What Makes Turkey Attractive for Foreign Investment
To learn about Turkey’s tax regime, we hear from one of the leading tax advisers and attorneys in Turkey, Ersin Nazali, who’s the Managing Partner at Nazali Legal & Tax Services.
With its five offices in Turkey (in Istanbul, Ankara, Izmir, Bursa and Denizli) and newly opened offices in Russia and Morocco, the full-service law firm provides a broad spectrum of consultancy services in the fields of social security, customs, legal, and tax with experts from different disciplines to both local and multinational clients.
With many foreign investors attracted to Turkey’s strong economic performance and outlook, can you outline the key considerations for foreign corporate entities wanting to establish business operations in Turkey?
With its large domestic and regional markets, Turkey is one of the fastest-growing economies in the world. Its strategic location provides global connectivity for MNEs. Moreover, the country’s young population is seen as a cost-competitive labour force for many international corporations. The legal environment in Turkey has become extremely investor-friendly thanks to developments in the tax and judiciary system. Pursuant to the Foreign Direct Investment (FDI) Law No. 4875 in Turkey, international investors have gained equal rights and obligations with local investors.
Is Turkey’s tax regime more suited to particular types of business? If so, what are they and what makes them suited to Turkey?
Turkey offers a range of opportunities for a wide variety of sectors by offering generous tax exemptions or deductions. Some of the main contents of incentives are:
- Investment Incentives Schemes
- Employment Incentives
- R&D and Design Incentives
- Technology Development Zone Incentives
- Regional Management Center Incentives
- Export Incentives
Incentives provided for investments can be listed as general investment incentives, regional investment incentives, strategic investment incentives, and project-based investment incentives. Reduced corporate tax, allocation of free investment site, compensating employers’ share of social security premium, interest support, customs and VAT exemption are some of the incentives provided to all investors including foreign ones.
International companies which move their regional management centres to Turkey are also offered special tax advantages.
In Turkey, income tax incentives are provided for newly hired employees. Moreover, the Turkish Employment Agency (“İŞKUR”) offers cash support for employment and personnel training. The Government grants a significant incentive for R&D activities and supports firms within the framework of the Law on Supporting Research and Development Activities No. 5746 and the Law on Technology Development Zones No. 4691. Additionally, TUBITAK supports the research, technology development, and innovation activities of companies with different support mechanisms. International companies which move their regional management centres to Turkey are also offered special tax advantages. On the other hand, special regimes, and tax advantages are provided in the scope of export incentives. Pursuant to Article 11/1-a of the VAT Law No. 3065, export deliveries and services are exempt from VAT.
Overall, there are numerous favourable mechanisms for companies who invest in production, technology and exportation in the country.
Tell us more about the tax services you offer?
At Nazali Tax & Legal we combine expertise and experience with an innovative and dynamic business approach which understands the needs of our clients. We offer truly comprehensive services to our clients and the fact that we have experts from both legal and financial backgrounds means that we’re able to look at a specific case from numerous different points of views. We develop and apply rational tax planning and strategies by virtue of interdepartmental communication. Our services cover not only compliance with tax laws and regimes but also dispute resolution.
What’s on Nazali Tax & Legal Services’ agenda for 2020?
Our goal is to be an international legal consultancy firm and we’re trying to achieve this by broadening our interdependence among countries. We’ve recently opened offices in Russia and Morocco, we’ve set up operations in The Netherlands and we plan to open offices in New York, London and The Netherlands in the near future. Our plan is to offer legal consultancy on a wide range of cases, including cross-border investment projects and multi-jurisdictional M&A projects, and we also aim to offer litigation services to Turkish companies doing business in countries where we have offices. Our core objective is to establish a long-term and trust-based relationship with our clients and to provide the most convenient service in the most accurate and fastest way. We believe that our globalised approach and knowledge-based services will help us to achieve these objectives.