This publication is a joint project with Doing business in Turkey Contents Disclaimer Executive summary 4 This document is issued by Foreword 6 HSBC Bank A.S. (the ‘Bank’) in Turkey in partnership with Introduction – Doing business in Turkey 8 PricewaterhouseCoopers (PwC). It is not intended as an offer or Conducting business in Turkey 14 solicitation for business to anyone in any jurisdiction. It is not intended Taxation in Turkey 20 for distribution to anyone located in or resident in jurisdictions which Audit and accountancy 32 restrict the distribution of this document. It shall not be copied, reproduced, transmitted or further Human Resources and Employment Law 34 distributed by any recipient. Trade 38 The information contained in this document is of a general Banking in Turkey 40 nature only. It is not meant to be comprehensive and does not HSBC in Turkey 42 constitute financial, legal, tax or other professional advice. You Country overview 44 should not act upon the information contained in this publication without Contacts 46 obtaining specific professional advice. This document is produced by the Bank together with PricewaterhouseCoopers (‘PwC’). Whilst every care has been taken in preparing this document, neither the Bank nor PwC makes any guarantee, representation or warranty (express or implied) as to its accuracy or completeness, and under no circumstances will the Bank or PwC be liable for any loss caused by reliance on any opinion or statement made in this document. Except as specifically indicated, the expressions of opinion are those of the Bank and/or PwC only and are subject to change without notice. This document is not a ‘Financial Promotion’. The materials contained in this publication were assembled in August 2012 and were based on the law enforceable and information available at that time. Executive summary A member of the G-20, Turkey budget deficit to GDP ratio is transportation and logistics, was the world’s 18th largest below Maastricht Criteria), the healthcare and banking; are economy in 2011. Powered current account deficit (CAD) therefore likely to continue to by private consumption and inflation still need to be grow. and supported by robust dealt with. macroeconomic policy Other factors attracting investors framework, the Turkish economy The new investment incentive to Turkey can be summarised as has expanded substantially over package and the incentive for follows: the past decade. In 2010 and savings is believed to have 2011, the Turkish economy grew positive effects on CAD. Also the • The Turkish legal framework by 9.2% and 8.5% respectively, Central Bank of the Republic of offers a level playing field to pushing GDP per capita above the Turkey will maintain its credible foreign investors and domestic USD10,000 mark. inflation-fighting policies stance companies. Foreign ownership in order to sustain price stability. is unrestricted, with no pre-entry Increasing stability, thanks to screening requirements. a restructuring of the banking It is widely expected that the sector and enforcement of tight pace of the growth will decline • Foreign investors are free to start fiscal policy in the wake of the in 2012 owing to a (especially up businesses in company, branch 2001 crisis, as well as the public Eurozone based) global office or liaison office forms. administration reform, the EU slowdown and huge base effect. accession process (in addition to However, the Turkish economy • Issues such as transfer pricing the customs union with the EU) is targeted to be one of the top and thin capitalisation are and attractive tax regimes, have 10 economies in the world, by formally regulated and classified made Turkey a magnet for foreign raising its GDP to USD2 trillion in line with Organisation for investment in recent years. The by 2023. Economic Co-operation and global financial crisis did impact Development (OECD) guidelines investment inflows in 2009 but These factors, together and worldwide applications, it has been recovering for the last with Turkey’s advantageous allowing international businesses 2 years. Turkey is expected to geographical position, young, to comply with the local policies maintain its attractiveness with rapidly growing population with a relative ease. sound macroeconomic indicators, and ever-increasingly qualified a new incentive package and a workforce, mean it is likely • Turkey has signed a Customs new Commercial Code. to remain an attractive target Union Agreement with the EU for investment well into and customs practices are in line Although the Turkish economy the future. Its key sectors, with World Trade Organization has robust macroeconomic including construction, member countries. indicators (where public debt and automotive, energy and utilities, 4 Foreword With a population of 75m, positioned to facilitate the of 331 branches in 62 cities, Martin Spurling Turkey is the 18th largest sustainable growth and serving c.4m clients. Most of Chief Executive Officer economy in the world as of emergence of the Turkish our strengths leverage HSBC’s HSBC Turkey 2011 in terms of GDP size economy. international connectivity and and the population of Istanbul global product expertise. This alone is larger than that of HSBC’s global footprint is also recognised by many 19 EU countries. 60% of the extends to 84 countries and reputable institutions. For population is below the age territories around the world instance, we were awarded of 35 and the country has the and this global connectivity, the Best Debt House in Turkey seventh largest number of coupled with our talented team Award between 2008-2010 by Facebook users in the world. and local know-how, make us Euromoney magazine and our All this highlights a country with very well suited to provide the HSBC GIF Turkey Equity Fund ‘significant mass’, a favourable unique set of services required is the 2010 & 2011 Euro Fund demographic profile, and by our customers. The wide Award winner. Additionally, exceptional growth potential. global reach of HSBC supports Global Finance magazine The young population is one the demands of an increasingly granted us the Best Corporate of the principal reasons behind inter-linked world, including & Institutional Internet Banking the fast growth of the Turkish those related to Turkey’s in Turkey Award in 2010 & 2011 economy over the past decade. strategic location between and we were also awarded the Turkey’s GDP growth in 2011 East and West. Best Foreign Bank in Turkey in outpaced the US and the EU, 2011 Award by EMEA Finance putting it alongside the world’s In 2011, HSBC Turkey magazine. fastest growing emerging developed its three year economies. FDI inflows to the strategic plan, anticipating As part of providing the best country reached US$13.4bn expansion of our network and service to our customers in 2011. Our global research an increase in the number of and business partners, analysts expect Turkey to rank our employees in parallel. In HSBC, in collaboration with 12th in the world by 2050 in line with our strategy, we will PricewaterhouseCoopers, has GDP terms, with a USD2 trillion continue to build upon our produced this Doing business economy. existing customer base, while in Turkey guide to help you investing in our technology, gain valuable insight into the In the aftermath of the global direct banking capabilities Turkish market and the wide crisis, the importance of and our people. Our core goal range of financial services emerging market economies remains to be Turkey’s Leading and investment opportunities has been emphasised and International Bank. that exist. growth levels in these economies are likely to outpace In 21 years we have built a On behalf of HSBC, I would like those of the developed world well-established bank with to take this opportunity to wish for the foreseeable future. diversified businesses ranging you success in your businesses HSBC’s expectation is that 19 from commercial and global in Turkey and beyond, and of the top 30 economies in banking to retail banking and please do not hesitate to 2050 will be those currently wealth management. Today, as contact us if we can help you deemed emerging markets. of September 2012, we have a in any way. At HSBC, we are very well firm business with a network 6 Introduction Doing business in Turkey Driven by private consumption based on independence Key attractions of Turkey machinery and equipment, as Challenges are important and supported by a stable of the Central Bank and a well as priority regions offering macroeconomic policy floating exchange rate regime, • Turkey is located at a close incentives such as free land and • Even though Turkish banks only framework, the Turkish tight fiscal policy, public proximity to Europe (two-three energy support. Investors are have negligible risk exposure economy has grown administration reform, and the hours’ flight to major European also able to benefit from R&D to the problematic Euro zone significantly since the country EU accession process with destinations), the Middle East support and market research economies, it should be ready emerged from the 2001 reform packages enacted by and the Caucasus. Therefore, with the aim of encouraging for a bigger storm in Euro financial crisis. Between the Parliament all contributed Turkey benefits from its exports and increasing the currency block. 2002 and 2011, Turkey’s GDP to the transformation of the location as a bridge between competitiveness of firms in experienced an annual average country after the 2001 crisis. Europe and Asia. It also acts as international markets. • There is a split between growth of 5.4%, versus 1.5% in an energy corridor connecting the east and the west of the EU. Due to global turmoil in Foreign Direct Investment (FDI) these two continents. • The Turkish government the country; economic 2009, Turkey’s GDP contracted inflows to Turkey declined in has also introduced flexible development, investment sharply, but rebounded both 2009 from a high of US$22bn • Turkey entered a customs exchange rate policies and opportunities, infrastructure and in 2010 and 2011, reaching in 2007.