The Turkish economy is an emerging market economy (based on the IMF definition). Turkey is the world's 20th largest economy by GDP, and the 11th largest economy by purchasing power parity.

Turkey's dominant industries are agricultural and industrial manufacturing, including textiles, motor vehicles, ships, other vehicles, construction materials and white goods.

According to the Address Based Population Registration System, Turkey's population was 83.6 million as of 2020. Turkey has a predominantly young population. Although the population consists of a high percentage of Turks, there are also Kurds, Arabs, Zazas, Megrels, Georgians and Circassians. Turkish is the main language spoken, but Kurdish and Arabic are also spoken.

The adoption of the free-market system has accelerated in the last 30 years. Independent regulatory and supervisory boards such as the Capital Markets Board, Turkish Competition Authority, Banking Regulation and Supervision Agency, Energy Market Regulatory Authority, and Information and Communication Technologies Authority were established during the 90s and 2000s to narrow the sphere of influence of politics and to regulate and supervise some privatised sectors. With its thriving economy, strategic geopolitical position, promising growth opportunities, hardworking business community and a young population, Turkey attracts foreign investors from all over the world.

Working hours in public institutions in Turkey are generally between 08:30am to 12:30pm and 1:00pm to 5:30pm but working hours arrangements in private institutions may vary.

The main public holidays are:

The Islamic celebrations of Ramadan and the Feast of Sacrifice are also counted as public holidays, but the date changes every year according to the religious calendar.

It is currently indicated that the 5.8% growth targeted in the New Economic Programme in 2021 is unrealistic. International organisations such as the OECD and the IMF predict that growth will be between 3% and 5%. The main economic agenda in 2021 involves increasing international investors' trust in the Turkish economy.

Turkey's last presidential election was held on June 2018, and Recep Tayyip Erdogan was re-elected. Municipal elections were held in 2019, and the current government and their supporting alliance received a significant share of the vote. However, the opposition alliance took the lead in major metropolitan cities such as Izmir, Istanbul, Ankara and Antalya. The next presidential election is expected to be held in June 2023.

Tax. Recent changes to the tax legislation include the following:

Banking. A Presidential Decree (No 3031 published in the Official Gazette No 31260 dated 30 September 2020) reduced the Banking and Insurance Transactions Tax (BITT) rate from 1% to 0.2%, effective from its date of publication.

Crypto assets. A regulation issued by the Central Bank of Turkish Republic (published in the Official Gazette No 31456 dated 16 April 2021) banned the use of crypto assets for payments.

Under the Regulation Amending the Regulation on Measures to Prevent Money Laundering and Terrorist Financing (published in the Official Gazette No 31471, dated 1 May 2021), crypto asset service providers are now subject to money laundering legislation.

Advertising. On 5 May 2021, the Advertisement Board of the Ministry of Trade published a business practices guideline, the Guideline on the Commercial Advertising and Unfair Commercial Practices Made by Social Media Influencers, which directly concerns advertisers, agencies, social media and social media influencers.

Turkey's legal system is based on civil law and is broadly in accordance with continental European law.

There are no general restrictions on foreign investment, ownership or control in Turkey. Foreign investors are free to incorporate or invest in companies, or open branches or liaison offices. Foreign individuals can freely invest in real estate, subject to some general (geographical and military zone) limitations. Foreign investment companies may require a permit to own real estate property (depending on their fields of operations). Foreign investors outside of Turkey can freely buy and sell Turkish securities or other capital market instruments through authorised banks or brokerage houses.

Under the Foreign Direct Investments Law (No 4875) and the Circular on Capital Movements (dated 2 May 2018), there are no exchange control or currency regulations on the repatriation of funds by foreign investors. However, the Turkish government recently issued the Council of Ministers Decree on the Protection of the Value of the Turkish Currency (No 32) to protect the value of Turkish Lira, which, while intended to regulate transactions between Turkish residents, has started to also affect Turkish corporations established by foreign citizens. In general, foreign currency can be transferred abroad through Turkish banks. However, transfers exceeding USD50,000 must be reported by Turkish banks to the Central Bank of Turkey within 30 days from the date of transfer.

There are no general restrictions on the acquisition of shares by foreign investors.

There are certain regulated sectors in which foreign ownership and investment are either prohibited by law or limited to a certain maximum threshold, for example:

Foreign investors must obtain prior approval from the regulatory authority to invest in some other sensitive sectors such as:

Turkey applies partial or total weapons embargos on the following countries:

In addition, sanctions are imposed by Turkey in line with UN regulations on:

Licensed entities operating in Turkey that are regulated and supervised by the Turkish Financial Intelligence Unit (MASAK) Financial Crimes Investigation Board and the Financial Crimes Co-ordination Board (MSMKK) must ensure anti-money laundering compliance. The laws preventing money laundering include the:

Turkey offers various incentives based on volume, project, type of investment or region. The incentives include:

Capital companies are the most common form of business entities in Turkey for both local and foreign investors.

Investors can choose to participate in an already existing capital company or to establish a new company. 100% ownership of Turkish corporate entities by foreign (non-resident) companies and/or foreigner individuals is permitted. Turkish law provides for both:

Under the new Turkish Commercial Code (No 6102, dated 13 January 2011), both ASs and LTDs can now be incorporated by only one shareholder. The minimum capital requirement for ASs is TRY50,000. The minimum capital requirement for LTDs is TRY10,000.

In both company types, the incorporator shareholder/s can be resident or non-resident companies or individuals.

In principle, the liability of shareholders is limited to the share capital subscribed to, for both ASs and LTDs. However, the shareholders and management of an LTD are also liable for amounts owed by the company to government authorities for taxes, duties and charges (such as taxes, administrative fines and social security premiums) that cannot be collected from the company

Company type, fields of activity, operations, and other corporate matters are governed by the company's articles of association within the framework set out in the Turkish Commercial Code.

In an AS, the management body is the board of directors, which must have at least by one member (either a legal entity or individual). Shareholders do not participate directly in the management. The board of directors can delegate powers to managers or directors to represent the company in daily affairs.

In an LTD, the management body is the board of managers, which must have at least one member. One of the shareholders (either legal entity or individual) of the company must be a manager of the company. The board of managers can delegate powers to managers or directors to represent the company in daily affairs.

From a practical point of view, ASs are better developed and more flexible. In addition, AS company share transfers are more practical for future reorganisations (and can be kept confidential). However, LTDs are commonly used for smaller-scale projects and investments.

Since LTD and AS companies are now closer in structure under the new Turkish Commercial Code in effect since 2012, foreign investors may prefer to incorporate an AS instead of an LTD due to its flexibility in corporate transactions and limited shareholder liability for the company's public debts.

Although the procedure can vary due to the type of entity and other specifications, the incorporation of a company, branch or liaison office in Turkey generally includes:

The documents required for the establishment of companies and liaison offices is not complicated, and mainly consists of the documentation of the shareholder companies or individuals such as their activity certificates and certificates of good standing, or passport/identification and residency information. However, there are some additional requirements for branches, including, among other things:

Foreign documents also require either an apostille verification (based on the HCCH Convention Abolishing the Requirement of Legalisation for Foreign Public Documents 1961) or Turkish consulate verification. The incorporation procedure takes less than one week following submission of documentation. For branches and liaison offices, an additional two weeks is required to obtain special permission or confirmation from the relevant authorities.

Boards of ASs and LTDs must prepare documents in compliance with certain standards within three months from the end of their accounting period for each financial year, including:

Companies traded on the stock exchange or operating in sectors such as banking, insurance are subject to additional reporting requirements.

All companies must also submit tax declarations monthly, quarterly and annually for various taxes (such as VAT, corporate tax, withholding tax and so on).

External independent audits are required if the company exceeds one of the following thresholds:

The minimum capital requirement for an AS is TRY50,000, and the minimum capital requirement for an LTD is TRY10,000. In an AS, one-fourth of the capital must be paid into the company accounts (temporary accounts must be established before Chamber of Commerce filing for incorporation) at commencement (which can be freely used for expenses of the company following establishment) and the remaining can be paid into the company within 24 months. This requirement was also relevant for LTDs but was abolished as of 15 March 2018. LTD shareholders can now deposit the capital into company accounts any time within the 24 months following company formation.

Intellectual property rights or other property rights can be deposited as in-kind capital items. An independent valuation approved by the court is required for these purposes. Personal enterprise, goodwill and undue receivables cannot be used as in-kind capital.

Under the Turkish Commercial Code, the rights granted to the shareholders of an AS or an LTS are divided into:

The main management body of an AS or LTS must have a minimum of one member. The member can be a Turkish or foreign natural or legal person. However, in LTDs, at least one board member must be a shareholder.

The board can be composed of foreign real or legal persons. There is no requirement for the members of the board of directors to be Turkish citizens or resident in Turkey.

Under Article 553 of the Turkish Commercial Code, if the members of the board of directors do not fulfil their obligations arising from the law or the articles of association, they are liable to the company, shareholders and company creditors for the losses they incur. If more than one person is liable to compensate for the same damage, each of those individuals may be jointly and severally liable, depending on their fault and the specific circumstances.

There are no comprehensive liability provisions for parent companies in the Turkish Commercial Code. The Turkish Commercial Code sets out specific group company rules for the situation where a parent company's abuse of its subsidiary company's causes a problem for the subsidiary's other shareholders.

The key pieces of environmental legislation include the:

In general, a business must obtain the relevant permissions and fulfil its environmental responsibilities according to standards and methods determined in the regulations, in order to receive a construction permit or maintain an operating licence and/or building occupancy permit. The obligations and sanctions in the Environmental Law vary depending on the field of operations.

The main environmental taxes also operate as environmental regulations. The users of houses, workplaces and other buildings are subject to environment cleaning tax under Article 44 of the Law on Municipal Revenues (No 2464, Official Gazette No 17354, dated 29 May 1981). The amount of the tax is based on the amount of water used.

Some other taxes in Turkey such as the Special Consumption Tax and Motor Vehicles Tax have environmental characteristics, although they are not used for the purpose of protecting the environment.

Employment relationships are mainly regulated under the Labour Law (No 4857) and its secondary legislation. The Labour Law is applicable to all types of employees except sea/air transport workers, sportsman, journalists and certain others mentioned in Article 4 of the Labour Law. The Ministry of Employment and Social Security Affairs is the relevant institution for employment issues.

Foreign employees are subject to the same employment laws applicable to local employees. See Question 14 for residence and permit requirements.

Turkish nationals working abroad are subject to the law governing their employment contract (which may be Turkish law) and may also be subject to the relevant host state's employment laws.

The Labour Law regulates the rights and responsibilities of employers and employees in relation to working conditions and the working environment, and sets out a number of mandatory rules for all employment contracts in Turkey (see Question 13, Implied Terms).

Under Article 8 of the Labour Law, employment contracts are not generally subject to special formalities. However, employment contracts with a duration of one year or more must be in written form. Contracts of less than one year duration can be executed verbally. However, if the contract is made verbally, the employer must provide a written contract to the employee within two months. These documents are exempt from stamp duty.

The written contract must set out the following employment conditions:

There are a number of mandatory implied terms for all employment contracts under the Labour Law, including:

The Law of Trade Unions and Collective Bargaining Agreements (No 6356 published in the Official Gazette No 28460, dated 7 November 2012) regulates collective bargaining agreements. Under Article 2/1h, a collective bargaining agreement is an agreement between a labour union and an employer or employers' union regulating the conclusion, content and termination of employment contracts. Under Article 35, collective bargaining agreements must be in written form and for a period of between one and three years. The agreement cannot be extended or shortened by the parties after signing and cannot be terminated before the contracted period. The duration of collective bargaining agreements for works whose activities last less than one year can be less than one year. If the works are not completed, these agreements continue to apply until the end of one year.

There are three types of collective bargaining agreements.

The Code of International Private and Procedure Law (No 5718) applies if there is an element of foreignness in employment relations. The Law on International Labour Force (No 6735, dated 13 August 2016) regulates work permits for foreign employees. Work permits are mandatory for employers seeking to hire foreign employees. Administrative fines can be imposed on both parties for non-compliance, and the foreign employee can even be deported.

Applications are evaluated by the Ministry of Family, Labour and Social Security. An application made from abroad must be made to the Turkish consulates located in the applicant's country of origin or permanent residence. Applications are then forwarded to the Ministry. If the documents are complete, the application will be finalised within 30 days.

Turkish companies must comply with certain requirements to employ foreign employees, as follows:

However, if foreign investors incorporate a company in Turkey and meet various thresholds in terms of turnover, exports, minimum number of employees and investment amount, foreign key employees may be exempted from the evaluation criteria.

Limited term. A work permit may be issued for a limited period, and extended for further limited periods. A standard work permit is granted for a maximum term of one year at the first application.

Unlimited term. Foreigners that have held a work permit for eight years or that hold a long-term residence permit can be granted a work permit for an unlimited duration.

An unlimited work permit grants foreigners the same rights and status as Turkish citizens, except for:

Company shareholder permits. Foreign shareholders or unlimited partners can receive a permit to act as an executive member of the relevant corporate bodies.

Independent work permits. Independent work permits are available to individuals who live in Turkey for five years without interruption and who make a positive contribution to the economy and employment.

Turquoise cards. Similar to the US green card, a turquoise card allows highly qualified individuals to work and stay in Turkey. Turquoise cards are a special form of work permit of unlimited duration. Turquoise card holders can work in Turkey without time limits, and their spouse and children are automatically granted a permanent residence permit. Individuals deemed to have a solid educational, professional or scientific background, as well as investors who can make a significant contribution to Turkish economy, are eligible to obtain a turquoise card. Turquoise cards are initially issued for a transitional period of three years. Before the expiry of this term, the card can be converted into a permanent turquoise card on application of the card holder. An application for the permanent turquoise card must be filed within 180 days before the expiry date of the initial card. Otherwise, the application will be rejected and the card will be cancelled.

Exceptional work permits. Exceptional work permits may be granted on an individual basis to certain foreigners such as:

In addition, some foreigners are exempt from obtaining a work permit, including:

However, work permit processing is quite discretionary and requires significant evidence to be evaluated by the government, rather than being a standardised immigration system.

Residency is regulated under the Law on Foreigners and International Protection (No 6458). A person with a work permit does not need to obtain a residence permit. However, under the Law on Charges (No 492), they must still pay a residence permit fee every year. A foreigner without a work permit but planning to stay in Turkey for more than 90 days must apply to the relevant police department to obtain a residence permit before this period expires. The Turkish Ministry of Interior issues the residence permit. Residence permits are personal, but collective residence permits can be issued for foreign persons and their spouses and dependent children (under 18 years of age). The fees for obtaining work and residency permits in 2022 (these are adjusted each calendar year) are as follows:

Some foreign nationals are exempt from certain charges:

Employees do not have a general right to management representation or to be consulted in relation to corporate transactions. However, if there is a collective agreement in force, it may provide for management representation or consultation through unions.

The parties can terminate an employment contract at any time in writing or verbally. However, the employer must submit a written termination notice explicitly indicating the termination grounds to the employee.

The death of the employee terminates the contract, while the death of the employer does not automatically terminate the contract. Employment contracts concluded for a fixed period end with the expiry of the period, unless otherwise agreed. Contracts ending for these reasons are not terminations, and a severance or notice indemnity cannot be demanded.

Under Article 18/1 of the Labour Law, an employment contract cannot be terminated without a valid reason. Otherwise, the employee can sue for re-employment. For a re-employment lawsuit to be filed, the following conditions must be met:

Employer's representatives and assistants (such as general managers or assistant general managers) who have the authority to manage the entire enterprise cannot file a re-employment lawsuit.

Under Article 21 of the Labour Law, if a valid reason is not given by the employer, the employer must re-employ the employee within one month. If the employer does not re-employ the employee, the employer must pay the employee a compensation of at between four- and eight-months' salary.

Under Article 22 of the Labour Law, the employer must notify employees of a fundamental change in the working conditions. Changes that are not notified and that are not accepted in writing by the employee within six working days are not binding on the employee. If the employee does not accept the change proposal within this period, the employer can terminate the employment contract by explaining in writing that the change is based on a valid reason, or that there is another valid reason for the termination and complying with the notification period.

Under Article 430/3 of the Turkish Code of Obligations No 6098, parties can terminate a service contract lasting for more than ten years, after ten years, by giving a six-month notice period. Except for this exception, fixed-term employment contracts cannot be unilaterally terminated by giving notice.

For indefinite-term employment contracts, the terminating party must give the following notice periods:

These periods are calculated from the date on which the notice of termination is received by the other party. During the notice period, the employer must give the employee permission to seek a new job. If the employer does not want the employee to work within this period, it can terminate the contract by paying the wages for the notice period in lieu, calculated according to the Labour Law.

Under Article 24 and 25 of the Labour Law, an employment can be terminated for just cause. Unless a notice period is foreseen in the contract, the contract is terminated immediately. Just causes include:

There can be just causes for termination other than those specified in the Law.

The right to terminate for just cause ceases to exist after a period that may be specified in the contract of at least six business days but in any case after one year from the detection of the relevant circumstances.

A party whose contract is terminated without just cause can request a severance and notice indemnity. However, if the employee terminates the employment contract at will, without the presence of any just cause set out under the Labour Law, the employer is not liable to pay severance to the employee (unless the employee terminated the contract due to factors such as military duty or marriage).

The Labour law mainly protects the employee as weaker party. Certain categories of employees enjoy further protection against dismissal (for example, pregnant women).

Collective redundancy is regulated under Article 29 of the Labour Law. It is the termination of the employment contract of a large number of employees due to economic, technological, or structural reasons.

The following cases are counted as a collective redundancy:

If at least 30 employees are laid off in a workplace with 301 or more employees, the employment contract must be terminated within one month. All layoffs must occur within this period, the period begins to run from the date the first employee is laid off. There must be a written notification at least 30 days in advance to the:

The notification must include information on the:

Turkish residents are subject to income tax on their domestic and overseas income. The taxation of income from employment in Turkey is calculated, declared and paid by employers as a withholding tax.

There is an exemption for employees of liaison offices of non-resident commercial entities, where no employee income taxes are applied or paid on employment income in foreign currency. Since liaison offices are forbidden to engage in commercial activities, there are no corporate and value added tax liabilities in Turkey.

Turkish tax resident employees are subject to individual income tax at the following rates for 2022, levied on both their domestic and overseas income:

Withholding payments are made in line with the calendar issued by the Revenue Administration and updated at the beginning of each year. Taxpayers who pay within the scope of a labour agreement make their payments monthly or quarterly.

As a rule, employees' wage incomes are taxed either in the real method and with withholding or as other wages. However, under Article 86 of the Income Tax Law No 193), if the employee receives wages from more than one employer, the employee whose total wage exceeds the amount in the second income segment of the tariff written in Article 103 must declare the employee's wage income. In addition, under Article 95, employees who receive their wages directly from an employer in a foreign country, or foreign embassies and consulates that do not have the principle of reciprocity and who cannot withhold, must submit an annual declaration.

Unless employees can prove that they are insured in a foreign country, they must pay social security premiums in Turkey. Employers must deduct the premium from wages, add their own premium amounts (see below, Employers), and pay these to the relevant social security institution.

Under Article 3 of the Law on Social Insurance (No 506), foreign employees who are sent to Turkey for a job by and on behalf of a foreign institution and who declare that they are insured in a foreign country are considered to be insured abroad.

For foreign employees working in liaison offices to be considered insured abroad:

Non-residents are only subject to individual income tax on income earnt in Turkey. Other than in the case of reduced rates or certain exemptions provided to foreign nationals under double taxation agreements, non-residents are taxed at the same income tax rates as for resident employees.

Under the Law on Social Insurances and General Health Insurance (No 5510), employers must pay social security contributions on employees' gross salaries. The relevant rates are:

The following institutions are subject to corporate tax:

Under the Income Tax Law, real person income tax payers are divided into:

Similarly, under the Corporate Tax Law (No 5520), companies with a legal or business centre in Turkey are full taxpayers. Companies without a legal and business centre in Turkey are limited taxpayers.

Limited taxpayers are subject to tax on commercial incomes obtained through a place of business or permanent representative in Turkey.

Companies that are not registered in Turkey, or that have no place of business in Turkey, must only pay taxes on income generated in Turkey.

The corporate tax rate for the 2022 taxation period is 23%. A corporation must pay corporate tax on its net income. The declaration containing the net income must include details of results for the relevant financial year. Non-tax resident corporations pay taxes on their income generated in Turkey. Tax resident corporations are subject to corporate tax on both Turkish source income and overseas income. The filing period for corporate income tax returns is between the first and the 25th of the fourth month following the end of each accounting period. Corporate income tax payments must be made by the end of the month in which the corporation submitted its corporate income tax returns.

Turkey applies a basic rate of 18% VAT on the delivery of goods and the performance of commercial, industrial, agricultural, and independent professional services. Some services have a 1% or 8% VAT rate. The tax period for value added tax is divided into four terms in a year. The Ministry of Treasury and Finance holds the power to determine monthly taxation periods. The filing for VAT is between the first and the 24th of the month following the taxation period. The tax payment must be made by the 26th of the month in which the VAT return is filed.

BITT is applied at the rate of 5% when banks, insurance companies and bankers receive payments. However, there are exemptions for some transactions where a 1% reduced rate applies. BITT filing is on a monthly basis between the first and 15th day of the month following the end of each taxation period. The BITT tax payment must be made within the declaration period.

Under the Law on Stamp Tax, stamp tax is applied to contracts, undertakings, assignments and other specific documents. Stamp tax is applied to contracts made in Turkey that refer to a monetary amount unless there is an exemption (such as for employment contracts). Stamp tax may be applied to a contract signed outside of Turkey when certain conditions are met. Under the current legislation, original contract copies are subject to stamp tax separately and once. The stamp tax rate is TRY9.48 per TRY1,000 of the contract price, limited at TRY4,814,234 for 2022 (this is adjusted each calendar year).

Gold loans and foreign exchange provided to Turkish citizens from countries other than Turkey, excluding banks and financing institutions, are subject to RUSF tax. This rate changes based on maturity intervals. Foreign exchange loans provided to Turkish residents from overseas entities are subject to the following rates:

TRY loans provided to Turkish residents from overseas entities are subject to the following rates:

Special consumption tax is applied once for certain products specified in the Special Consumption Tax Law (No 4760), including:

Under Article 94 of the Income Tax Law No 193, withholding tax applies at rates of:

Under Article 22/2 of the Income Tax Law, dividends paid to full taxpayer corporations to ASs, shareholders or shareholders, unsecured bare shareholders, founders' shares or usufruct shares, or their chairman and members of their board of directors are half exempt from income tax. Under Article 94/16, dividends subject to this exception are generally subject to withholding.

Under Article 75/123 of the Income Tax Law and Article 30 of the Corporate Tax Law, a corporate tax deduction of 15% must be made by resident corporations from dividends distributed to non-resident corporations or non-corporate taxpayers exempt from corporate tax, excluding those who receive dividends through a workplace or permanent representative in Turkey. The rate may be decreased where there is a double tax treaty.

25% corporate tax rate is applied to dividends received by tax resident companies from foreign subsidiaries. Dividends paid by foreign branches are exempt from tax under certain conditions, such as where:

Interest paid by a Turkish corporation to a foreign corporate shareholder is subject to a 10% withholding tax rate, unless the lender is a foreign state, an overseas bank or financial institution or international institution, in which case no withholding tax is applied. In the absence of a double tax treaty, 10% to 18% withholding tax rates, based on the currency and the maturity, are applied to interest paid by banks to foreign shareholders (for deposit accounts and foreign exchange deposit accounts).

In the absence of a double tax treaty, IP royalty payments to foreign corporate shareholders are subject to a 20% withholding tax rate.

Article 12 of the Law on Corporate Tax sets out thin capitalisation rules that apply where loans obtained from related parties or shareholders are either:

In addition, technical bankruptcy is regulated under Article 376 of the Turkish Commercial Code, under which, where a company's capital and legal reserves are reduced to one-half, the board of directors must immediately call general assembly for a meeting and provide suitable remedial measures. If the capital and legal reserves are reduced by two-thirds in the last annual financial statement, the company must terminate itself, unless the general assembly decides to continue with one-third of the capital or to raise capital. Implementation of the Article 376 of the Turkish Commercial Code is also regulated under the Communiqué on the Procedures and Principles Regarding the Implementation of Article 376 of the Turkish Commercial Code.

Under Article 7 of the Corporate Tax Law, tax-resident real persons and corporations are subject to corporate tax in Turkey on the earnings of foreign subsidiaries they control directly or indirectly, separately or together, by holding at least 50% of their capital, dividends or voting rights whether distributed or not, in the following cases:

Under Article 13/4 of the Corporate Tax Law, three transfer pricing rules can be applied:

The Ministry of Finance and Treasury may approve other transfer pricing methods.

The main tax levied on imports to Turkey is customs duty, but additional customs tax and VAT may also apply. The customs tax rates are determined by the relevant Import Regime Decision and foreign trade policy within the framework of the provisions of international agreements to which Turkey is a party.

VAT is collected on all imports of goods and services, except for import exemptions. VAT on imports is calculated by the customs administration and is charged together with customs tax. VAT rates are determined in the lists attached to the Value Added Tax Law (No 3065).

Under Articles 11 and 32 of the Value Added Tax Law, VAT incurred on exported goods is deducted, and the non-deductible portion is returned to the taxpayer. Export deliveries are exempt from VAT.

Under the Special Consumption Tax Law, export deliveries of goods included in the lists attached to the Special Consumption Tax Law are exempt from Special Consumption Tax, and refunds cannot be obtained for exports to free zones.

Under the Law on Stamp Tax, stamp tax is due on customs declarations other than customs declarations of foreign-exchange earning transactions. However, since exports are foreign-exchange earning transactions, no stamp tax is due.

Turkey is an EU candidate country and member of the EU customs union. However, the customs union between the EU and Turkey does not include all goods, and certain exceptions may apply under the relevant agreements or decisions.

Turkey has 86 double tax treaties, including with France, the UK, the US, Australia, Switzerland, Canada and Germany.

Article 1 of the Turkish Competition Code (No 4054) aims to:

Article 4 prohibits the following activities:

While the Turkish Competition Law does not regulate unilateral conduct as such, it does prohibit abuse of a dominant position as a restrictive practice (see above, Restrictive Agreements and Practices).

Under Article 7/2 of the Turkish Competition Code and the Communiqué on Mergers and Acquisitions to be Approved by the Competition Authority (No 2010/4), mergers and acquisitions meeting the thresholds must be notified to the Competition Authority for permission in order to be legally valid.

The thresholds are:

A foreign-to-foreign merger or acquisition is notifiable if the thresholds are met in Turkey.

There are specific rules for credit institutions, other financial companies and insurance companies holding and trading in securities as part of their business activities.

The main legislation regulating corruption and bribery are the:

Banks and insurance companies in Turkey also have their own anti-bribery and anti-corruption policies.

Turkey is party to a number of international agreements and conventions, including the:

Definition and Legal Requirements. A patent is an exclusive right that is granted for a limited period and place, preventing third parties from producing, selling, using or importing an invention without permission. For a patent to be granted an invention must:

Registration. The Turkish Patent and Trade mark Office registers patents.

Enforcement and remedies. The remedies for infringement include:

Length of protection. The length of protection is 20 years starting from the application date of the registration. The length of protection cannot be extended.

Definition and legal requirements. Under Article 4 of the Industrial Property Law (No 6769), trade marks can consist of any signs, such as words, including personal names, figures, colours, letters, numbers, sounds and the shape of goods or their packaging, provided that such signs are capable of distinguishing the goods or services of one undertaking from those of other undertakings and of being represented on the register.

Protection. Registration with the Turkish Patent and Trade mark Office is necessary for trade mark protection.

Enforcement and remedies. Under Article 7 of the Industrial Property Law, a trade mark holder can demand prevention of the use of any sign:

If the sign is used commercially, the prohibition extends to:

The available remedies are the same as for patent infringements (see above, Patents).

Length of protection. The length of protection is ten years starting from the application date. Registration is renewable for an unlimited number of ten-year periods.

Definition and legal requirements. Designs are the appearance of the whole or a part of a product resulting from the features of the line, contour, colour, shape, material, or texture of the product itself or its ornamentation. For protection to be granted, a design must be new and have an individual character.

Registration. Registration at the Turkish Patent and Trade mark Office is necessary for protection of a design.

Enforcement and remedies. A registered design cannot be produced, put on the market, sold, imported, used for commercial purposes, or kept in stock for those purposes without the consent of the right holder.

The available remedies are the same as for patent infringements (see above, Patents).

Length of protection. The length of protection is five years from the filing date. It can be renewed for five-year periods, provided that the total protection duration does not exceed 25 years.

Definition and legal requirements. Designs that are presented to the public for the first time are protected as unregistered designs in Turkey.

Enforcement and remedies. The available remedies are the same as for patent infringements (see above, Patents).

Length of protection. Unregistered designs are protected for three years following their disclosure to the public.

Definition and Legal Requirements. Copyrights are legal rights over works created by an individual through all forms of intellectual labour. Copyright automatically provides protection under the Law on Intellectual and Artistic Works (No 5846), without requiring registration. However, cinematographic and musical works must be registered with the Ministry of Culture and Tourism to benefit from protection.

Protection. The owner of the work has financial rights over the work, including rights over the work's:

Enforcement and remedies. If there is an infringement, the copyright holder can demand a stop to the infringement or infringing actions and compensation for damages.

Length of protection. Copyright is protected during the lifetime of the owner and for an additional 70 years following their death. Copyright protection starts from the death of the owner even if the work becomes public after their death. If there are multiple owners, protection remains in force for 70 years after the last surviving owner's death.

The Turkish Commercial Code defines agents as legal or real persons permanently authorised under a written contract to act as an intermediary in contracts or in making contracts on behalf of a client within a specified location or region. Documents giving the authority to make contracts must be registered and announced by the agency. Unless the client later consents to the contract, the agent is liable for the performance of a contract it exceeded its authority by entering into. Agents are entitled to remuneration and have retention rights over their clients' products if fees are not paid. In certain circumstances, agents can seek further fees following termination of the agency agreement.

Turkish legislation does not specifically contain provisions on distributorship agreements, which are not specifically regulated under the Turkish Code of Obligations. However, the general principles of contract law apply to distributorship relations, and certain provisions of the Turkish Commercial Code regulating agency agreements may be applied to distributorship agreements by analogy.

Turkish legislation does not directly regulate franchise agreements. However, since franchise agreements are considered to be similar to distributorship and agency agreements, the provisions of the Turkish Commercial Code regarding agency agreements may be applied by analogy to franchise agreements.

E-commerce in Turkey is regulated by the:

Under the Law on Electronic Signatures (No 5070) electronic signatures have the same legal effect as a written signature. Secure electronic signatures are considered to be equivalent to a handwritten signature and will be considered as definitive evidence unless proven otherwise. However, legal transactions and contracts of guarantee that are subject to official formalities cannot be executed by secure electronic signature. Therefore, transactions such as purchases and sales of real estate, inheritances, transfers without consideration, and marriages, which require third party witnesses, cannot be carried out by electronic signature.

Marketing and sales through online platforms are regulated under the general provisions on advertising. See Question 35.

Distance sales contracts are regulated under:

Under the Regulation on Distance Sales Contracts, a distance seller or supplier must provide certain information to the consumer before the establishment of the contract, including:

If the distance contract is established through the internet, such information must be clearly shown before the consumer undertakes the liability to pay, and the supplier must clearly state whether any shipping restrictions are applied, and which payment instruments are accepted.

The right of withdrawal in distance sales contracts is regulated under Article 9 of the Regulation. The consumer has the right to withdraw from the contract within 14 days without giving any reason or paying any penalty.

The main legislation concerning advertising includes the:

Commercial advertisements must be in accordance with public morality, public order and personal rights, and they must be true and honest. Deceiving or exploiting consumers' lack of knowledge or experience is prohibited. The burden of proof lies with the advertiser to prove the truth of its claims.

Article 62 of the Consumer Protection Law defines unfair commercial practices as trade practices that are not in compliance with standards of professional care and that significantly distort or may significantly distort economic behaviour. To protect the consumer against unfair commercial advertising practices, the Advertisement Board may review such practices and, if necessary, conduct an inspection and decide on the suspension or imposition of an administrative fine.

The following are prohibited:

Marketing and sales through online platforms are regulated under the general provisions on advertising (see above). In relation to influencer marketing, surreptitious advertising is forbidden on all platforms (Article 22, Advertising Regulation). Regardless of the form and the platform, an advertising must be clearly understood as such by the consumer (Article 6, Advertising Regulation).

Direct selling and teleshopping advertisements are regulated under Article 27 of the Advertising Regulation. It is mandatory to include information on:

Under the Law on the Regulation of Electronic Commerce, a commercial communication must clearly present information that identifies the:

Commercial electronic messages require prior consent from the receiver. Consent must be given in written form or through electronic communication channels. However, consent is not required if the receiver has given their communication information through third parties.

Separate consent is not needed for new commercial electronic messages on changes to, usage of or repairs to provided goods or rendered services. Receivers of the commercial electronic messages can refuse to receive commercial electronic messages at any time without giving a justification or reason.

A 15% tax is deductible from advertising payments to individual taxpayers operating online such as bloggers, youtubers or influencers, or to companies such Google, Facebook and so on. However, if the taxpayer earns income over the internet, the deduction to be applied on the payments is 0%.

Advertising payments made to foreign companies are subject to VAT on the use or rental of advertising platforms (including websites) if the beneficiary of the service is in Turkey. However, advertising services aimed at customers abroad are not subject to VAT.

Sales promotions are regulated by the:

Article 4/1n of the Advertising Regulation defines advertisements as marketing communications on written, visual, auditory and other platforms that aim to:

Therefore, sales promotions fall under the category of advertisements.

Promotional statements, footage or images are prohibited if they may lead to:

The start and end date of the sales promotions and, if limited in quantity, the quantity of the good or service, must be clearly stated.

Article 15 of the Advertising Regulation regulates free prize draws and competitions.

The Turkish Law on the Protection of Personal Data (No 6698, published in the Official Gazette No 29677, dated 7 April 2016) is similar to the EU General Data Protection Regulation. Its aim is to protect natural persons' fundamental rights and freedoms in the processing personal data and to establish the relevant obligations and rules and principles.

Product liability is mainly regulated under the:

Under Article 8 of the Consumer Protection Law, a defective good is a good that not in compliance with the sample or model that was agreed between the parties or that does not possess the qualities it objectively should possess, thus violating the contract. The following are set out in the law as being defective goods:

In addition, delivery by the seller or a person under their responsibility that takes place outside the agreed time or instalment is regarded as non-compliant performance.

The consumer can choose one of the following:

The burden of proof lies with the seller if the defect appears within the six months of delivery. This legal presumption does not depend on the nature of the good or defect. There is no breach of contract if the consumer had knowledge or could be expected to have knowledge of the defect at the time of entering into the contract.

Unless a longer period is stated in the law or the contract between the parties, liability for the defective good, even if the defect appears later, is subject to a limitation of two years from the date of delivery of the good. For immovable properties or immovable properties, the limitation period is five years from the delivery date. The limitation period does not apply if the defect is hidden due to a gross fault or through fraudulent means.

Main activities. The Turkish Competition Authority is responsible for regulating competition. Under Article 27 of the Law on The Protection of Competition, the Turkish Competition Authority aims to:

Main activities. The main regulatory body for the environment is the Ministry of Environment and Urban Planning. The Ministry sets policies and takes measures in relation to:

Main activities. The regulatory body for financial services is the Banking Regulation and Supervision Agency. Its main duties are to contribute to the development of financial markets and financial stability by ensuring that the:

Main activities. The main regulatory body for the capital markets is the Capital Markets Board. Its main duties are to:

Main activities. The main regulatory body for the energy market is Energy Market Regulatory Authority. It is responsible for making regulations and inspections to present energy to the consumer in a sufficient, high quality, continuous, economical and environmentally compatible manner.

W www.epdk.gov.tr

There are no further relevant matters.