Izmir Business Club

Izmir Business Club

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  • Rabia Rahimbayeva
    Rabia Rahimbayeva    Group moderator   Ambassador
    The company name is only visible to registered members.
    Establishing a Business in Turkiye (some tips)
    Dear memebers and all, who has an interest of investing in Turkey !

    Turkey's regulatory environment is extremely business-friendly. You can establish a business in Turkey irrespective of nationality or place of residence. The registration and establishment of a company in Turkey can be completed in one day.

    The process is handled by one ministry which acts as the coordinator between all authorities.

    The first step in establishing a business in Turkey is to fill out the business registration form at the local trade registry office located at the local chamber of commerce.

    Here are the steps to follow:

    • Submit the notarized articles of association .
    • Deposit 0.04% of the capital into either a state bank or the Central Bank of Republic of Turkey
    • Complete the company establishment form and register with the trade registry office.

    International companies may start their activities in Turkey in various forms depending on the investors' development strategies.

    The most common types of legal entities in Turkey are:

    • Limited liability company (Ltd. Sti.)
    • Joint-stock company (A.S.)
    • Branch office
    • Liaison office


    Cost of Labor
    ***********************
    One of the most important aspects of the business environment of Turkey is that 35.6% of the labor force work on the minimum wage which is the highest rate in the EU.

    Minimum Monthly Wage:

    Net minimum wage: 369,06 usd
    Gross minimum wage: 515,08 usd
    * Social security premium payment (14%) ............................ 72,11
    * Payment for unemployment insurance fund (1%) ............. 5,15
    * Income tax (15%) ..................................................................... 65,68
    * Stamp tax (6%) .......................................................................... 3,08

    Cost for Employer:

    Gross minimum wage: 515,08 usd
    + Employer Share of Social Security Premium (19.5%) ..................... 100,44
    + Employer's payment for unemployment insurance fund (2%) ....... 10,30
    Total Employer Cost : 625,82 usd

    //Source: Ministry of Labor and Social Security of the Republic of
    Turkey, and Central Bank of the Republic of Turkey. Valid for the
    first 6 months of the year 2008. Exchange rate is calculated as the
    average of the exchange rates on banknotes (selling) of the last 3
    months (2.1.2008-2.5.2008). 1USD=1.15TRY (approx.)//


    Turkey offers a simple business legislation system with international standards through which all investors enjoy equal treatment. Recent amendments to the existing law will assist Turkey even further with its present improvements in the investment environment.

    Turkey offers:

    1. Legal framework of foreign direct investment
    2. Bilateral Agreements
    3. Bilateral free trade agreements


    1) Legal framework of foreign direct investment

    The aim of Foreign Direct Investment Law is:

    • To encourage FDIs in the country
    • To protect foreign investors’ rights
    • To bring the investors and investments in line with international standards
    • To establish a notification-based rather than approval-based system for FDIs
    • To increase the volume of FDI through established policies

    The Foreign Direct Investment Law provides a definition of foreign investors and foreign direct investments. Additionally, it explains the important principles of FDIs 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 for the implementation of the foreign direct investment law consists of:

    • Specifying the procedures and principles of the issues that are laid down in Foreign Direct Investment (FDI) Law

    The target for the new FDI law on work permits for foreigners is:

    • To regulate the work carried out by foreigners
    • To stipulate the rules about working permits given to foreigners


    2) Bilateral Agreements

    2-a) Bilateral agreements for the promotion and protection of investments

    Since 1962, Turkey has developed an impressive bilateral agreements network including 80 countries. The main purpose of these agreements is to promote the investment flows between the parties, to ensure a more stable investment environment, to provide economic and legal assurance to foreign investors and to establish a favorable atmosphere for economic cooperation.

    2-b) Double taxation prevention treaties

    Turkey signed double taxation prevention treaties with 68 countries which enables offsetting tax paid in one of two countries against the tax payable in the other, preventing double taxation in this way.

    Turkey continues to expand the coverage area of the double taxation prevention treaty by adding more countries on continuous basis.

    2-c) Social security agreements

    Turkey signed Social Security Agreements with 23 countries which ease the movement of the expatriates between countries. The number of these countries will increase parallel to the enlarging spectrum of the FDI origin.


    3) Bilateral free trade agreements

    Turkey has free trade agreements with 15 countries which forms a levy-free environment in intra-trade on an agreed list of goods. This framework explains why many global companies are now using Turkey as the second supply source, not only for EU and rapidly growing Turkish market, but also for Middle East, Black Sea and North Africa, with the added advantage of relatively cheaper but well-educated labor force, coupled with cost-effective transportation.

    Turkey is carrying out negotiations to include Faroe Islands, Georgia, member countries of Gulf Cooperation Council, Jordan, and Lebanon to the existing network in order to attract investors.

    (to be continued)............................
    • 08 Sep 2008, 11:22 am
  • Rabia Rahimbayeva
    Rabia Rahimbayeva    Group moderator   Ambassador
    The company name is only visible to registered members.
    Re: Establishing a Business in Turkiye (some tips)
    *** Direct Marketing

    Especially for those firms whose sales potential is large enough to warrant it, a local affiliate is the best possible way selling to the market without an agent or distributor.

    ** Joint Ventures/Licensing

    The government authority in charge of joint ventures/licensing is the U n d e r s e c retariat of Tre a s u ry, General Directorate of Fore i g n Investment. Especially in large urban centres a highly sophisticated infrastructure exists in terms of legal support as well as financial or consultancy services which may be required by potential foreign investors or joint venture partners.

    * Establishing an Office

    Under the Foreign Investment Law, foreigners may invest in Turkey, engage in commercial activities, participate in partnerships, purchase shares, open branch offices, and establish liaison offices. The General Directorate of Foreign Investment (GDFI) of the Undersecretariat of Treasury is responsible for implementing foreign investment regulations. 77 A foreign company is free to choose between a corporation (Anonim fiirket-A.fi.-), private limited company (limited liability company), or branch office in Turkey. The A.fi. form is more suitable for larger projects since corporations can attract a large number of shareholders and are preferred by banks for credit purposes. The limited company form is more convenient for sales and distribution enterprises. Selling Techniques Once a firm appoints an agent, the agent or distributor expects - and should receive- full support with regard to literature, technical i n f o rmation and advertisement material. Possible govern m e n t buyers and potential private sector buyers should re c e i v e catalogues and other literature clearly indicating the name and address of the local agents/distributors. Both agents and, if possible their principals, should periodically visit existing customers. The detailed information can be found on the web site of The Undersecretariat of Treasury http://www.treasury.gov.tr Especially in larger Turkish cities international trade promotional events such as fairs, exhibitions, and seminars are a common method of sales promotion. These fairs are also opportunities for companies to observe the competition since all major foreign and local suppliers participate in such events.

    * Advertising and Trade Promotion

    Chambers of Commerce and Industry, various associations, and specific sectoral publications serve as potential channels for advertisement. TV commercials or ads in major newspapers are also highly effective.

    * Sales and Customer Services

    Local agents/distributors should have the required service and maintenance ability. Through personal contact the potential customer should be convinced about this ability. It is a further advantage if the firm has established its own office in Turkey and has servicing facilities throughout the country’s major centres. For some of the industrial and consumer products, establishment of a minimum number of service centres is a legal obligation.

    * Public Procurement

    For the adoption of the principles of tendering contained in the EU acquis, studies related to the amendment of Public Procurement Law No. 2886 are completed and a new law covering the norms of the WTO and the Directives of the EU has been prepared by the Ministry of Public Works and Resettlement, the Ministry of Finance and related institutes and institutions, Within the prospect of harmonisation with the EU acquis, the new law on Public Procurement (No. 4734) is adopted on 04.01.2002 and it is published in Official Journal on 22.01.2002 with a Public Procurement Contracts Law (No. 4735) to replace the former Law on Public procurement No. 2886 of 8 September 1983. In pursuant to Article 53 and Temporary Article 5 of the Public Procurement Law No. 4734 the President and the Members of the Public Procurement Board have been appointed. After the new law being published in the Official Journal, upon a draft law proposal amending certain articles of the mentioned law, certain articles of the Law No. 4734 were amended by the Law No. 4761 on 12.06.2002. By these amendments, the new procurement law has been fully aligned with the international standards, particularly with the EU acquis.

    * Need for a Local Attorney

    English-speaking attorneys specialised in commercial law, investment legislation, joint ventures, corporate law, tax law, bankruptcy law, public finance, banking corporations, criminal law, civil law, patent and trade mark applications and in other areas are available for consultation by business people.

    http://www.aegeanexporters.com/
    • 09 Sep 2008, 11:10 am
  • Rabia Rahimbayeva
    Rabia Rahimbayeva    Group moderator   Ambassador
    The company name is only visible to registered members.
    Re^2: Establishing a Business in Turkiye (some tips)
    Some Costs of Doing Business:
    ************************************

    Cost of Electricity USD/kwh:

    1) Double Term Tariff:

    DAY TIME
    - Industry mid voltage .......... 11.52 (cent/kWh)
    - Direct connection to the local power grid with private line (industry) .............. 10.59 (cent/kWh)

    NIGHT TIME
    - Industry mid voltage .......... 5.97 (cent/kWh)
    - Direct connection to the local power grid with private line (industry) .............. 4.05 (cent/kWh)

    2) Single Term Tariff

    DAY TIME
    - Industry mid voltage .......... 13.96 (cent/kWh)
    - Direct connection to the local power grid with private line (industry) .............. 13.74 (cent/kWh)

    NIGHT TIME
    - Industry mid voltage .......... 7.83 (cent/kWh)
    - Direct connection to the local power grid with private line (industry) .............. 7.73 (cent/kWh)

    http://www.tedas.gov.tr/253,2008_Yili_Tarifeleri.html
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    Cost of Water for Industrial Use:

    (as an expample - Manisa Industrial Zone)

    Water*: 0.40 usd/m3
    VAT: % 8
    Total: 0.43 usd /m3
    * water supplied from the locl stream

    ISKI (Istanbul Water and Sewage Administration –reference price): 5.22 usd/m3 (VAT included)
    ** water supplied by the city water grid

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    Cost of natural gas for industrial purposes:

    - Disengaged Consumer: 0,04128 USD/kwh
    - Engaged Consumer: 0,04724 USD/kwh

    (Disengaged Consumer): The group of consumers who consumes more than 1 million m3 annually and qualified to purchase gas from other suppliers.
    (Engaged Consumer): The group of consumers who must purchase gas from the local supplier company.

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    • 11 Sep 2008, 2:18 pm