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Foreign Investment Law
Foreign capital is the procedure of making a transfer of capital from one country to the other. Foreign capital may enter countries in two ways as official capital flow and special capital flow. Official capital flow is made from a country or international institution towards another country. Special capital flow is separated into two as direct investments and portfolio investments.
The most important reason for foreign investment; profit difference which means the profit obtained abroad is more than the profit obtained in the country to put in other words the cost in making investments in other countries is lower. Another advantage of these types of investments is the fact that labour may be cheaper abroad. Countries may decide with the intention of riding themselves from the weight of labour fees in their countries to benefit from the cheap labour found in less developed countries. Another reason is to get rid of customs fares and other limitations.
In order for foreign capital to enter the country the first step is export and later on the country’s lands production facilities are established.
The companies in which foreign investors may establish are the companies regulated in the Turkish Commercial Code and the ordinary companies established in the Turkish Code of Obligations.
The purpose of Direct Foreign Investments Law is to encourage direct foreign investments, protect the rights of foreign investors and to comply with international standards for the definition of investment and investors, also to change the permission and approval system for foreign investments into a notifying system and to regulate the principles of politics which have been determined for increasing direct foreign investments.
Foreign investors are real people who are foreign country nationals or who are Turkish citizens which reside abroad as well as legal entities which have been established by foreign country laws and international institutions which do direct foreign investments in Turkey.
Direct foreign investments: By a foreign investor brought in from abroad 1- Cash capital as convertible moneys or company securities which may be sold by the Turkish Republic Central Bank 2- Machines and equipment 3- Intellectual property rights 4- Profits, revenues, money claims and financial other rights reused in investment which have been obtained inside the country.
The pre permission needed to be given from the Foreign Capital General Management in order to establish companies which are established with foreign capital have been revoked. Therefore the establishment procedure will be exactly like the establishment of domestic capital companies.
Save as otherwise provided by International agreements and special law regulations;
1-Foreign investors have the liberty to make direct foreign investments in Turkey 2- Foreign investors will be subjected to the same (equal) treatment as local investors are subjected to.
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