Foreign Direct Investment (FDI) Framework in Turkey: Law No. 4875

Turkey offers one of the most liberal and investor-friendly legal regimes in its region. The Foreign Direct Investment Law No. 4875 is the primary legislation designed to protect the rights of international investors, encourage capital inflow, and align Turkish investment standards with global norms.

At Atlas Global Audit & Accounting, we guide international businesses through this legal framework to ensure a secure and efficient market entry.

1. Key Objectives of the FDI Law

Law No. 4875 shifted the Turkish investment environment from a “screening and approval” system to a “notification-based” system. Its primary goals are:

• Protecting the rights of foreign investors.
• Defining “investor” and “investment” according to international standards.
• Promoting equality between foreign and domestic capital.
• Simplifying the establishment and operational processes for global entities.

2. Who is a “Foreign Investor”?

The law provides a broad definition to include both individuals and entities:

• Real Persons: Foreign nationals and Turkish citizens residing abroad.
• Legal Entities: Companies established under the laws of foreign countries and international institutions.

3. Core Principles of Protection
4. National Treatment and Freedom to Invest

Foreign investors are free to make direct investments in Turkey and enjoy equal treatment with domestic investors. Unless otherwise stipulated by special laws or international agreements, there is no discrimination between local and foreign capital.

1. Guarantee Against Expropriation

Foreign direct investments cannot be expropriated or nationalized, except for the public interest. In such cases, the process must follow due legal procedures, and prompt, adequate compensation must be paid to the investor.

1. Freedom to Transfer Funds

Foreign investors are entitled to freely transfer abroad the following through Turkish banks:

• Net profits and dividends.
• Proceeds from the sale or liquidation of an investment.
• License, management, and technical assistance fees.
• Reimbursements and interest payments arising from foreign loans.

1. International Dispute Settlement

For disputes arising from investment agreements, investors have the right to apply to:

• Authorized local courts.
• National or international arbitration (such as ICSID or UNCITRAL), provided the parties agree and relevant conditions are met.

4. Strategic Operational Advantages

• Employment of Expatriates: The law facilitates the issuance of work permits for foreign “key personnel” in companies and branches established within the scope of this Law.
• Liaison Offices: International companies can establish non-commercial liaison offices in Turkey to conduct market research and representation, subject to a permit from the Ministry.
• Non-Cash Capital Valuation: Non-cash assets (machinery, equipment, intellectual property) are valued under Turkish Commercial Law. Valuations determined by the authorities or courts of the investor’s home country are recognized.

Strategic Support by Atlas Global Audit & Accounting

Navigating the legal landscape of a foreign market requires local expertise. We provide comprehensive services to help you leverage the benefits of Law No. 4875:

• Company Incorporation: Choosing the right legal structure for your business.
• Regulatory Notification: Managing the mandatory administrative filings with the Ministry of Treasury and Finance.
• Work Permit Consultancy: Assisting in the recruitment of foreign key personnel.
• Liaison Office Management: End-to-end support for non-commercial representative entities.

Ensure your investments in Turkey are legally protected and financially optimized. Contact Atlas Global Audit & Accounting for a consultation.