Turkey Doing Business

1. Business tips
2. Triffs and non-tariff barriers
3. Product certification, labelling and packaging
4. Documentary requirements
5. Setting up in Turkey
6. Dispute resolution

Business development specialists have prepared a range of market profiles that offer potential to assist in your exporting investigations.

Business tips

As a rule, there are several people present at any one meeting. Proceedings begin slowly with the exchange of pleasantries and the drinking of Turkish tea served in small glasses. It’s best not to refuse tea, regardless of how many cups you've already had.

Pricing and finance are tackled slowly and never at the beginning of negotiations. Bargaining will be conducted strenuously and often subtly. Turks are good negotiators.
There may be multiple incoming and, to a lesser extent, outgoing telephone calls made during meetings. Turks are great users of the telephone and mobile phones are ever-present.

The shaking of hands, both male and female is normal in Turkey. Good friends, again both male and female, kiss each other on both cheeks when meeting. This is not uncommon in the business world but not expected of foreigners.

A personal relationship is an important basis for a successful business affiliation in Turkey. It’s important to allow time for friendly conversation before the business agenda.

Entertaining in the evenings can greatly assist the development of a close relationship. If you’ve met business acquaintances on previous trips, it’s polite to ask after their families.
When meeting for the first time, Turks will address you by using the Western ‘Mr’ (‘Bey’ in

Turkish followed by your surname) and ‘Ms’ (‘Bayan’ followed by your surname). Also acceptable is the traditional use of the first name followed by ‘Bey’ for men and ‘Hanim’ for women.

In the major cities there is a certain amount of liberalism in dress and custom for women. Business suits for females and males are the norm. Generally, Turks dress more formally than Australians. In rural and regional areas women should maintain a conservative mode of dress.

Tariffs and non-tariff barriers

Tariff

Tariffs on imports from non-European countries are approximately three % above EU rates but varies on product-by-product basis.

A Value Added Tax (VAT) applies in Turkey irrespective of the country of origin. The VAT for most agricultural products (basic food) ranges from one to eight % and can reach up to 18 % for some processed products. Capital goods, some raw materials, imports by government agencies and state owned enterprises, and products for investments with incentive certificates are exempt from import fees. Import duties are calculated on the CIF value.

As part of the 1 January 1996 customs alliance between Turkey and the European Union (EU), the Turkish Government has adopted the EU's common external trade standards. Therefore, Turkey's customs tariffs and duties (with a few exceptions) are equal to those of the EU. Turkey's weighted rate of protection for imports of non-sensitive industrial products is zero for products originating in EU and EFTA countries; rates for other countries such as Australia dropped from ten % to approximately 4.1 % on most items. Some agricultural goods will remain protected by steep tariffs. When the EU applies further Uruguay Round reductions, Turkey's average rates for third countries (including Australia) will be lowered to 3.5 %.

Despite the EU alliance, Turkey continues to maintain various tariff and non-tariff barriers to control and restrict imports, particularly for agriculture products including wine.
Information on custom procedures and regulations can be obtained from www.gumruk.gov.tr

Product certification, labelling and packaging

Labelling

Special regulations apply to labelling of some items, including food products, products used by humans, pharmaceutical products, and insecticides. Translation into Turkish is required.

All industrial products must bear a registered trademark. All packages, cases, and bales must bear shipping marks, numbers, dimensions, and the gross weight of the merchandise.

Packaging

Packing should be strong and should guard against heat in summer, humidity in winter and possible periods of storage in the open.
Quotes should be in the form of an itemised pro-forma invoice, FOB and CIF. Unless instructions are given to the contrary, goods should be fully insured on the CIF value and covered for the entire journey. A letter of credit - favourable credit terms, for example, up to 60 days, are often expected.

Special certificates

Import licenses and phytosanitary certificates are necessary for food and agricultural commodity imports.

Methods of quoting and payment

Quotes should be in the form of an itemised pro-forma invoice, FOB and CIF. Unless instructions are given to the contrary, goods should be fully insured on the CIF value and covered for the entire journey. A letter of credit - favourable credit terms, for example, up to 60 days, are often expected.

Documentary requirements

Commercial invoice

The commercial invoice must be in triplicate with the original certified and signed by the exporter. The exporter must endorse the original as follows: "We hereby certify that this is the first and original copy of our invoice, the only one issued by our firm for the goods herein mentioned."

It is advisable to have documents certified by the Turkish Embassy or Consulate. The commercial invoice must contain:

• description of goods
• unit price
• quantity and total amount
• net weight or number of units
• a breakdown of the total amount if the invoice covers freight charges and/or insurance is required

Certificates of origin

The certificate of origin must be in duplicate. The packing list is generally required in triplicate. It may need to be certified by a chamber of commerce or similar body or by the Turkish Consulate . The certificate must identify the name and address of the consignor and consignee, the nature of the goods, the type of packing and number of packages, marks, numbers, gross and net weight in kilograms, FOB and CIF values together with shipping route.

Bill of lading

The original bill of lading and three copies should be submitted. Details must correspond exactly with those on the commercial invoice.

Setting up in Turkey

It is advisable to have a local representative to enter the Turkish market. As Turkish companies would provide local experience and knowledge as well as contacts in government and private sectors, it would be better to engage in a relationship with a local partner.

Local partners can assist especially in knowing the regulations and business relationships. Austrade Istanbul can assist in finding the right business partner for Australian companies.

Taxation

Value added tax (VAT), assessed on the duty paid value, is levied on most goods. Three rates apply:

• Basic foods and books – 8 %
• Basic rate – 18 %
• Some food items and others – 1 %

Additional taxes (special consumption tax) are imposed on automobiles, cigarettes, alcoholic beverages, white goods and fuel oil.

All corporations and limited liability entities are liable for corporation and withholding tax. Corporation tax is currently 20 % and withholding tax is 15 %.

A double taxation agreement between Turkey and Australia is still under negotiation.

Intellectual property protection

Turkey's intellectual property rights regime has improved in recent years, but certain deficiencies from international standards remain a concern.

Turkey's issued a new copyright law, which provides deterrent penalties for copyright infringement. Anti Piracy provisions are an important part of the new law. You can still find pirated materials, especially CDs and books, but there are more cases and more deterrent penalties for the producers and sellers of these pirated materials.

Turkey is a signatory to a number of international conventions, including the Stockholm Act of the Paris Convention, the Patent Cooperation Treaty, the Strasbourg Agreement, and the WIPO Copyright Agreement and Performances and Phonograms Treaty.

Banking and finance

As of February 2008, there are 50 banks operating in Turkey. Thirteen of these banks are investment and development banks, and four are participation banks. There are four commercial state banks and four investment and development state banks.

After 2001, many international banks started investing in Turkey. Today foreign investments control over 25 of the 46 banks in the Turkish banking sector resulting in foreign share of the banking industry exceeding 38.8 %. Some of the major banks are Isbank, Garanti Bank, Akbank and some international banks operating in the country are Citibank, HSBC, and Fortis.

Dispute resolution

Turkey's legal system has written commercial and bankruptcy laws and provides means for enforcing property and contractual rights. The court system can be slow in making decisions as the court system is overloaded. Therefore having a case finalised can sometimes take quite long. Turkey is a member of the International Center for the Settlement of Investment Disputes (ICSID), and is a signatory of the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.

Turkish law accepts binding international arbitration of investment disputes between foreign investors and the state.