Taxation of foreign investment

In the upcoming pages you will understand the tax practices applied to foreign investors in Turkey. The advantages and current figures are discussed. The forms of entities that may be used for the investors and certain tax practices applied on these entities are also explained.

1.1. Investor and Foreign Direct Investment

Law 6224 on Encouragement of Foreign Capital enacted on January 18, 1954 was a quite liberal law compared with the legislations of some OECD countries of those times. The term "encouragement" in the name of Law 6224 derived from th

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The ceiling on the first level legal reserves is 20% of the paid-up capital. Therefore it is clarified that expropriation cannot take place with any reason other than the above-mentioned regulations.

Stamp taxes and fees exemption

Where the investor gives minimum export undertaking of US $ 10,000 within 2 years following the completion of the investment, the transactions stated below shall be exempt from stamp tax and fees:

§ Company establishment

§ Investment loans obtained locally or from abroad, provided that the equity to debt ratio set in the investment certificate is preserved

§ Registration procedures with the Land Registry Office on behalf of the company where immovable or their related rights are contributed as capital in kind and all documents relating to the registration of the same in the Land Registry department pursuant to the IICs. 1 Type of Legal Entity

Real persons or legal entities resident abroad can invest in Turkey through joint stock companies (AŽ), limited companies (LC), branches or partnerships. As a result, all transactions for establishing a company with foreign capital will be the same as with local companies. Leasehold improvements are also eligible for revaluation. Free Zones are also the regions where more convenient business climate is offered in order to increase trade volume and export for some industrial and commercial activities as compared to the other parts of country. Profit generated through activities performed in the zone by real or legal persons, is exempt from all kind of taxes including personal and corporate income tax. However, in case of employment of less than 10 employees, a quarterly withholding tax return may be filed by submitting a petition to the tax office to file quarterly tax returns. The principle of reciprocity is still valid for foreign real persons. Under the regulations of the Tax Procedural Law, for goods produced the cost value includes direct and indirect production costs. Foreign exchange gains or losses emanating from the valuation are posted to the related accounts and they are, in principle, taken into account in determination of the tax base.

Common topics in this essay:
Table II, Council Ministers, Income Tax, VAT VAT, Procedural Law, Ministry Finance, Tax Stamp, Staying Turkey, Free Zones, IIC Companies, income tax, corporate income, corporate income tax, free trade, withholding tax, free trade zones, trade zones, investment allowance, stamp tax, foreign exchange, foreign direct, social security, foreign direct investment, turkish commercial code, dividend withholding tax,

Approximate Word count = 8670
Approximate Pages = 35 (250 words per page double spaced)

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