GENERAL OVERVIEW
Turkey is situated in Anatolia (95%) and the Balkans (5%), bordering the Black Sea, between Bulgaria and Georgia, and bordering the Aegean Sea and the Mediterranean Sea, between Greece and Syria.The area of Turkey is: 783,562 km2 land: 770,760 km2, water: 9,820 km2 . The Anatolian part of Turkey accounts for 95% of the country’s area. The European portion of Turkey accounts for 5% of the total area.
Turkey is home to some of the most alluring destinations. A Mecca for art and history lovers, the stunning Turkish land is shrouded in an elegant archaic aura. A tour of the age old town will make you marvel at its timeless beauty. Turkey also offers some of the most exotic spots for adventure junkies and nature lovers. The magnificent Mediterranean coastline of Turkey warms your soul while you cruise on the yacht and take in the pretty sights.
The current population of Turkey is estimated at 81.92 million, and increase from 2013’s estimate of 75.5 million, of which the male population is approximately 49.1% of the total population and the female population is 50.9% of the population.The population increases with almost 3600 births every day. The growth rate remains around 1.29% per year.
Economic overview
Turkey’s performance since 2000 has been impressive. Macroeconomic and fiscal stability were at the heart of its performance, enabling increased employment and incomes and making Turkey an upper-middle-income country. During this time, Turkey urbanized dramatically, opened to foreign trade and finance, harmonized many laws and regulations with European Union (EU) standards, and greatly expanded access to public services.
High-frequency indicators suggest economic momentum, while resilient, moderated in recent months. It was aided by robust domestic demand and a recovery in the external sector, but hampered by the government’s depleted fiscal stimulus. Economic conditions remained supportive of growth early this year, with the manufacturing PMI recording its highest figure in seven years in January, and both consumer and business sentiment shooting up in the same month.
Economic growth will experience a soft landing this year as the government limits the extent of its fiscal stimulus and focuses on maintaining the economy on a steady course ahead of next year’s twin elections. In addition, a weak dollar and strong investor sentiment towards EM assets boosted inflows of foreign capital last year, but further tightening by the Fed this year and swings in global market sentiment continue to pose major threats to Turkey’s financial stability. The FocusEconomics panel expects growth of 3.9% this year, which is up 0.2 percentage points from last month’s estimate. It also expects growth of 3.8% in 2019.
Key sectors in Turkey
Textile Sector
Turkey is a world leader in textiles and clothing. The textile industry accounts for more than 25% of the overall exports of the country. Turkey is the world’s 7th largest cotton-lint producer, with almost 1 million tons of annual production. Turkey is also the global leader in organic cotton production. More than 40,000 companies operate in the textile and clothing industry. The total annual production volumes of both these sectors exceed $30 billion. The textile industry is based out of cities like Izmir, Bursa, Ankara, Kayseri and Adana.
Energy Sector
Turkey’s energy industry, which supplied 40,000 MW annually, is dominated by hydro, natural, gas and coal resources. The share of public and private enterprises in this production is 58% and 18%, respectively. According to the 2020 projections, production capacity needs to be increased to 50,000 MW, which requires an investment of $4 to $5 billion annually. About 20% of Turkey’s annual imports in 2007 had been energy related. The Turkish energy industry relies heavily on imports from Russia. Iran is Turkey’s second largest energy supplier. Due to oil prospects in the Black Sea, companies like BPChevron, ExxonMobil and Petro Brass have collaborated with Turkish petroleum corporations in the Black Sea region.
Automotive Sector
Turkey has a thriving automotive sector and is the 16th largest automobile manufacturer in the world and a leader in Europe. In 2007, the production capacity of the Turkish automotive industry was more than 1.3 million vehicles. Turkey aims to increase its production to 2 million units by 2015, to export 1.5 million units and generate $40 billion from the exports. The country also aims to be the third largest automobile producing country in Europe and tenth largest in the world.
Tourism in Turkey
Turkey’s tourism revenue reached $26.3 billion in 2017.
According to TurkStat, annual revenue rose by 18.9 percent in 2017, up from $22.1 billion the previous year. While 77.4 percent of this income [excluding GSM roaming and marina service expenditures] came from foreign visitors, around 22.6 percent was obtained from Turkish citizens residing abroad.
Turkey welcomed 38.6 million visitors in 2017, marking a 23.1 percent rise from the previous year, 83.1 percent foreign and 16.9 percent representing citizens living abroad.
The TurkStat data revealed that average expenditure per capita was $681 in 2017. Foreigners’ average expenditure per capita amounted to $630 while for Turkish citizens residing abroad it reached $903 per capita.
The primary reason for more than 56 percent foreign visitors’ trips to Turkey was “travel, entertainment, sports and cultural activities” while 14.7 percent traveled to the country to “visit relatives and friends.”
Tourism this year
Nearly 878,000 people visited Turkish museums and archeological sites in January, up 57 percent from the same month last year, the Culture and Tourism Ministry announced Tuesday.
In addition to visitors, museum and historic sites also took in more revenue, said the ministry website.
In January revenues from Turkish museums and archeological sites totaled 14.5 million Turkish liras ($3.84 million), skyrocketing 236 percent from the same month in 2017.
Taxes in Turkey
Turkey has one of the most competitive corporate tax rates in the OECD region. The Turkish corporate tax legislation has noticeably clear, objective and harmonized provisions which are in line with international standards.
Corporations are liable for CIT at a rate of 20% on net profits generated, as adjusted for exemptions and deductions and including prior-year losses carried forward, to a limited extent.
Please note that the Law proposing amendments on several tax laws was accepted by the Parliament’s General Assembly meetings and will be submitted for the approval of the president. According to draft law, the CIT rate for all companies will be increased from 20% to 22% for the years 2018, 2019, and 2020. The Law also gives authority to the Council of Ministers to reduce the rate to 20%. According to the Law, the regulation shall enter into force to be applied on earnings that should be stated in CIT returns to be submitted after 1 January 2018.
According to Turkish tax legislation, income taxation differs significantly based on the taxpayer’s place of residence. Resident entities are subject to tax on their worldwide income, whereas non-resident entities are taxed solely on the income derived from activities in Turkey.
There are no provincial or municipal taxes on corporate income in Turkey.
Investing in Turkey
We have made a list with some reasons to invest in Turkey:
Succesful economy
• Promising economy with a bright future as it is expected to become one of the fastest growing economies among the OECD members during 2017-2020 with an average annual real GDP growth rate of 5.4 percent (OECD).
• Institutionalized economy fueled by USD 145 billion of FDI in the last decade (CBRT).
Liberal and reformist investment climate
• Highly competitive investment conditions.
• Strong industrial and service culture.
• International arbitration.
• Guarantee of transferz.
• Business-friendly environment with an average of 6.5 days to set up a company (World Bank Doing Business Report 2017).
Low taxes and incentives
• Corporate Income Tax reduced from 33 percent to 20 percent.
• Tax benefits and incentives in Technology Development Zones, Industrial Zones and Free Zones, including total or partial exemption from Corporate Income Tax, a grant on employer’s social security share, as well as land allocation.
• R&D and Innovation Support Law.
• Incentives for strategic investments, large-scale investments and regional investments.
Also there is a conference organized in Conrad London St.James in UK this May 11th about investing in Turkey.