Foreign Investment Law

Between the period of Republic and the political era of multi-party, the economic policy of the Republic of Turkey was more national. The economic policy established on the axis of statism was not very open to foreign investors in this period. Foreign investment law was also affected by these policies. Turkey’s ecomomic strategies varied as a result of political matters such as the change in political climate and globalization of the economy since 1950’s. Investments of foreign investors in Turkey began to be seen more positively. As a natural result of this; legal infrastructure on foreign investment has also started to be prepared.

With the aim of having foreign investors investing in Turkey, Foreign Investment Encouragement Act was implemented on January 18th, 1954. Over the years, the needs have changed in line with reasons such as international relations and the globalization of the economy. For this reason, Foreign Direct Investments Law No. 4875, which is currently a regulation, came into force in 2003. The name of this law caused the foreign investment law to be known as the “foreign direct investment” law.

What is Foreign Investments Law?

Foreign investments law deals with all kinds of foreign economic activities to be performed in Turkey. Issues such as foreigners settin up companies in Turkey, foreign companies opening new branches of their companies in Turkey, legal procedures and rules in this stage and the employment of foreign workers is within the scope of foreign investment law. Legal rules to be followed by company activities, transactions such as mergers or acquisitions, and problems regarding tax disputes are also related to foreign investment law. Therefore, companies with foreign capital should work with a law firm specialized in their fields. Considering that financial penalties are high due to sensitive and wrong strategies, the importance of the issue becomes apparent. Marhan Hukuk also provides legal consultancy services for companies in this field.

Among the financial advantages of foreign capital, the concept of free zone is most noticeable. Therefore, the issue of free zones is of great importance in foreign investment law. Some regions in a certain geographical area within the borders of the country are called free zones. In these regions, restrictions on commercial activities are less. In this direction, foreign investments are also encouraged. Many of the administrative and commercial obligations in free zones have a flexible structure. In this way, export and production capacity, as well as employment opportunities increase.

Foreign Investments Law

The law, which contains various articles on protecting the rights of foreign investors and encouraging foreign investment, aims to increase foreign investment in these ways. The flexibility capacity of the law has increased as a result of the increasing spread of neoliberal economic policies. Issues such as free transfer of companies’ profits, dispute resolution methods, freedom to invest are also considered within the scope of the law. The system that developed based on approval for foreign investments has become notification-based over time. This strategy aims to increase the amount of foreign investments.

The only regulation that offers a legal framework for foreign direct investments is not the Foreign Investments Law. In addition, interstate bilateral agreements offer advantages for promoting investments. Turkey has signed bilateral agreements with105 countries and enacted the agreements of 80 countries. Similarly, agreements have been signed with many countries on the prevention of double taxation.