Doing business in Turkey requires going through an adventurous process for foreigners. People who do not know Turkish law, culture and business style may be surprised about doing business in Turkey. In this article, we will give some important advice about doing business in Turkey.
Why should you do business in Turkey?
1. Well-Educated Young Population
2. Strong Banking and Finance System
3. Custom Union Agreement with the EU
4. Legal System
5. Tax Advantages
6. Free Market Economy
What do you gain by doing business in Turkey?
Why should you do business in Turkey?
Turkey is an important European country located between the continents of Asia and Europe, surrounded by seas on all four sides. Turkey is neighbor to the Balkan countries, Russia in the north, North African countries in the south, Iran and Iraq in the east, and the European Union in the west.
Turkey is extremely close to many different markets in terms of road, sea, air and rail transportation. The most important advantage is that Turkey is close to different markets and that these markets can be accessed by more than one mode of transportation.
However, doing business in Turkey has other advantages as well. Young and educated population, strong banking and financial system, customs union agreement with the European Union, implementation of European law, implementation of free market economy are just a few of them.
If you wish, let us explain the advantages of doing business in Turkey, respectively and in detail.
1. Well-Educated Young Population
Turkey has a young and dynamic population. The young population in the 15-24 age group constitutes 15.3 percent of Turkey’s population. The ratio of the population in the 15-64 age group, defined as the working age, is 67.9%. The number of high school graduates in Turkey has exceeded 10 million in 2020.
It is known that Turkey’s young population ratio is higher than the young population ratio of 27 European Union member countries. The ratio of the population between the ages of 14-24 in 27 European Union member countries is 10.6 percent.
You can access all these data on the website of the Turkish Statistical Institute.
As can be seen, Turkey has an educated and young population. The vast majority of well-educated young people in working life work in multinational companies. Apart from these, it is possible to reach many young people who are well-trained in areas such as export, consultancy, service and production.
In addition, there are highly experienced managers among the workforce between the ages of 30-45. Most of these managers have national and international experience in their field. These young people in the management level are extremely open to technology and innovations.
2. Strong Banking and Finance System
After the 2001 crisis, with the support of the IMF and the will of the Turkish parliament, revolutionary developments took place in the field of banking and finance in Turkey. The banking and financial system in Turkey was rebuilt. The Banking Regulation and Supervision Institute (BDDK) was established to ensure the supervision of banks.
You can access all these data on the website of the Banking Regulation and Supervision Institute.
In order to improve the banking system, the capital structure of banks was strengthened. The banking and finance system was opened to competition. Thus, an internationally developed banking system emerged in Turkey and more developed than many other countries.
Being a candidate member of the European Union, Turkey has started to use many financial instruments actively. Within the framework of the free market economy, holding and buying and selling foreign currency was made free. Apart from these, capital inflows into the country were facilitated. Turkey actively cooperates with many countries and institutions on banking and finance.
For this reason, banks and financial institutions that will be your most important assistant in doing business in Turkey are subject to an effective audit.
3. Custom Union Agreement with the EU
The Customs Union Agreement entered into force on 31 December 1995. Thus, commercial products could be sold without any customs restrictions between both parties. The Customs Union applies bilateral trade concessions in key economic areas such as agriculture, but does not cover services or public procurement.
Since 1996, Turkey has been one of the EU’s main export and import partners. In this commercial relationship, in which industry is dominant, Turkey’s gross domestic product increased 4 times, making Turkey one of the fastest growing economies in the world.
You can visit the website of the European Commission to get information about the trade relations between the EU and Turkey.
DOWNLOAD THE CUSTOM UNION AGREEMENT
Some basic data on the trade partnership between the European Union and Turkey are as follows;
- Turkey is the EU’s 6th biggest trade partner in 2020.
- The EU is by far Turkey’s largest import and export partner, as well as its main source of investments. In 2020, 33.4% of Turkey’s imports came from the EU and 41.3% of the country’s exports went to the EU.
- Total trade in goods between the EU and Turkey in 2020 amounted to €132.4 billion. The EU’s imports from Turkey were worth €62.6 billion and were led by machinery and transport equipment (€24.1 billion, 38.5%), clothing (€8.3 billion, 13.3%), and agriculture and raw materials (€5.3 billion, 8.5%). The EU’s exports to Turkey totalled €69.9 billion. They were dominated by machinery and transport equipment (€30.6 billion, 43.8%), chemicals (€12.9, 18.5%) and fuel and mining products (€6.4 billion, 9.2%).
- Two-way trade in services between the EU and Turkey in 2019 amounted to €26.5 billion, with EU imports of services representing €13.9 billion and exports €12.6 billion.
As can be seen, Turkey’s exports to the European Union are increasing every year. In fact, Turkey’s foreign trade deficit is decreasing every year. The chart above relates to trade in goods only.
4. Legal System
The Turkish legal system is subject to Continental European law. That is outside the Anglo-Saxon legal system. While Turkish private law is similar to Swiss and German law, administrative and criminal law is based in France and Italy. However, with the latest developments, the universal legal system and understanding in Europe has been adopted in Turkey.
Due to Turkey’s candidate membership to the European Union and the intensification of bilateral negotiations, significant developments have been experienced in law after 2000. Many laws in Turkey were changed quickly. Many fundamental laws such as the Turkish Code of Obligations, the Turkish Commercial Code, the Turkish Penal Code, and the Turkish Code of Civil Procedure have changed.
Apart from these, many new institutions were established in Turkey. Banking Regulation and Supervision Agency, Energy Market Regulatory Authority, Competition Authority are some of them.
Turkish law closely follows current developments. In particular, important steps have been taken to speed up the proceedings. In addition, bureaucracy has been minimized and commercial life has been facilitated. Turkey can provide fast and effective service in many areas with the 4.5G projects it has carried out. Thanks to the UYAP system, the trial has accelerated and effective solutions have been found for judicial problems.
You can access the judicial statistics in Turkey through the UYAP system.
Mediation activities are also developing in Turkey, apart from court proceedings. Thanks to mediation, parties can access their rights quickly and easily. Judicial activities, which have accelerated significantly thanks to the new application, are at an important turning point. It is foreseen that the speed of the judiciary will increase gradually in the coming years.
5. Tax Advantages
Foreigners who want to establish a company in Turkey can complete the application process within 1 day and establish a company with only one signature.
You can read the Full Guide we have prepared about establishing a company in Turkey.
In addition to being easy to establish a company, foreign investors have some tax advantages. Investors benefit from tax advantages for businesses falling within the scope of the Foreign Direct Investment Law. Apart from this, these tax advantages are basic taxes such as VAT, customs duty. However, it is seen that serious reductions have been made in the taxes that must be paid for the employees.
In addition to these, foreigners who invest a certain amount can get a work permit or become an exceptional Turkish citizen, provided that certain conditions are met.
6. Free Market Economy
Free market economy is practiced in Turkey. Since competition is at the forefront in a free market economy, manufacturers and service providers seek innovation.
Turkish society and all the countries around it are open to innovation. For this reason, the product or service produced in Turkey at certain standards can be exported safely.
In addition, thanks to the free market economy, companies can set prices as they wish. As long as it does not cause a social disaster and is against competition, the state does not interfere in the price policy of companies in any way.
Apart from prices, since the circulation and security of money works according to the free market economy, it is possible to trade in many currencies in Turkey. For this reason, doing business in Turkey is easier in every sense than in other countries.
What do you gain by doing business in Turkey?
You can grow your investments quickly by doing business in Turkey. Apart from these, you can export to other countries by using the advantages of Turkey’s human resources, legal system, banking and finance system and free market economy.
As Turkey provides significant advantages to foreign direct investments, you can increase your earnings quickly. In addition, as Turkey is one of the new supply chain legs, you can greatly increase your market share.
You can contact us to start a business in Turkey.