​​​​​Turkey’s investment legislation is simple and complies with international standards while offering equal treatment for all investors. 

The fundamental parts of the overall investment legislation include the Encouragement of Investments and Employment Law No. 5084, Foreign Direct Investment Law No. 4875, the Regulation on the Implementation of the Foreign Direct Investment Law, multilateral and bilateral investment treaties, and various laws and related sub-regulations on the promotion of sectorial investments.

Foreign Direct Investment Law

The aim of the Foreign Direct Investment (FDI) Law No. 4875 is:

  • to encourage FDI in the country

  • to protect the rights of investors

  • to align the definitions of an investor and investment with international standards

  • to establish a notification-based system rather than an approval-based one for FDI

  • to increase the volume of FDI through streamlined policies and procedures
The FDI Law provides a definition of foreign investors and foreign direct investments. In addition, it explains important principles of FDI, such as freedom to invest, national treatment, expropriation and nationalization, freedom of transfer, national and international arbitration and alternative dispute settlement methods, valuation of non-cash capital, employment of foreign personnel, and liaison offices.

The Regulation on the Implementation of the FDI Law consists of specifying the procedures and principles set forth in the FDI Law. The aim of the FDI Law with regard to the work permits for foreigners is:

  • to regulate the work carried out by foreigners
  • to stipulate the provisions and rules on work permits given to foreigners
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Bilateral Agreements for the Promotion and Protection of Investments

Bilateral Agreements for the Promotion and Protection of Investments have been signed from 1962 onwards with countries that show the potential to improve bilateral investment relations. The basic aim of bilateral investment agreements is to establish a favorable environment for economic cooperation between the contracting parties by defining standards of treatment for investors and their investments within the boundaries of the countries concerned. The aim of these agreements is to increase the flow of capital between the contracting parties, while ensuring a stable investment environment. In addition, by having provisions on international arbitration, they aim to prescribe ways to successfully settle disputes that might occur among investors and the host state. Turkey has signed Bilateral Investment Treaties with 98 countries; however, Turkey is a dualist country, where an international treaty has to be ratified and promulgated in order to become part of the national legal system. Within this regard, 81 Bilateral Investment Treaties out of these 98 have gone into effect so far.​

81 BILATERAL INVESTMENT TREATIES

Afghanistan, Albania, Argentina, Australia, Austria, Azerbaijan, Bangladesh, Bahrain, Belarus, Belgium-Luxembourg, Bosnia and Herzegovina, Bulgaria, China, Croatia, Cuba, Czech Republic, Denmark, Egypt, Estonia, Ethiopia, Finland, France, Georgia, Germany, Greece, Guatemala, Hungary, India, Iran, Israel, Italy, Japan, Jordan, Kazakhstan, Kosovo, Kuwait, Kyrgyzstan, Latvia, Lebanon, Libya, Lithuania, Macedonia, Malaysia, Malta, Mauritius, Mexico, Moldavia, Mongolia, Morocco, Netherlands, Oman, Pakistan, Philippines, Poland, Portugal, Qatar, Romania, Russian Federation, Saudi Arabia, Senegal, Serbia, Singapore, Slovakia, Slovenia, South Korea, Spain, Sweden, Switzerland, Syria, Tajikistan, Thailand, Tanzania, Tunisia, Turkmenistan, Ukraine, United Arab Emirates, United Kingdom, United States of America, Vietnam, Uzbekistan, Yemen.

Source: Ministry of Trade​

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Double Taxation Prevention Treaties

Turkey has signed Double Taxation Prevention Treaties with 85 countries. This enables tax paid in one of two countries to be offset against tax payable in the other, thus preventing double taxation.

Turkey is continuing to expand the area covered by the Double Taxation Prevention Treaty by adding more countries on an ongoing basis.

85 DOUBLE TAXATION PREVENTION TREATIES

Albania, Algeria, Australia, Austria, Azerbaijan, Bahrain, Bangladesh, Belarus, Belgium, Bosnia and Herzegovina, Brazil, Bulgaria, Canada, China, Croatia, Czech Republic, Denmark, Egypt, Estonia, Ethiopia, Finland, France, Gambia, Georgia, Germany, Greece, Hungary, India, Indonesia, Iran, Ireland, Israel, Italy, Japan, Jordan, Kazakhstan, Kosovo, Kuwait, Kyrgyzstan, Latvia, Lebanon, Lithuania, Luxembourg, Macedonia, Malaysia, Malta, Mexico, Moldova, Mongolia, Morocco, Netherlands, New Zealand, Norway, Oman, Pakistan, Philippines, Poland, Portugal, Qatar, Romania, Russian Federation, Saudi Arabia, Serbia and Montenegro, Singapore, Slovakia, Slovenia, South Africa, South Korea, Spain, Sudan, Sweden, Switzerland, Syria, Tajikistan, Thailand, Tunisia, Turkish Republic of Northern Cyprus, Turkmenistan, Ukraine, United Arab Emirates, United Kingdom, United States of America, Uzbekistan, Vietnam, Yemen.

Source: Revenue Administration (GIB)​

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Social Security Agreements

Turkey has signed Social Security Agreements with​ 30 countries. These agreements make it easier for expatriates to move between countries. The number of these countries will increase in line with the increased sources of FDI.

30 SOCIAL SECURITY AGREEMENTS

Albania, Austria, Azerbaijan, Belgium, Bosnia and Herzegovina, Canada and the Province of Quebec, Croatia, Czech Republic, Denmark, France, Georgia, Germany, Hungary, Italy, Libya, Luxembourg, Macedonia, Montenegro, Netherlands, Norway, Romania, Serbia, Slovakia, South Korea, Sweden, Switzerland, Tunisia, Turkish Republic of Northern Cyprus, United Kingdom. 

Source: Social Security Institution (SSI)​

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​​Turkey’s investment climate has been significantly improved in recent years, reducing tax burden with an internationally-competitive tax system. 

Total Tax and Contribution Rate* – 2018 (% of profit)
Source: World Bank

*Total Tax Rate: Profit or corporate income tax, social contributions and labor taxes paid by the employer, property taxes, turnover taxes, and other taxes (such as municipal fees and vehicle taxes).

​​International Tax Competitiveness – 2018 (Index = 100 as most competitive**)
​​Source: Tax Foundation

**Tax competitiveness measures countries’ tax policies in five categories: corporate income tax, consumption taxes, property taxes, individual taxes, and international tax rules.​
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