Turkey - Market Entry and Business Opportunities

Turkey, a transcontinental country located at the crossroads of Europe and Asia, boasts a rich tapestry of cultural heritage and geographical diversity. With its capital in Ankara, the nation is home to a population of approximately 84 million people, predominantly speaking Turkish as their official language. While the majority of the population identifies ethnically as Turkish, there are also significant minority groups, including Kurds, Arabs, Circassians, and others dispersed across the country. The population growth rate of Turkey, estimated at around 1.1% in 2021 by the World Bank, reflects the nation's dynamic demographic landscape. Covering an expansive area of approximately 783,356 square kilometres, Turkey shares borders with eight neighbouring countries, including Greece, Bulgaria, Georgia, Armenia, Iran, Iraq, Syria, and shares coastlines with the Aegean, Mediterranean, and Black Seas. The Turkish Lira serves as the official currency, facilitating commerce and trade within the country's diverse economic landscape. Positioned strategically between Europe and Asia, Turkey offers significant opportunities for business and investment, underscored by its vibrant culture, burgeoning population, and strategic geopolitical location.

Economic Overview

Turkey's economic outlook remains positive, with forecasted growth rates of 4.5% in 2023, easing slightly to 2.9% in 2024 and 3.2% in 2025. While tighter financial conditions and persistent inflationary pressures are expected to temper household consumption, investment growth is anticipated to remain strong, supported by post-earthquake reconstruction efforts. The central bank is committed to tightening monetary policy to address inflation, while fiscal consolidation measures are underway to stabilize public finances. Despite challenges, such as high inflation and global economic slowdown, Turkey's economic resilience is demonstrated by robust domestic demand and efforts to diversify revenue sources, including increased tourism revenues and natural gas production.

Bilateral Relations between India-Turkey

The historical visit of Pandit Jawaharlal Nehru to Turkey in 1960 laid the foundation for a series of prime ministerial exchanges, marking a significant milestone in the bilateral relationship between India and Turkey. Subsequent high-level visits, including those by Vice President Dr. Zakir Hussain, Prime Minister Turgut Ozal, and President Suleyman Demirel, have played a pivotal role in strengthening diplomatic ties over the years. The new millennium witnessed a surge in engagements, with leaders from both nations actively engaging in reciprocal visits and parliamentary exchanges. Institutionalized mechanisms such as Foreign Office Consultations and Joint Working Groups have further deepened cooperation, culminating in the establishment of the 'India-Turkey Policy Planning Dialogue.' The recent round of consultations in Ankara underscores the ongoing commitment to enhancing bilateral relations across various sectors, reflecting the shared aspirations of India and Turkey for a robust and multifaceted partnership.

Taxation

Turkey has implemented changes in its corporate tax structure, with the standard rate increasing to 25% from the previous 23%, effective January 1, 2023. Financial sector entities face a higher tax rate of 30%, up from 25%. However, companies listing shares on the Istanbul Stock Exchange may qualify for a reduced rate of 23% for five years. Additionally, qualifying export companies can benefit from a reduced rate of 20%, while production companies may enjoy a rate of 24%. These adjustments aim to incentivize investment and boost economic growth, particularly in the export and production sectors.

Financing Business in Turkey

Various financing options are available to businesses in Turkey, catering to diverse needs and stages of growth. Turkish banks like Isbank and Garanti Bankasi offer tailored loan products for working capital, investment, and export financing. Additionally, the thriving venture capital ecosystem includes firms like 212 Capital Partners and Revo Capital, supporting early-stage start-ups. Private equity firms such as Actera Group and Turkven focus on mid-sized and large businesses, while government incentives provide grants, tax incentives, and preferential financing. Crowdfunding platforms like Fongogo and Startnext Turkey offer alternative financing for entrepreneurs, and Türk Eximbank serves as Turkey's official export credit agency, facilitating international trade. These options collectively contribute to the financing landscape, fostering entrepreneurship and economic growth in Turkey.

Top 10 Companies in Turkey – 2023

Rank	Company	Industry	Revenue in 2023 (USD)
1	Türkiye Petrol Rafinerileri	Oil and Gas	$ 21.81 B
2	Is Yatirim Menkul Degerler Anonim Sirketi	Bank & Financial Services	$ 14.72 B
3	Ford Otoson	Automotive Manufacturing	$ 12.68 B
4	BIM Birlesik Magazalar	Retail	$ 10.04 B
5	Türkiye Is Bankasi	Bank & Financial Services	$ 9.92 B
6	Arçelik	Kitchen Appliances	$ 8.10 B
7	Yapi Kredi	Bank & Financial Services	$ 6.12 B
8	Sisecam	Manufacturing	$ 5.92 B
9	Akbank	Bank & Financial Services	$ 5.90 B
10	Erdemir	Steel Production	$ 5.78 B

Business Clusters in Turkey

• Automotive Cluster: Located in cities like Bursa, Izmir, and Kocaeli, Turkey's automotive cluster is vital for exports and employment.
• Textile and Apparel Cluster: Istanbul, Gaziantep, and Denizli are key locations for Turkey's textile and apparel production.
• IT Cluster: Istanbul and Ankara are major hubs for software development and IT services.
• Tourism Cluster: Antalya, Izmir, and Bodrum house clusters driving Turkey's tourism sector.
• Defence and Aerospace Cluster: Cities like Ankara and Istanbul host clusters contributing to Turkey's defence and aerospace industry.
• Agriculture Cluster: Regions like Çukurova and Aegean are vital for Turkey's agricultural production.
• Jewellery Cluster: Istanbul's historic Grand Bazaar and districts like Eminönü are significant for Turkey's jewellery industry.
• Logistics Cluster: Istanbul, Izmir, and Mersin serve as key logistics hubs due to Turkey's strategic location.
• Energy Cluster: Istanbul, Ankara, and Izmir host clusters focusing on energy production and infrastructure.
• Healthcare Cluster: Istanbul, Ankara, and Izmir house clusters contributing to Turkey's healthcare sector.
• Construction Cluster: Istanbul, Ankara, and Antalya host clusters driving Turkey's construction industry.
• Education Cluster: Ankara, Istanbul, and Izmir have clusters supporting Turkey's education sector.
• Finance Cluster: Istanbul is a financial hub hosting clusters of banks and investment firms.
• Creative Industries Cluster: Istanbul, Ankara, and Izmir are significant for Turkey's media, advertising, and entertainment industries.
• Maritime Cluster: Istanbul, Izmir, and Tuzla have clusters supporting Turkey's maritime and shipbuilding sectors.

Starting a Business in Turkey

• Obtain a Tax Number from a Tax Office
• Determine Your Company's Location
• Decide on Your Corporation Type
• Find an Accounting Outsourcing Company
• Register Your Company Legally
• Open a Company Bank Account

To know more about our services and how we can help you in Turkey – CLICK HERE

Best Locations to Set-Up Business in Turkey

• Istanbul: Turkey's economic capital with a large consumer market and strategic location bridging Europe and Asia.
• Ankara: Stable business environment, administrative focus, and good connectivity to other regions.
• Izmir: Third-largest city, manufacturing, trade, and logistics hub with proximity to key markets.
• Bursa: Industrial centre for automotive, textile, and manufacturing industries near Istanbul.
• Antalya: Tourist destination with growing economy, favourable climate, and developed infrastructure.
• Gaziantep: Vibrant trade and manufacturing sectors, competitive costs, and access to Middle Eastern markets.
• Kocaeli: Major industrial centre near Istanbul, focusing on automotive and petrochemicals.
• Kayseri: Strong industrial base in textiles, furniture, and manufacturing, with skilled labour and modern infrastructure.
• Adana: Key centre for agriculture, food processing, and manufacturing, strategically located for trade.
• Mersin: Port city facilitating international trade, with modern infrastructure and investment incentives.
• Denizli: Textile industry hub with growing tourism sector, particularly in spa and thermal tourism.
• Trabzon: Gateway to Caucasus and Central Asia, opportunities in trade, logistics, and tourism.
• Eskisehir: Centre for innovation and technology, particularly in aerospace, automotive, and engineering.
• Diyarbakir: Opportunities in agriculture, energy, manufacturing, and tourism, with cultural significance.
• Samsun: Port city focusing on maritime trade, logistics, and agriculture, with access to regional markets.

Visa and Immigration

• Business Visa (Short-Term): Designed for short-term business activities such as meetings, conferences, and negotiations. Valid for a few days to a few months.
• Work Visa (Long-Term): Necessary for extended business engagements, employment opportunities, or investment activities. Requires additional documentation like employment contracts or business registration papers.
• Investor Visa: For foreign investors injecting significant capital into Turkey. Requires proof of investment such as business plans or evidence of funds transferred to Turkish banks.
• E-Visa for Business: Convenient electronic visa system for short-term business visits. Allows quick online application and approval without visiting a Turkish embassy.
• Residence Permit for Business Purposes: Required for longer stays in Turkey for business-related activities. Allows legal residence and work beyond the validity of a regular visa.

In conclusion, Turkey presents lucrative opportunities for international business expansion due to its strategic location, growing economy, and large population. Throughout this report, we've explored various aspects of doing business in Turkey, including its economic landscape, regulatory environment, key sectors, and market entry considerations. While challenges like competition and regulatory complexities exist, strategic planning and partnerships can help overcome them. Overall, Turkey offers a vibrant market ripe for growth. Businesses should consider Turkey for international expansion due to its dynamic economy and diverse consumer base.

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