With minor exceptions, these 

CMB standards generally conform to International Financial Reporting Standards 

(IFRSs) prevailing as of 31 December 2004. 

Starting from 31 December 31 2006, financial institutions other than insurance 

companies, prepare their financial statements in accordance with the Turkish 

Accounting Standards which are in line with IFRSs. However, there are certain 

departures from IFRSs as explained in communiqués of Banking Regulations and 

Supervision Agency (BRSA) like non-consolidation of non-financial institutions. 

A separate set of accounting principles together with uniform chart of accounts 

applicable to insurance companies are issued by Undersecretariat of Treasury. 

Financial Statements 

The statutory financial statements should include at least the following: 

• Balance sheet 

• Profit and Loss Statement 

Supplementary financial statements, which are not mandatory for all companies are: 

• Statement of Changes in Shareholders’ Equity 

• Statement of Cash Flows 

• Statement of Cost of Sales 

• Statement of Profit Distribution 

Legal Books 

Taxpayers (with the exception of small shopkeepers or merchants) are required to 

maintain the following books: 

a) Journal 

b) General ledger 

c) Inventory register 

In addition to the above mentioned books, depending on the type of work they perform, 

taxpayers may also be required to maintain certain other books such as a production 

register (may not be maintained based on the accounting for production), a stamp duty 

register and a banking and insurance transactions tax register. The books (other than 

the general ledger) must be notarized prior to their use. Besides the public notaries, 

the Ministry of Finance may authorize other offices to certify legal books of account. 

The Tax Procedures Code requires that legal books of account be maintained in 

Turkish and in terms of Turkish liras. The journal entries are required to be completed 

within ten days from the date of a transaction. Taxpayers who use documents such as 

journal vouchers in their accounting entries may delay recording their transactions in 

their legal books up to 45 days. 

Legal books of account are maintained on a fiscal year basis. When recording 

transactions (i.e. bookkeeping), the requirements of the uniform chart of accounts 

should be complied with. Legal books of account can be maintained manually or on 

computer. The use of computers in bookkeeping does not preclude the certification 

process mentioned above. 

Legal books of accounting and supporting documentation must be retained (for tax 

inspection purposes) for a period of five years from the date of their most recent entry. 

Under the commercial code and social security law, the above period is determined 

as ten years. 

44 



Record Keeping 

Business and professional activities are subject to strict record keeping requirements. 

In business activities partnerships and larger proprietorships are required to keep 

their accrual based accounting records in the journal and ledger system, and produce 

financial statements of, at least, balance sheet and income statement. However, small 

proprietorships have an option of keeping a single book to post their revenues and 

expenses, also details of the inventory account added to the account to give the total 

income or loss of the operations. Naturally, this book keeping represents an exception 

to double entry accounting and, also only the annual depreciation expense of assets 

can be recorded. 

Individuals involved in professional activities keep a single book to record their 

payments and collections whether made in cash or in kind. Depreciation of fixtures, 

equipment, and vehicles used in the activity can be deducted from the income. 

Professional activities conducted in the form of fiscally transparent partnerships keep 

their accounting records in journal and ledger system, and their accrual based income 

will be considered as professional income of the partners. 

Recording entries are to be made at the latest in ten days after the transaction actually 

takes place. Each posting is to be properly supported by source documents. 

In business and professional activities there is a strict rule of producing and forwarding 

an invoice or receipt for the goods provided and services rendered in at the latest 

seven days from the date of the transaction. Failing to produce or receive these source 

documents or providing false or misleading documents necessitate severe fines and 

penalties for both the vendor and the customer, even in some cases these actions are 

considered as criminal offenses. 

Those individuals who have no obligation of book keeping, in order to able to deduct 

their expenses from their gross income, are obliged to keep a file of the related 

invoices and receipts provided from the vendors and the service providers. 

These books and documents must be kept for five years for taxation purposes. The 

duration of keeping these books and records for commercial purposes is ten years. 

Inventory Valuation 

The inventory valuation method is historical cost. Entities can use different types of 

inventory costing methods, like FIFO, specific unit cost, weighted average cost the 

only exception is the LIFO method that can not be used by the tax payers for inventory 

valuation. 

Instead of the historical cost method, companies can use the fair value method for the 

inventory if the market prices are lower than at least 10% of the historical cost on the 

valuation day. 

The inventory goods may loss their economic value substantially because of natural 

disasters, such as fire, earthquake and flood. In these cases, valuation would be done 

by an official valuation board (takdir komisyonu). 

However, the cost of inventory that misappropriated or lost can not be written off for 

taxation purposes. 

Valuation of imported goods is based on the CIF value of the goods plus the customs 

duties, and transportation costs and commissions incurred up to the storage facilities 

of the company. 

Interest and commissions paid for the importation are also included in the value of 

imported goods. 

The exchange rate gains or losses realized between the dates of purchase and that 

of receiving the goods into storage facilities have to be taken into account during 

the valuation of goods. The exchange rate gains or losses realized later on must be 

included either in the cost of goods or expensed directly. 

The financing costs of the goods up to the stage of receiving them to be included in 

the inventory costs. It is optional to include the financing costs incurred later on to 

inventory costs. 

The cost of manufactured goods follows the general accounting principles. Tax payers 

have an option of including the general administrative expenses in inventory costs or 

expensing them. 

Payments made to vendors for their providing credit for purchases must be considered 

as financing expense. Additional payments made for late payment and not included in 

the vendor’s invoice can be optionally included in either inventory costs or financing 

expenses. 

Discounts provided and included in the invoices during the sale of goods can be taken 

into account in inventory valuation. 

Discounts of any form provided by the vendor after the invoicing and delivery of goods 

can be taken into account during the calculation of the related period’s income. 

Discounts provided by vendors at the end of financial periods can not be taken into 

account during the valuation of inventory. 

Accounting for notes receivable and notes payable 

Instead of their book value, notes receivable and payable can be measured by the net 

realizable value. This can be achieved by discounting the account with the interest 

rate of the notes to reach the present value of the receivable or payable. If the interest 

rate is unknown then the discount rate that is determined by the Central Bank will be 

used. 

46 



The same rules are to be applied for foreign currency nominated notes receivable and 

payable. But instead of using the Central Bank discount rates in cases of unknown 

contract interest rates, LIBOR rates are to be used. 

Valuation of foreign currencies 

Cash in foreign currencies are to be valued at the exchange rates of the valuation 

date. The foreign exchange buying rates announced by the Turkish Central bank are 

used to determine foreign exchange gains or losses on the cost of foreign loans. 

Depreciation 

Depreciation is classified under four headings 

1. Straight Line Method 

2. Double Declining Method for taxpayers who keep their accounts on the balance 

sheet basis 

3. Depreciation in Mines determined separately for each quarry 

4. Extraordinary Economic and Technical Depreciation as determined by the 

Ministry of Finance. The assets which are subject to losing totally or partially their 

value because of fire, earthquake, flood, or obsolescence, or those subject to 

extensive usage can be depreciated by using extraordinary depreciation rates. 

These rates are to be determined by the Ministry of Finance on a case by case 

basis. 

Depletion rates for natural resources like mineral and stone reserves can be depleted 

over the rates jointly determined by the Ministry of Finance, and Ministry of Industry 

and Trade on a case by case basis. 

The amount to be depleted is either the costs of the facilities or the price paid for the 

concession. The price paid for the concession includes all the costs incurred by the 

concessionaire before the beginning of expenses. 

Replenishment Fund 

Profits from the sales of depreciable assets or from the insurance compensations 

received for damages of natural disasters can be used as a tax free replenishment 

fund under certain circumstances. 

Depreciable assets are to be replaced by similar quality assets or new models which 

are the result of the technological developments. 

The provision has to be kept at the liability side of the balance sheet at least for 

three years. The remaining amount after the third year has to be added to the taxable 

income of the period. 

Depreciation expense of the new assets is to be offset against the provision. After 

depletion of the provision, normal depreciation practice is to be continued. 

The amount of the provision is limited with the profits from the alienation of the 

assets. If the revenue from alienation of the assets provided in a foreign currency 

and deposited in a foreign currency bank account, then the foreign exchange gains or 

losses have nothing with the provision. The foreign exchange gains or losses will be 

taken into account in the income of the related period. 

Allowances For Receivables 

Turkish income tax system enables business entities to take into account the current 

period’s probable bad debts in calculation of the taxable income by setting up an 

allowance for uncollectible receivables. Since the setting up the allowance causes 

a decrease in the taxable income, its application is subject to strict rules. Only those 

receivables that are at the court stage can enjoy for setting up an allowance. An 

allowance can also be setup for partially uncollectible receivables. 

After setting up the allowances for receivables, they are to be treated under the 

normal accounting principles i.e. the uncollected amounts from the receivable has 

to be deducted from the allowance; while the collected amounts have to be added to 

taxable income of the period. 

In order to accept the probability of failure of collecting the receivables from abroad, 

the debtor is to be sued abroad and the supporting documents of the case are to 

be submitted Turkish representation offices in those countries or an internationally 

accepted document is to be introduced to the tax administration. 

If it becomes clear by a court decision that the receivable can not be collected at all. 

The receivable can be written off. 

Businesses can also write off the amount of receivables that they have given up from 

collection. But in order to write off the related amount, the action is to be based on a 

compromise (sulh) or a bankrupt’s certificate (konkordato) acquired by the entity. 

In order to create that provision the depreciable assets sold or alienated must be 

essential for conducting the business, and management must make a decision to 

replace them and act accordingly. 

48 



7 Intellectual Property Rights 

Patent and intellectual property rights in Turkey 

With the fundamental changes in the economy and business environment, new 

sectors have gained importance as a consequence of the technological changes and 

globalizations of goods and services. Thus, the protection of industrial and intellectual 

property rights has gained importance. 

According to Turkish Intellectual and industrial property rights legislation, the term 

intellectual and industrial property rights contains: 

For the protection of these rights, Turkey has many regulations. Turkey has adhered 

to the Bern Convention for the protection of literary and artistic works, and the 

Rome Convention on the protection of performers, producers and phonogram and 

broadcasting organizations 

To add muscle to enforcement, the Turkish copyright law was changed to make heavy 

fines and even prison sentences regarding the penalties for violations of the rules 

stipulated in TRIPS (Agreement on Trade Related Aspects of Intellectual Property 

Rights). 

• Banderoles (in effect, tax stamps) were made a requirement for any material 

(printed, audio, visual) that was used in a public place. Furthermore, the right 

to convey to the public material by means of devices useful for disseminating 

“markings, sounds or images” was reserved exclusively to the owner of the work. 

• A provision in the law that allowed state-owned broadcasters to make use of 

material without the owner’s permission or without paying him anything was 

repealed. Public broadcasters are now subject to the same permission and 

payment rules as are other broadcasters etc. The right to compose music for a 

work under copyright without the owner’s permission was also revoked. 

• Blank video cassettes, audio cassettes, computer diskettes, CDs, DVDs and 

similar recording media are now required to have identifying marks and serial 

numbers. 

• The institution of neighboring rights was introduced. A number of additions were 

made to bring various parts of the law into line with the international system 

and with the Council of Europe directives. Penalties were also increased for the 

same reason. In order to bring the law in line with TRIPS, changes were made 

to prevent infringements of the rights of those who had associated rights and the 

penalties for these violations were also increased 

• Finally, an obsolete debate over who the copyright owner was in the case of 

cinematic works was resolved. Under the old rule it was the producer; under the 

new rule the owners are the director, the composer of the original music score, 

the scenarist and the scriptwriter. 

Industrial property right protection 

Concerning trademarks, the Turkish legislation consists of the Decree 556 of 1995, 

amended in 2004, and implementing provisions. Decree 556 provides for protection of 

registered marks. Non-registered trademarks are protected under the provisions of the 

Turkish Commercial Code concerning unfair competition. In line with the legislations, 

four major tools are introduced as to protect different kinds of industrial properties: 

• The first group is patents, under which international classifications list the 

following industries: human needs, transportation, chemistry, textile and paper 

works, construction, various engineering works, physics, and electricity. 

• The second group consists of trademarks, which are classified into 45 subgroups. 

• The third group is industrial design, which has a wider classification. 

• The fourth group is geographical instruments, which does not have a general 

expected classification, rather a classification based on the geography and 

property of regions. 

Intellectual Property Right Protection 

Rules and norms about intellectual property rights are mostly arranged and controlled 

by the Culture Ministry. The legal framework of intellectual property was derived from 

Law no. 5846 on Intellectual and Artistic Works, which was approved on Dec. 5, 1951. 

This law was modified by Law no. 4630 in 2001 and Law no. 5101 in 2004. With 

these improvements, standards and norms about copyright policy become closer 

to international standards and the requirements of the World Intellectual Property 

Organization, or WIPO. These improvements include: 

• Patents and utility models 

• Trademarks 

• Intellectual and industrial designs 

• Geographical signs 

• Topographies of integrated circuits 

Turkey is a signatory to various international treaties on intellectual and industrial 

property rights. Pursuant to Article 90 of the Turkish Constitution, international treaties 

duly ratified and promulgated are treated the same as internal law. Below is a table 

indicating the international treaties signed in the field of intellectual and industrial 

property rights and Turkey’s status therein: 

50 



1. Patents and Utility Models 

The Decree Law No. 551 for the Protection of Patents aims at the protection of 

inventions by way of granting patents and utility model certificates for the purpose 

of promoting inventive activity and contributing to technical, economic and social 

development by implementing inventions in industry. The holder of a patent is entitled 

to prevent the following actions of third persons performed without his/its prior 

permission: 

(i) 

(ii) 

production, sale, use or importation of patented products or keeping same 

in possession for purposes other than personal needs, or 

use of a process (i.e. material, equipment, etc.) which is the subject matter 

of the patent, or 

(iii) offers made by third persons to others for the use of a patented process, the 

use of which is known to be or is known to have been prohibited, or 

(iv) the sale, use, importation or keeping in possession of the products obtained 

directly through the patented process. 

2. Trademarks 

The new trademark system in Turkey is embodied in the Decree Law No. 556 for the 

Protection of Trademarks Pursuant to Article 9 of the Decree Law No. 556, the holder 

of a trademark right is entitled to prevent the following actions of third persons: 

(i) 

(ii) 

the use of a symbol being identical to a registered trademark and relating to 

the product and service within the scope of such registered trademark, or 

the use of a symbol, which is likely to create confusion in the general opinion 

of consumers due to being identical or similar to a registered trademark and 

relating to identical or similar products and services within the scope of such 

registered trademark, or 

(iii) the use of a symbol identical or similar to a registered trademark but 

relating to different products and services from those within the scope of 

such registered trademark, which, however, is likely to exploit or harm the 

reputation of the registered trademark. 

3. Intellectual and Industrial Designs 

Intellectual and industrial designs are regulated under the Decree Law No. 554 for 

the Protection of Intellectual and industrial Designs The Decree No. 554 aims at the 

protection of various features of a product, either in total or in part, including ornaments 

or other elements such as lines, colour, shape, texture, sound, elasticity, material 

or other characteristics of a product perceived by human senses. Article 2/1 of the 

Decree Law No. 554 provides that protection is available to natural and legal persons 

domiciled or possessing an intellectual and industrial or commercial establishment 

within the territory of the Republic of Turkey or to persons entitled to file applications 

under the provisions of the Paris or Bern Conventions or the Agreement by which the 

World Trade Organization was established. 

4. Geographical Signs 

Geographical signs are regulated under the Decree Law No. 555 for Protection 

of Geographical Signs . The Decree Law No. 555 aims at the protection of signs 

indicating the origin of a product which possesses a specific quality, reputation or 

other characteristics attributable to a place, area, region or country of origin. Pursuant 

to Article 15 of the Decree Law No. 555, the holder of a geographical design right will 

be entitled to prevent the following actions of third persons: 

(i) 

(ii) 

any direct or indirect commercial use of a registered name in respect of 

products similar or comparable to the products registered or any use of the 

name which will exploit the reputation of the registered name, or 

use of a name defining the true geographical place but conveying a false 

impression in the general opinion of public as to the origin of the product, or 

(iii) use of false and misleading indication or wording on the packaging or in 

the promotion or advertisement of the product as to its origin, nature or 

essentialqualities, or 

(iv) the packaging of the product in a mode to mislead the public as to the origin 

of the product. 

With the fundamental changes in the economy and business environment, new 

sectors have gained importance as a consequence of the technological changes and 

globalizations of goods and services. Thus, the protection of industrial and intellectual 

property rights has gained importance. 

For the protection of these rights, Turkey has many regulations. Turkey has adhered 

to the Bern Convention for the protection of literary and artistic works, and the 

Rome Convention on the protection of performers, producers and phonogram and 

broadcasting organizations. 

Asset valuation 

Real Estate and Asset Valuation specialization is a new profession very much required 

by the Turkish Economy and Markets. The subject of Real Estate and Asset Valuation 

is independent determination by the hand of a valuation specialist of values of real 

estate, estate and related rights and liabilities, assets registered in the balance sheets 

of companies and banks, guarantees taken by the same, rights and liabilities arising 

from the agreements they signed, and many assets alike on a certain date. 

52 



A valuation specialist is a professional who engages in valuation activity. Valuation 

specialists may work in valuation companies by a service contract or they may work as 

self-employed specialists. To become a valuation specialist, one has to graduate from 

a four-year higher education institution and must have obtained a Valuation Specialist 

License granted by Turkish Capital Market Board (SPK). 

Some international institutions have been formed to determine the rules to be followed 

during valuation processes and the international standards on the qualifications of 

valuation specialists. Among these institutions are: International Valuation Standards 

Committee, Appraisal Institute, Institute of Real Estate Management, etc. Existence 

of numerous international institutions on the subject of valuation is an indicator that 

shows how much importance this profession has gained internationally. Government 

institutions in Turkey on this subject are the Capital Market Board (SPK) and Banking 

Regulation and Supervision Agency (BDDK). 

Provider Of Asset Valuation Services (Certified Public 

Valuer) 

The Appraisal Companies (AC) are professional institutions which employ appraisers 

to determine values of real estates, components of the real estates and real estate 

projects by gathering, analyzing, and applying relevant information with respect to the 

general accepted international principles of valuation. 

The requirements for the AC’s that will operate according to the capital market 

regulations are as follows. Note that other AC’s are out of the scope of these 

requirements. 

• Establishment in the form of joint stock corporation 

• Shares must be issued in terms of cash 

• A minimum 200,000 TL of paid in capital 

• A minimum 51% of the capital must belong to at least two responsible appraisers 

• Including the responsible appraisers at least five appraisers must be employed 

• Adequate office and equipment and qualified employees 

8 Investing in Turkey 

Turkey is a country offering 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. 

Large And Growing Economy 

• Booming economy (USD230 billion to USD618 billion GDP from 2002 to 2009) 

• Sustainable economic growth (4.3 percent annual average real GDP increase for 

the last seven 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 to the EU 

area in 2009 

• Institutionalized economy fueled by over USD83 billion of FDI in the last seven 

years and ranked as the 15th most attractive FDI destination for 2008-2010 

(UNCTAD) 

Populatıon 

• A population of 73 million people 

• Largest youth population compared with the EU 

• Median age 28.8 

• 60 percent of the population under the age of 35 

• Young, dynamic, well-educated and multi-cultural population 

Qualıfied Labor Force 

• Over 24.7 million young, well-educated and motivated professionals 

• Labor productivity with an annual average growth of 4.4% between 2002-10 

• 5th largest labor force compared with the EU 

• Consumer base and motivated work force 

• Approximately 450,000 graduates from circa 150 universities 

• Around 550,000 high school graduates, including one third from vocational and 

technical high schools 

54 



Liberal And Reformıst Investment Clımate 

• A dynamic and mature private sector with USD102 billion worth of exports and an 

increase of 183% between 2002 and 2009 

• Highly competitive investment conditions 

• Strong industrial and service culture 

• Equal treatment for all investors 

• More than 23,000 companies with international capital 

• International arbitration 

• Guarantee of transfers 

Infrastructure 

• New and highly developed technological infrastructure in transportation, 

telecommunications and energy 

• Well-developed and low-cost sea transport facilities 

• Railway transport advantage to Central and Eastern Europe 

• Well-established transportation routes and direct delivery mechanism to most of 

the EU countries 

Centrally Located 

• A natural bridge between both East-West and North-South axes, thus creating an 

efficient and cost effective outlet to major markets 

• Easy access to 1.5 billion customers in Europe, Eurasia, the Middle East and 

North Africa 

• Access to multiple markets worth USD22 trillion of GDP 

Energy Corrıdor And Termınal Of Europe 

• An important energy terminal and corridor in Europe connecting East and West 

• As an energy transit country, Turkey currently has the capacity to transport 121 

million tons of oil to the world markets per annum. Once the ongoing projects are 

completed, the annual transit capacity will increase to 221 million tons of oil and 

43 billion m³ of natural gas. 

Low Taxes & Incentıves 

• Corporate Income Tax reduced from 30% to 20% 

• Individual Income Tax varies from 15% to 35% 

• Tax benefits and incentives in Technology Development Zones, Industrial 

Zones and Free Zones could include total or partial exemption from Corporate 

Income Tax, up to 80% grant on employer’s social security share, as well as land 

allocation 

• New R&D and Innovation Support Law 

• Region and sector-based incentive system 

Customs Unıon Wıth The Eu Sınce 1996 

• Customs Union with the EU since 1996, and Free Trade Agreements (FTA) with 

16 countries 

• More FTAs underway 

• Accession negotiations with the EU since 2005 

Large Domestıc Market 

• 30 million internet users in 2009, up from 4 million in 2002 

• 63 million GSM users in 2009, up from 23 million in 2002 

• 44.4 million credit card users in 2009, up from 16 million in 2002 

• Over 85 million airline passengers in 2009, up from 33 million in 2002 

• 27.3 million international tourist arrivals in 2009, up from 13 million in 2002 

Ease Of Setting Up Business 

Nearly all industries are open to foreign direct investment without screening or 

prior approval. Some areas, such as the financial and petroleum sectors do require 

government approval. Others, such as media and maritime transportation are only 

allowed a certain percentage of foreign ownership. 

Leading sectors that have flourished as a result of increased foreign direct investment 

include: banking; trade and retail chain stores; telecommunications; tourism; 

automotive and transportation equipment manufacturing; food, beverage and tobacco; 

chemical and petroleum products; electrical machinery and electronics. 

Turkey has been experiencing steady economic growth since new reforms have 

increased investment opportunities in the private sector. What’s more, internal 

development and investment programs have given way to incentive opportunities of 

which foreign and domestic business can take advantage. These incentives include: 

• Exemption from customs duties and fund levies 

• Value Added Tax exemptions for machinery and equipment purchases 

• Credit allocation from the budget 

• Interest support for small and medium enterprises, R&D and environmental 

projects and projects in 50 prioritized development provinces 

56 



• Free land, income tax relief, employer’s share for Social Security relief and 

energy support in some regions 

9 Listing Rules in Turkey 

Turkey has three types of regions that determine the type of incentives available: 

developed regions; normal regions and priority regions. Throughout these areas, 

Organized Industrial Zones and Technology Development Zones have been created 

to promote the domestic economy. Free trade zones have also been created in some 

regions to attract more investors. 

Pipeline Projects in Turkey 

Turkey’s priority is to secure its energy resources. In order to achieve this goal, Turkey 

is carrying out many pipeline projects for both natural gas and oil. Once they are 

completed, the following projects will provide secure energy resources for both Turkey 

and Europe. 

• Baku-Tbilisi-Ceyhan* COPL Project 

• Turkey-Greece-Italy NGTL Project (ITGI) 

• Transcaspian Turkmenistan-Turkey Europe NGTL Project 

• Azerbaijan-Turkey NGTL Project 

• Iraq-Turkey NGTL Project 

• Egypt-Turkey NGTL Project 

• Turkey-Bulgaria-Romania-Hungary-Austria NGTL Project (Nabucco Project) 

• Eastern Black Sea NGTL 

• Western Black Sea Project 

• Natural Gas Underground Storage Project 

*Construction of the Baku-Tbilisi-Ceyhan COPL was completed in 2005. The annual carriage 

capacity of this pipeline is 50 million tons of crude oil. It is an internationally recognized facility 

which transports Caspian crude oil to the Mediterranean region via Turkey. 

Financing a Business 

Turkey is a member of the Organization for Economic Cooperation and Development. 

As such, its banking regulations do not vary significantly from those of the U.S. and 

European Union. The Central Bank of Turkey and Banking Regulating and Auditing 

Commission oversee banking activities within the country. Foreigners are able to open 

bank accounts in Turkey, as they are often requirements for establishing a business or 

purchasing property in the country. 

A number of Turkish and foreign commercial and investment banks can help 

finance foreign investment projects in Turkey. The Export-Import Bank, World Bank 

/International Bank for Reconstruction also offer a variety of credit and financing 

options for foreign businesses. 

Istanbul Stock Exchange 

Istanbul Stock Exchange (ISE) provides a fair and transparent environment for 

trading of various types of securities including equities, ETFs, warrants, government 

bonds, Treasury bills, corporate bonds, repo and reverse repoagreements, foreign 

securities (Eurobonds issued by the Turkish Treasury). ISE has fully computerized 

trading systems and surveillance with on-line, real-time data dissemination. Currently, 

there are four main markets operating at the ISE; Stock Market, Emerging Companies 

Market, Bonds and Bills Market and Foreign Securities Market. 

Markets and sub-markets of the ISE are as follows: 

• Stock Market 

• National Market 

• Second National Market 

• Collective Products Market 

• Watchlist Companies Market 

• Emerging Companies Market 

• Bonds and Bills Market 

• Outright Purchases and Sales Market 

• Offering Market for Qualified Investors 

• Repo/Reverse Repo Market 

• Foreign Securities Market 

• International Bonds Market 

Listing Criteria on the National Market 

Audit: Financial statements of the company for the last three years and the respective 

interim period must have been independently audited. Operating Term: Minimum 

three calendar years must have elapsed since establishment and financial statements 

for the last three years must have been publicly disclosed. 

Profit: The company must have recorded profits before tax in the last two years prior 

to the application date (or in the last one year if the market value of the free-floating 

shares is minimum TL 45 million, or the free float rate is minimum 35%). 

Shareholders’ Equity: The shareholders’ equity in the last independently audited 

financial statement must be at least TL 16 million. 

58 



Market Value and Free Float Ratio: Market capitalization value of the publicly offered 

must be at least TL 24 million and the ratio of nominal value of these shares to the 

paid-in or issued capital must be at least 25% (if this ratio is below 25%, market 

capitalization of the publicly offered shares must be at least TL 45 million). 

Sound Financial Structure: The ISE should examine the corporation’s financial 

structure and accept its ability to continue as a going concern. 

Others 

• There must be no significant legal disputes which might affect the company’s 

production ability and activities, and 

• The company’s legal situation with regard to its establishment and activities 

as well as the legal situation of its shares must be documented to verify their 

compliance with the respective legislation. 

Collective Products Market 

The Collective Products Market has been created in order to ensure that the shares 

of the investment trusts, real estate investment trusts and venture capital investment 

trusts, exchange traded funds participation certificates, warrants and other structured 

products are traded in a special market segment. Under this separate section the 

prices of the securities are determined in a regulated and transparent market under 

competitive conditions. The principles governing trading and settlement on the 

National Market also apply in the Collective Products Market. 

Besides multiple price-continuous auction method, continuous auction via market 

making or single price auction systems could also be employed as the trading method. 

About RSM International 

RSM International is a worldwide network of independent accounting and consulting 

firms. RSM International and its member firms are separate and independent legal 

entities. RSM International does not itself provide accounting or consultancy services. 

All such services are provided by member firms practising on their own account. RSM 

is represented by independent members in over 80 countries and brings together the 

talents of over 32,500 individuals in over 700 offices worldwide. 

The network’s total fee income of US$3.9bn places it amongst the top six international 

accounting organisations worldwide. Member firms are driven by a common vision 

of providing high quality professional services, both in their domestic markets and in 

serving the international professional service needs of their client base. 

RSM International is a member of the Forum of Firms. The objective of the Forum of 

Firms is to promote consistent and high quality standards of financial and auditing 

practices worldwide. 

RSM International 

Executive Office 

11 Old Jewry 

London EC2R 8DU 

United Kingdom 

Telephone: + 44 (0) 20 7601 1080 

Fax: + 44 (0) 20 7601 1090 

Email: rsmcommunications@rsmi.com 

Website: www.rsmi.com 

About Kapitalkarden 

Kapital Karden is the Turkish member firm of RSM International and may be contacted 

through any of the member and correspondent RSM firms around the world. The 

firm’s main service lines include: assurance and business advisory, tax and corporate 

services and back Office. Kapital Karden offers financially focused services from four 

offices, located in the business centre of Istanbul and offices in Ankara, Bursa and 

Baku. We have 10 highly qualified and experienced partners and 56 professional staff 

60

Doing Business in Turkey - RSM International

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