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This publication is available at https://www.gov.uk/government/publications/exporting-to-turkey/doing-business-in-turkey-turkey-trade-and-export-guide
Find out how UK companies can control risks when doing business in Turkey.
Export opportunities and advice
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1. Turkey export overview
Turkey is a large, rapidly developing country. Turkey’s ongoing negotiations to join the European Union (EU) and its existing Customs Union with the EU offer significant opportunities for UK companies across a broad range of sectors.
Contact a Department for International Trade (DIT) Turkey export adviser for a free consultation if you are interested in exporting to Turkey.
There are many existing business links between the UK and Turkey. Over 2,500 UK companies are currently operating in Turkey including global companies such as BP, Shell, Vodafone, Unilever, BAE, HSBC, Aviva and Diageo.
Several retail giants and high street names such as Harvey Nichols, Kingsisher, Marks and Spencer and Laura Ashley also have extensive operations in Turkey.
Benefits for UK businesses exporting to Turkey include:
- gateway to the markets of Central Asia, south Caucasus and the Middle East
- European business ethics and modern management practices
- increasing use of English for business
- a 6 day average to start a business
- low social security contribution rate with an offer of a 5% rebate
- new initiatives to meet EU standards making it a more familiar business environment
Strengths of the Turkish market include:
- becoming the world’s 16th largest economy and Europe’s sixth
- a forecast to be in the world’s top 10 economies by 2023
- strong Gross Domestic Product (GDP) growth with an average of 4% between 2002 and 2012
- having the youngest and fastest growing population in Europe (700,000 graduates per year)
- Istanbul and Ankara being among the biggest cities in the world in terms of GDP
- a forecast to be the second fastest growing country in the world by 2018 according to the Organisation for Economic Co-operation and Development (OECD)
- investments of more than TL 112 billion (USD 60 billion) in the transport, maritime and communications sectors in the last 10 years
- access to 1.5 billion customers in Europe, Eurasia, the Middle East and North Africa and to markets with a total USD25 trillion GDP within 4 hours flight.
2. Challenges of doing business in Turkey
Because of the Customs Union with the EU, UK companies don’t experience the same obstacles they may face in other high growth markets. However, there are certain unique challenges when doing business in or with Turkey. These include:
- regulatory issues
- sudden changes to legislation and regulations without warning and consultation
- a need to demonstrate a commitment to the market, either by having a visible presence in the country or building and maintaining strong relationships
- necessity of regular market visits to fulfil Turkish requirements
Read the Overseas Business Risk report for Turkey.
3. Growth potential
3.1 Economic growth
According to HSBC’s ‘The World in 2050’ report, Turkey will be the world’s 12th and Europe’s fourth biggest economy by 2050. Turkey aims to be among the world’s 10 largest economies by 2023, on the 100th anniversary of the foundation of the Republic.
Turkey’s growth rate was 3% in 2014 and 2015.
Turkey is expected to spend USD 140 billion on public investment 2014 to 2018.
FDI into Turkey reached USD 16.5 Billion in 2015 at a growth rate of 32% over the preceding year according to the data released by the Central Bank of Turkey.
78% of Turkey’s overall Foreign Direct Investment (FDI) comes from the EU.
In 2015, the manufacturing sector attracted the highest portion of FDI, followed by financial services and transportation sectors.
3.2 Gateway to third markets
Turkey is big - with an area of 300,950 square miles. It borders Greece, Bulgaria, Armenia, Georgia, Iran, Iraq and Syria with easy land and sea access to the Gulf States, Near East and north Africa.
As a result there are opportunities for collaboration with Turkish companies to do business in third markets such as Central Asia and south Caucasus.
4. UK and Turkey trade
The Strategic Partnership signed by the UK and Turkish Prime Ministers in July 2010 cements the UK’s commitment to deepening the bilateral relationship.
In 2015, the bilateral trade between the UK and Turkey was £11.2 billion.
The UK is Turkey’s 3rd largest export market after Germany and Iraq by 2015.
Turkey is the UK’s 10th largest European export market..
Top UK exports to Turkey include:
- mechanical appliances
- iron and steel
5. Opportunities for UK businesses in Turkey
Department for International Trade (DIT) provides free international export sales leads from its worldwide network. Search for export opportunities.
Health is one of the fastest growing sectors in Turkey. An important factor behind Turkey’s continued healthcare budget growth is the country’s enhanced health insurance coverage and the demand for new healthcare facilities across the country.
There is considerable scope for UK companies to enter the supply and service provision chain. The possible value to UK companies is estimated at £2.5 billion.
Opportunities exist in:
- design - innovative e-delivery, energy efficient/green buildings, intelligent IT, designing of rooms and devices for operation theatres, laboratories and patient rooms
- provision of goods - equipment, devices, furniture, consumables
- provision of services - catering, cleaning, security, hotel and accommodation services
- operation of commercial areas - cafes, restaurants, shops, banks, chemists etc
- professional, clinical and facilities management services to the delivery of these projects
- integrated software systems between hospitals for communication and data sharing
- sterilization - operation theatres, intensive care units, devices and laboratories
- patient tracing and monitoring equipment - bed-head monitors, tablets, mounted sensors
- security - CCTV’s, scanning devices, alarm and fire systems
There are also wider opportunities and demand in the Turkish healthcare sector in the supply of:
- dental products and consumables
- orthopaedic and implantable products and consumables
- splints and other fracture appliances, hearing aids and consumables
- education and training - practitioners, nurses, device technicians, catering staff, cleaning staff
- high-end advanced medical technologies and equipment in all areas of medicine, but especially in diagnostics, laboratory systems, and robotic surgery equipment
- telehealth equipment and suppliers - primary care, home care, mobile care services with proven benefits for patients with long term conditions
- elderly and disabled medical services - home care, mobile care
Contact Trade Manager Zeyno.Sobaci@mobile.trade.gov.uk for more information on opportunities in Public Private Partnership (PPP) hospital projects.
Contact Trade Advisor Merve.Gokben@mobile.trade.gov.uk for more information on opportunities in the healthcare products sector.
In 2011 the Turkish Ministry of Transport, Maritime Affairs and Communications committed to develop a 3rd airport in Istanbul to underpin Turkey’s ambitious claims to be the premier hub connecting Europe, Asia and the rest of the world. The airport would also address the rapidly expanding demographic, economic and commercial interests of the nation.
The 25 year leased Build, Operate, Transfer contract was awarded in May 2013 to the Istanbul Grand Airport (IGA) consortium; Cengiz, Mapa, Limak, Kolin, Kalyon. Once complete, the new airport will have a 150 million passenger capacity, six runways, 16 taxiways, 165 aircraft passenger bridges at all terminals and a 6.5 million square metre apron with the capability of parking 500 aircraft, making it one of the world’s biggest.
The land delivery to IGA took place in July 2014 and currently the ground works are ongoing.
Opportunities for UK companies:
- planning and master planning
- airport design and architecture
- professional and legal services
- airport management
- airport security
- luggage handling systems
- airfield lighting
- fire fighting equipment
- other equipment and procurement
Contact Trade Manager Zeyno.Sobaci@mobile.trade.gov.uk for more information on opportunities in Turkey’s airport projects.
The Turkish energy sector needs more than USD 130 billion of investment by 2023. Demand for energy is increasing by 6 to 8% annually. Turkey plans to reform energy production to meet increasing demand and become a transit hub for energy transportation in the region.
The government has set a target for the share of renewable energy to reach 30% of total energy consumption by 2023. Turkey’s renewable energy resource potential is estimated at around 136,600 MW (excluding hydropower and geothermal).
Solar energy is the most important renewable power source for Turkey due to its climate. There are major solar energy project plans that are supported by the government such as a £3 billion project providing 4,000 MW of solar energy to power over 1 million homes.
Due to its climate and topography Turkey is also attractive for wind energy investments. Given the constraints on grid infrastructure potential, the highest feasible wind-power generation capacity is estimated at 48 GW, with 10 GW of this total capacity being offshore wind. 20 GW onshore wind has been set as the target capacity to attain by 2023 by the Energy Ministry.
The Turkish government is also working on amendments in the regulation to enable offshore wind development and they will be announcing an offshore wind map in 2015.
Turkey is also planning to build 3 nuclear power plants in the next 15 to 20 years.
Major opportunities are in:
- legal and regulatory advice
- human resources training
- local capacity building
- supply chain
Contact the Trade Manager Umay.Uysal@mobile.trade.gov.uk for more information on nuclear and renewable energy and power projects.
5.4 Financial and business services
The Turkish financial services industry has gone through a radical structural transformation since the financial crisis in 2001. A new industry watchdog has been created and has responsibility for enforcing strict reserve requirements.
The Turkish banking industry is considerably healthier than its European counterparts and survived the recent financial crisis relatively unscathed partly as a result of this reform.
Turkey has a very competitive retail financial services industry, often listed as one of the most advanced in the world. However there are opportunities for UK investors in:
- infrastructure finance
- asset management
- private pension schemes
- Islamic finance
Contact the Trade Manager firstname.lastname@example.org for more information on opportunities in Turkey’s financial sector.
5.5 Defence and security
There are significant opportunities in the defence and security sectors as Turkey is one of the world’s largest defence and security equipment importers.
One of Turkey’s strategic targets is to create a self-sufficient defence/security industry sector. UK industry should seek partnership with the Turkish industrynot just for business in Turkey, but for third markets as well.
Turkey is an important partner in building international security, and the Turkish security sector represents a significant market for the UK industry including cyber, energy, nuclear, airports and disaster relief.
Opportunities are available in:
Contact email@example.com for more information on opportunities in Turkey’s defence and security sector.
6. Start-up considerations
The main company types in Turkey are:
- limited liability company which is appropriate for small and medium-sized enterprises (SMEs)
- joint stock company, which is more suitable for large-scale investors - shareholders can be either real persons or legal entities
- foreign businesses can also open a liaison office
- UK companies based abroad whose capital is divided into shares can open branches in Turkey
You should seek legal advice as the tax and legal obligations of each business structure can differ.
7. Legal considerations
In Turkey, there are a number of regulatory institutions that specialise in different areas. The most important are the:
Energy Market Regulatory Authority (EMRA) which regulates and controls the energy market and ensures a financially viable, stable, and transparent energy market within a competitive environment
Banking Regulation and Supervision Agency (BRSA) which safeguards the rights and benefits of depositors. It aims to prevent operations and transactions that may risk the orderly and safe operation of banks or that may harm the economy, and facilitates the efficient working of the credit system
Capital Markets Board of Turkey (CMB) which is the regulatory and supervisory authority for Turkey’s securities markets. It has responsibility for regulation and supervision of securities markets and institutions, determination of the operational principles of the capital markets and protection of the rights and interests of investors
Information and Communication Technologies Authority (BTK) which undertakes the regulation, authorisation, reconciliation, and supervision of activities within the telecommunication market
Tobacco, Tobacco Products, and Alcoholic Beverages Market Regulation Board (TAMRB) which establishes regulatory and supervisory systems in areas dealing with tobacco, tobacco products, alcohol, and alcoholic drinks
Privatisation Administration and Privatisation High Council which are responsible for carrying out privatisation transactions in Turkey
Contact the Department for International Trade (DIT) team in Turkey or its strategic partner BCCT (The British Chamber of Commerce in Turkey) to help find tax and legal advisers before entering into agreements.
7.1 Standards and technical regulations
Suppliers and manufacturers have an obligation to make sure products are safe. Products must meet relevant safety standards, have clear instructions for proper use and include warnings against possible misuse.
Under Turkish law Consumer Protection Law governs the legal status of all consumer related transactions. This legislation is the main protection for consumer rights along with additional supplementary legislation.
The Turkish Standards Institution is responsible for the development of all kinds of commercial standards.
7.2 Intellectual property
Trademarks, designs, patents and copyright matters in Turkey are governed by the Law on Intellectual and Artistic Works (website in Turkish), which is enforced by Turkish judicial authorities.
The General Directorate of Copyright and Cinematography Department of the Ministry of Culture and Tourism is in charge of the administrative side of intellectual property issues in Turkey.
8. Tax and customs considerations
Turkey has one of the most competitive corporate tax rates in the Organisation for Economic Co-operation and Development (OECD) region.
8.1 Income tax
The basic corporate income tax rate levied on business profits is 20% in Turkey.
The personal income tax rate, depending on income, varies from 15% to 35%.
8.2 Taxes on expenditure
The generally applied Value Added Tax (VAT) rate varies between 1%, 8%, and 18%.
Four main product groups are subject to Special Consumption Tax (SCT) at different tax rates:
- petroleum products, natural gas, lubricating oil, solvents, and derivatives of solvents
- automobiles and other vehicles, motorcycles, planes, helicopters, yachts
- tobacco and tobacco products, alcoholic beverages
- luxury products
Banking and insurance company transactions are subject to a Banking and Insurance Transaction Tax. This tax applies to income earned by banks, for example on loan interest. The general rate is 5%.
Stamp duty applies to a wide range of documents including contracts, agreements, notes payable, capital contributions, letters of credit, letters of guarantee, financial statements, and payrolls. Stamp duty is levied as a percentage of the value of the document at rates ranging from 0.189% to 0.948%.
8.3 Taxes on wealth
There are 3 kinds of wealth tax including:
- inheritance and gift taxes
- property taxes
- motor vehicle tax
Buildings, apartments and land owned in Turkey are subject to real estate tax ranging at a rate of 0.1% and 0.06%.
You can find more about import tariffs in the Market Access Database.
9. Entry requirements
If you’re visiting Turkey as a tourist or on business, you can now get an e-visa online before you travel.
From 10 April 2014 you must obtain an e-visa as you won’t be able to get a visa on arrival.
If you are travelling to Turkey for business check the Turkey Travel Advice before you travel.
The British Chamber of Commerce in Turkey (BCCT) is DIT’s strategic delivery partner in Turkey as part of the Overseas Business Network initiative. The BCCT delivers a range of services to UK companies wanting to do business in Turkey. Please contact the BCCT team in Istanbul or see their website for more information and advice on opportunities for doing business in Turkey.