investment legislation is simple and complies with international standards,
while it offers equal treatment for all investors. The backbone of the
investment legislation are the Foreign Direct Investments Law No. 4875,
international treaties and various laws and related sub-regulations on the
promotion of sectoral investments.
Recent amendments to the existing laws help improving Turkey’s investment
1. Legal Framework of Foreign Direct
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 investors and investments 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
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,
transfers, access to real estate, dispute settlement, valuation of non-cash
capital, employment of expatriates, and liaison offices.
The regulation on the implementation of the FDI Law consists of:
• specifying the procedures and principles of the issues that are laid
down in the FDI Law.
The aim of the new FDI Law on work permits for foreigners is:
• to regulate the work carried out by foreigners
• to stipulate the rules on work permits given to foreigners.
2. Bilateral Agreements
2. a. Bilateral Agreements for the
Promotion and Protection of Investments
Bilateral agreements for the promotion and rotection of Investments have been
signed since 1962 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 hosting
state. Turkey has signed Bilateral Investment Treaties with 75 countries.
Afghanistan, Albania, Argentina, Australia, Austria, Azerbaijan, Bangladesh,
Belarus, Belgium, Bosnia and Herzegovina, Bulgaria, China, Croatia, Cuba, Czech
Republic, Denmark, Egypt, Estonia, Ethiopia, Finland, France, Georgia, Germany,
Greece, Hungary, India, Indonesia, Iran, Israel, Italy, Japan, Jordan,
Kazakhstan, Kuwait, Kyrgyzstan, Latvia, Lebanon, Libya, Lithuania, Luxembourg,
Macedonia, Malaysia, Malta, Moldova, Mongolia, Morocco, Netherlands, Oman,
Pakistan, Philippines, Poland, Portugal, Qatar, Romania, Russian Federation,
Saudi Arabia, Serbia, Singapore, Slovakia, Slovenia, South Korea, Spain,
Sweden, Switzerland, Syria, Tajikistan, Thailand, United Arab Emirates, Yemen,
United Kingdom, United States of America, Tunisia, Turkmenistan, Ukraine,
2. b. Double Taxation Prevention Treaties
Turkey has signed double taxation prevention treaties with 77 countries. This
enables tax paid in one of two countries to be offset against tax payable in
the other, thus preventing double taxation.
Albania, Algeria, Austria, Azerbaijan, Bahrain, Bangladesh, Belarus, Belgium,
Bosnia and Herzegovina, Bulgaria, Canada, China, Croatia, Czech Republic,
Denmark, Egypt, Estonia, Ethiopia, Finland, France, Germany, Georgia, Greece,
Hungary, India, Indonesia, Iran, Ireland, Israel, Italy, Japan, Jordan,
Kazakhstan, Kuwait, Kyrgyzstan, Latvia, Lebanon, Lithuania, Luxembourg,
Macedonia, Malaysia, Moldova, Mongolia, Montenegro, Morocco, Netherlands, New
Zealand, Norway, Oman, Pakistan, Poland, Portugal, Qatar, Romania, Russian
Federation, Saudi Arabia, Serbia, Singapore, Slovakia, Slovenia, South Africa,
South Korea, Spain, Sudan, Sweden, Syria, Tajikistan, Thailand, United Arab
Emirates, United Kingdom, United States of America, Tunisia, Turkish Republic
of Northern Cyprus, Turkmenistan, Ukraine, Uzbekistan, Yemen.
Turkey is continuing to expand the area covered by the double taxation
prevention treaty by adding more countries on an ongoing basis.
2. c. Social Security Agreements
Turkey has signed Social Security Agreements with 22 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.
Albania, Austria, Azerbaijan, Belgium, Bosnia and Herzegovina, Bulgaria, Canada
and the Province of Quebec, Czech Republic, Denmark, France, Georgia, Germany,
Libya, Luxembourg, Macedonia, Netherlands, Norway, Romania, Sweden, Switzerland,
Turkish Republic of Northern Cyprus, United Kingdom.
3. Customs Union and Free Trade
A Customs Union Agreement between Turkey and the European Union has been in
effect since 1996. The agreement allows trade between Turkey and the EU
countries without any customs restrictions. The EU-Turkey Customs Union is one
of the steps towards Turkey's acession to the EU.
Turkey has FTAs with 22 countries, creating a free trade area in which the
countries agree to eliminate tariffs, quotas and preferences on most goods and
services traded between them. This framework explains why many global companies
are now using Turkey as a second supply source and manufacturing base, not only
for the EU and rapidly growing Turkish markets, but also for the Middle East,
Black Sea and North African markets, with the added advantage of a relatively
low cost but well-educated labor force, coupled with cost-effective
transportation. The FTAs marked with (*) in the list below are in the process
Albania, Bosnia and Herzegovina, Chile, Croatia, Egypt, Georgia, Iceland,
Israel, Jordan, Lebanon*, Liechtenstein, Mauritius*, Macedonia, Montenegro,
Morocco, Norway, Palestine, Serbia, South Korea*, Switzerland, Syria, Tunisia.
(* in the process of ratification)
Investors' Guide, please click.