TURKEY

Source: IMF, International Financial Statistics, July 2021.

• The Turkish central bank is the Central Bank of the Republic of Turkey (www.tcmb.gov.tr).

Bank supervision

• Turkish banks are supervised by the Banking Regulation and Supervisory Agency (BRSA – www.bddk.org.tr)

• Payments between resident and non-resident bank accounts are subject to regulations. Taxes may apply or additional documentation may be required depending on nature of payment.

• DISCLOSED / UNDISCLOSED 

In export business. Recourse cheque discounting, which is the main domestic factoring facility, is usually undisclosed. Undisclosed and disclosed programmes are also practiced among large corporates. 

• RECOURSE / NON-RECOURSE 

Both recourse and non-recourse programmes are offered. ‘’True sales’’ is not applicable. 

• STRUCTURED PRODUCTS 

DDS (Direct Debiting System) finance and supplier’s finance are offered. Long term factoring facility for the end users in telecom market. 

• EXPORT / IMPORT 

Export business mainly via FCI network. Import factoring is not common. Eximbank covered export facility for countries out of FCI coverage. 

• CONCENTRATION REQUIREMENTS 

Not applied for large corporates. 20% for SME’s. 

• MAX. PREPAYMENT % 

100%. 

• CREDIT COVER % 

In international factoring 100%. In domestic factoring no insurance for the time being. 

• USUAL FUNDING PERIOD 

Financing is provided between invoice date and due date. 

• OFF-BALANCE SHEET SOLUTIONS 

Not available. 

• INVOICE TRANSFER 

Not applicable for the moment. E-assignment is a project for the future. 

• ONLINE APPLICATIONS 

The TEB Factoring mobile application and “Easy Apply” page on the website is applicable for domestic business. It is fully digital, starting from application through to automatic pricing. 

Users can easily submit their factoring application online using their mobile phone, by scanning the QR code of postdated check, to get pricing offers and monitor their applications. Getting pricing offers and monitoring applications is also possible via the TEB Factoring mobile application. 

There is also an online branch, allowing clients to monitor their activities, download documents such as balance statements, or check their limit/risk information. 

• DELAYED DUNNING 

Not applicable for the moment. 

• DATA FACTORING 

Not available. 

• CURRENCIES OF FINANCE 

EUR, GBP, USD, TL. 

• EXPECTED ANNUAL TURNOVER 

No limit is applicable. 

• FOREIGN EXCHANGE (F/X) BASED FINANCING 

Applicable.

• Credit transfers are used by companies to pay salaries and suppliers.
• Credit transfers can be settled in real time via EFT (high-value), or the RPS (low-value).
• Credit transfer facilities are also offered to postal check account holders by the PTT and processed by the PTT.
• In January 2021, the CBRT launched an instant retail payments platform, called the Instant and Continuous Transfer of Funds (FAST) System. FAST is able to process payments in real-time, 24 hours a day, seven days a week.
• Alongside FAST, a new Easy Addressing System allows bank account holders to initiate payments using mobile phone numbers, ID numbers or email addresses as personal identifiers. The system allows users to pay for goods and services through QR codes. FAST has a maximum limit of TRY 100,000.
• Cross-border transfers can be made via SWIFT and settled through correspondent banks abroad.

• Direct debits are not widely used in Turkey.
• Direct debits are available on an intrabank basis only.

• The cheque is not a common payment instrument. It is primarily used by companies for high-value payments. In 2023, cheque volumes declined 186% to 3.2 trillion.
• Cheques are MICR-encoded and truncated into electronic items before being processed via the Takasbank Cheque Clearing System on a same-day basis. Funds are available within four to six days.
• Promissory notes are popular with small and medium-sized enterprises and can be discounted by commercial banks. They are cleared via the Takasbank Cheque Clearing System.

• Card payments are increasingly popular, especially for retail transactions.
• There were 188 million debit cards and 75.7 million credit cards in circulation at the end of December 2020.
• Visa and MasterCard-branded payment cards are the most widely issued.
• All credit cards issued have EMV chips. Most debit cards issued are magnetic stripe cards.
• Contactless payment cards are available.
• TROY (Turkey’s Payment Method) is the country’s domestic payment card scheme. TROY-branded debit, credit and prepaid debit cards are available from 18 banks and three e-money institutions.
• Card payments are processed via the Interbank Card Centre (BKM) or via correspondent banking arrangements. There are 35 member banks of BKM and each must also be a member of either Visa or MasterCard.
• The Gosas system clears card transactions on behalf of its ten member banks. The system operates on a deferred net settlement basis on T+2.
• Payment card transactions made on cards issued by non-BKM members or with banks abroad are processed abroad through Visa or MasterCard systems or cleared using correspondent banking relationships.

• There were 53.500 ATMs in Turkey at the end of June 2024.
• There were 8.7 million POS terminals in Turkey at the end of June 2024.
• Banks provide their own proprietary ATM networks, although a number of BKM member banks share ATM access.
• The BKM provides a national ATM and POS network for debit cards issued by BKM member banks.
• All ATMs and POS terminals are EMV-compliant.

• Pre-paid cards are available.
• BKM Express is a popular digital wallet platform. It enables users to make online purchases (including purchases using mobile devices). There are currently 20 participant banks.
• Other mobile wallet schemes, such as GPay and Mobilexpress, are available.

• TEB's Global Trade Solutions (GTS) team is made up of 4 senior trade managers and 1 senior trade advisors based in 3 trade centres across the most industrialised provinces of Turkey (Adana, Bursa, İstanbul, İzmir). TEB is one of the active trade finance banks in Turkey thanksthe bank's expertise in international trade, customised trade finance and risk management solutions for corporations headquartered in, or operating in Turkey, and commitment to operational excellence. 

• Turkey-EU Customs Union constitutes major legal basis of Turkey’s free trade agreements. Under the Customs Union, Turkey aligns its policies with the EU’s Common Commercial Policy. 
• Together with the EU Common Customs Tariff, the preferential trade regimes constitute the most important part of the trade policy applied towards third countries. 
• Turkey has concluded FTAs with 38 countries, 11 of which were repealed due to the accession of these countries to the EU. Currently, Turkey has 23 FTAs in force; namely, EFTA, Israel, Macedonia, Bosnia-Herzegovina, Palestine, Tunisia, Morocco, Egypt, Albania, Georgia, Montenegro, Serbia, Chile, Mauritius, South Korea, Malaysia, Moldova, Faroe Islands, Singapore, Kosovo, Venezuela United Kingdom and the UAE.

Foreign Trade Statistics, December 2023

Exports increased by 0.6%, imports decreased 0.5% respectively in January-December 2023

The foreign trade deficit decreased by 37.8% in December 2023

The ratio of manufacturing industries products in total exports was 92.9%

The main partner for exports was Germany in December 2023

The main partner for imports was Russia followed by China

Ratio of exports of high-tech products in manufacturing industries was 4.6%

• Import licences are required for machinery, motor vehicles and certain chemicals.
• Import licences with quotas are required for textile and clothing products from some non-WTO member countries.
• Permission from the Ministry of Economy is required for imports of old, used, faulty or obsolete goods.

• An average 4.2% tariff is levied on industrial imports.
• An average 58% tariff is levied on agricultural imports.
• There are 18 free zones operating in Turkey.

• None

• None

• Turkey prohibits the import of certain items in order to protect fauna and flora, for health and safety or moral reasons, and/or for national security.

• Licencing restrictions are placed on exports of certain works of art, articles of cultural or historical value and goods for which the demand outweighs the supply, as well as for various commodities which may endanger fauna, national security or which are deemed morally unacceptable.

• None

• Türk Eximbank (Export Credit Bank of Turkey), Turkey’s national export credit agency, provides state-supported export credit insurance and financing.
• Export credit insurance is also available from private insurance companies.
• Export financing  (post or preshipment) are   available privately from commercial banks. Confirmation of letters of credit or re-issuance of guarantees are widely used.

• Prohibited exports are published on a negative list of products.
• Turkey prohibits the export of various works of art and articles of cultural or historical value.

• Exchange controls are administered by the Central Bank and the Undersecretariat of the Treasury.
• Foreign currency consumer and mortgage credits must not be allocated to resident individuals.
• Non-resident investment in mining, petroleum exploration and refining, transport, electricity, broadcasting and accountancy is subject to restrictions/ permissions.
• All proceeds from foreign investment that are transferred abroad are required to be reported to the Central Bank.

• There are no specific tax rules relating to financial instruments.

• There are no specific tax rules relating to interest and financing costs, apart from the Banking and Insurance Transaction Tax (BIFTT) and the Resource Utilisation Support Fund (RUSF).

• The rate announced by the Central Bank is used for foreign exchange conversions. Accounting books must be kept in TRY. Companies may be entitled to keep their books in a foreign currency, provided that their paid-in capital is at least USD 100 million or its equivalent in another currency and at least 40% of the capital belongs to a non-resident person by President’s permit.

• A tax payer may request an advance ruling on the tax treatment of specific transactions.

• Capital gains derived by a resident corporation are taxed at the corporation tax rate of 30%. for banks, financial leasing, factoring and financing companies, e‑money and payment services institutions, authorised foreign exchange currency-related entities, asset management companies (varlık yönetim şirketleri), securities intermediaries and other capital markets institutions, insurance and reinsurance companies and pension companies and 25% for other corporate entities.
• Seventy-five per cent of capital gains derived from the sale of participation shares are exempt from corporation tax if the following conditions are satisfied:
• The property has been held for at least two years;
• The gains are kept in a special fund account under shareholder equity for five years following the year of the sale;
• The exempt profits are not transferred within the specified period to another account (except for transfers to the capital account by way of a capital injection); and
• The consideration for the sale is collected by the end of the second calendar year following the year of the sale.
• The company does not hold the participations for the purpose of an ordinary business involving the trading of participations.
• Capital gains derived from the sale of foreign participations that have been held for at least two years by an international holding company resident in Turkey are exempt from corporate income.
• To qualify as an international holding company:
• A Turkish company must be a corporation (Anonim Sirket – AS);
• At least 75% of its total assets (excluding cash items) must be comprised of foreign participations that have been held for a continuous period of at least one year;
• The Turkish company must hold at least 10% of the capital of each foreign participation; and The foreign participation must be in the form of a corporation or a limited liability company.

• Interest income arising from deposit accounts is subject to at varying withholding tax r rates between 0-25% based on opening period, maturity and currency.The rate can be reduced under a tax treaty.. The provider is liable to deduct the tax before payment.
• Interest on loans payable to a foreign state, international institution or foreign bank or foreign corporation that qualifies as a ‘financial entity’ is subject to a 0% withholding tax. A 10% rate applies to interest paid on loans from other non-resident entities, unless the rate is reduced under a tax treaty.
• Withholding tax of 10% is levied on all dividends (except for dividends distributed by a resident company to another resident company, and Turkish branches of non-resident companies). The rate levied on dividends paid to non-residents may be reduced through tax treaties,.
• Withholding tax of 20% is levied on royalties paid to non-resident companies.
• A 20% withholding tax is imposed on royalties paid to a non-resident, unless the rate is reduced under a tax treaty. A 20% withholding tax is levied on fees paid for professional services, such as consulting, supervision, technical assistance and design fees, unless the rate is reduced under a tax treaty.

• Turkey has exchange of information relationships with 95 jurisdictions through90 double tax treaties, and five TIEAs.
• Turkey is a signatory of the Multilateral Competent Authority Agreement (MCAA) on the automatic exchange of country-by-country financial account information. Under this multilateral agreement, information is being  exchanged between tax administrations, giving them a single, global picture on some key indicators of economic activity within multinational enterprises.

• The thin capitalisation rules apply when loans from shareholders or related parties exceed a 3:1 debt to-equity ratio at any time in an accounting period (six times shareholder equity for loans from related-party banks or financial institutions). Related parties for these purposes are defined as shareholders and persons related to shareholders that own, directly or indirectly, 10% or more of the shares, voting rights or the right to receive dividends of the company. The amount of equity is that determined under the Tax Procedures Code at the beginning of the accounting period.
• Where the debt-to-equity ratio is exceeded, interest payments in excess of the safe harbour ratio will be deemed to constitute a hidden profit distribution or a remittance of profits as of the last day of the accounting period in which the conditions for application of the thin capitalisation rules are satisfied and, therefore, subject to the 10% dividend withholding tax. Related expenses, foreign exchange losses and interest payments are non-deductible.

• When a transaction between related parties (whether or not residents) is not carried out on arm’s length terms, profits arising from the transaction will be deemed to be constructive dividends subject to both corporate income tax and dividend withholding tax. The transfer pricing rules provide for the comparable uncontrolled price, cost-plus and resale price methods, as well as profit-based methods (e.g. profit-split and transactional net margin methods). However, a taxpayer may adopt another method based on its particular circumstances.
• Taxpayers are required to maintain documentation to support their transfer pricing. Corporate taxpayers that are registered with the tax office of the largest taxpayers (large taxpayer office) must prepare an annual transfer pricing report with respect to domestic and foreign-related party transactions. Those registered with other tax offices only have to prepare the annual report with respect to their foreign-related party transactions.
• Taxpayers registered with the large taxpayer office also must include their transactions with related parties in Turkish free trade zones (FTZs), including branches, and their branches abroad, in their annual transfer pricing report. Corporate taxpayers operating in FTZs must prepare an annual transfer pricing report with respect to domestic related-party transactions.
• Turkish corporate income taxpayers that are members of a multinational entity (MNE) group with prior year assets and net revenue of at least TRY 500 million must submit a master file by the end of the fiscal year following the first year to which the master file relates.
• Ultimate parent entities or agency surrogate parent entities resident in Turkey that are part of an MNE group whose consolidated group revenue is at least EUR 750 million in the accounting period preceding the reporting fiscal year, are required to file and submit electronically a country-by-country (CbC) report to the Turkish tax authorities by the end of the year following the reporting period.
• The CbC notification form must be submitted annually by June 30 of the year following the reporting period. The notification must be submitted electronically via the online tax office (Internet Vergi Dairesi). Taxpayers required to submit a notification must request their user code and password from the relevant tax office.

Unilateral, bilateral and multilateral advance pricing agreements (APAs) may be concluded with the Ministry of Finance. Turkey has introduced pre-filing meetings to negotiate the terms and details of the APA process, the application form to be filled out, the timeline for finalising the application, etc.

• Stamp duty applies at rates ranging from 0.189% to 0.948%, depending on the type of document.

• There are no specific rules covering cash pooling arrangements.

• A banking and insurance transaction tax applies at a general rate of 5% on bank and insurance charges.
• Banks are required to withhold a contribution to the resource utilisation support fund on the principal amounts of foreign-denominated loans with an average maturity period of three years or less. The rate is 3% for loans of less than one year, 1% for loans with an average maturity period of at least one year or two years and 0.5% where the average maturity period is at least two to three years. 0%, with an average maturity period of more than 3 years. A 1% contribution applies to the interest accrued on TRY denominated loans with an average maturity of less than one year, and 0% applies to TRY loans with an average maturity of more than one year. In addition, imports realised on credit are subject to a 6% withholding tax (subject to certain exemptions).
• The banking and insurance transaction tax also applies to foreign exchange purchases from banks, and foreign exchange offices, at a rate of 0.25 2 per thousand. The president is authorized to reduce this new tax rate to 0% or to increase it to 2%.

All tax information supplied by Deloitte Touche Tohmatsu and Deloitte Highlight 2021. (www.deloitte.com).