BENEFITS OF MAKING BUSINESS IN TURKEY W W W. M E R G E R S C O R P. C O M
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W W W. M E R G E R S C O R P. C O M
BENEFITS OF MAKING BUSINESS IN TURKEY
W W W. M E R G E R S C O R P. C O M
Country Overview Turkey, known officially as the Republic of Turkey, is a transcontinental Eurasian country. Its location at the crossroads of Europe and Asia makes Turkey a country of significant geostrategic importance. The capital of Turkey is Ankara, and the official currency is the Turkish lira. The official language of Turkey is Turkish. The modern Republic of Turkey was established in 1923, with Mustafa Kemal AtatĂźrk as its first president. Turkey is a democratic, secular, unitary, constitutional republic. It has become increasingly integrated with the West through membership in organisations such as the Council of Europe, North Atlantic Treaty Organization, Organisation for Economic Co-operation and Development, Organization for Security and Co-operation in Europe, and the G-20 major economies. Total population of the Turkish republic was about 13 million; since then it has increased more than six fold. Growth was particularly rapid after World War II, reaching nearly 3 percent annually in the early 1960s, but the rate of growth has since declined. A fall in the birth rate was the main factor for the decline, offset somewhat by a decline in the death rate. Since its inception in 1923, Turkey has operated a mixed economy, in which both state and private enterprise contribute to economic development.
Executive Summary In 1923, Ankara was declared the capital of Turkey, in place of Istanbul. This was a massive change, since Istanbul was one of the largest cities in Europe, while Ankara was but a small town in that time, it had only 35,000 inhabitants. Turkish Ä°stanbul, formerly Constantinople, ancient Byzantium, largest city and principal seaport of Turkey. It was the capital of both the Byzantine Empire and the Ottoman Empire. The old walled city of Istanbul stands on a triangular peninsula between Europe and Asia. Turkey population is projected to increase by 1,429,642 people and reach 86,325,261 in the beginning of 2021. The natural increase is expected to be positive, as the number of births will exceed the number of deaths by 979,695.
If external migration will remain on the previous year level, the population will be increased by 449,947 due to the migration reasons. Turkish cuisine also influenced these cuisines and other neighbouring cuisines, as well as western European cuisines. Ottomans fused various culinary traditions of their realm with influences from Middle Eastern cuisines, along with traditional Turkic elements from Central Asia such as yogurt. Turkey, by land mass, is positioned 95% in Asia and 5% in Europe.
Introduction – Doing business in Turkey Turkey’s FDI Law is based on the principle of equal treatment, allowing international investors to have the same rights and liabilities as local investors. The conditions for setting up a business and share transfer are the same as those applied to local investors. International investors may establish any form of company set out in the Turkish Commercial Code (TCC), which offers a corporate governance approach that meets international standards, fosters private equity and public offering activities, creates transparency in managing operations and aligns the Turkish business environment with EU legislation as well as with the EU accession process. Turkey has introduced reforms with a view to making it easier to do business in order to enhance the investment environment, eliminating red tape in setting up a business and minimizing costs and procedures. To this end, establishing a company is now only carried out at Trade Registry Offices located in Chambers of Commerce and designed to be a ‘one-stop shop’. The process is completed within the same day.
Conducting business in Turkey The Turkish Commercial Code defines several legal business structures, all open to foreigners. Here is an overview of the most common ones. The limited company, requiring a minimum of one partner and 5,000 Turkish liras in capital, is relatively simple to set up and is hence one of the most popular corporate forms for small and medium businesses. The joint stock company, involving a minimum capital of 50,000 Turkish liras and a minimum of one shareholder on the board, is more suitable for larger-scale projects. It must be registered with the Capital Market Board and obtain a stock certificate. Turkey's corporate law is based on the principle of equal treatment, entitling international investors to the same rights and duties as local ones. However foreigners must request special authorizations to invest in a few regulated sectors such as energy or aviation.
Taxation in Turkey ​Turkey has one of the most competitive corporate tax rates among OECD member countries. The Turkish corporate tax legislation has noticeably clear, objective, and harmonized provisions that are in line with international standards. The Turkish tax legislation may be classified under three main headings: The Turkish tax regime is an important part of the economy and can be divided into 3 main categories: Income Taxes, such as Individual Income Tax and Corporate. Taxes on Expenditure, such as Value Added Tax or Banking and Insurance Transaction Tax or Stamp Tax Taxes on Wealth, such as Property Tax or Inheritance and Gift Tax.
The tax system in Turkey is progressive. In other words, the higher your income, the higher the rate at which you will pay tax. The 2016 individual tax rates vary from 15% - 35%. in 2016 the standard rate of Turkey corporate tax is 20%.
Trade Turkey shipped US$168 billion worth of products around the globe in 2018. That figure represents roughly 1% of overall global exports estimated at $17.546 trillion one year earlier during 2017 (calculated as of February 6, 2019). The latest available country-specific data shows that 51.9% of products exported from Turkey were bought by importers in: Germany (9% of the global total), United Kingdom (6.3%), Italy (5.4%), Iraq (5.2%), United States (4.7%), France (4.5%), Spain (4.5%), Netherlands (3.2%), Israel (2.5%), Russia (2.3%), Romania (2.2%) and United Arab Emirates (2.1%). Turkey ships another 8.4% worth of goods to Africa and 6.1% to North American customers. A much smaller percentage of Turkish exports arrived in Latin America (1.6%) excluding Mexico but including the Caribbean. Turkey is currently our 32nd largest goods trading partner with $20.5 billion in total (two way) goods trade during 2018. Goods exports totaled $10.2 billion; goods imports totaled $10.3 billion. The U.S. goods trade deficit with Turkey was $143 million in 2018.
Banking in Turkey Ziraat Bank Established in 1863, Ziraat Bank is a state-owned bank. It provides various banking products and services to retail, small and medium-sized enterprises, and corporate customers in Turkey and other countries. With around 24,374 employees, it is headquartered in Ankara. As of December 31, 2016, the bank managed 1,814 branches. It is present in 19 countries with a focus on individuals and real estate. As of 2016, total assets of the bank were US$91.60 billion and net profit was US$1.69 billion. Isbank Founded in 1924, Isbank is the first public bank established by the Turkish Republic. The bank offers corporate and commercial banking services, and other banking services to large corporations, SMEs, and other trading companies. It also provides retail banking services, and other banking services, private banking services comprising various financial and cash management related services, and Internet and mobile banking services.
Our M&A Process TARGET APPRAISAL
APPROACH
DUE DILIGENCE
NEGOTIATION & CLOSE
POST MERGER INTEGRATION (PMI)
Revisit indicative valuation & prepare detailed valuation based on due diligence findings; SPA negotiations with the seller; Development of final structure (share/asset deal) and final valuation; Approvals; Signing of SPA & Close.
Consider the extent of integration; Development of 100 Day PMI Plan; Consider short & long term objectives; Estimate requirements to capture synergies; Determine resource needs & optimal allocation.
Company general counsel; Lawyers; Senior management.
Company general counsel; Lawyers; Senior management/HR.
Key Areas Target & market analysis; Initial assessment of synergies & value drivers; Indicative valuation; Go or No-Go decision; Preparation of transaction documents (NDA – Nondisclosure Agreement/LOILetter of Intent); Select Transaction team; Appoint advisors; Consider funding ability.
Initial approach letter; Signing of NDA; Prepare & share initial information requests; Formulation of LOI (Letter of Intent) & possible negotiations; Initial meeting and Q&A; Circulate information on the Target to the Transaction team.
Set scope of due diligence; Set up VDR (virtual data room); Coordinating of due diligence, further meetings and Q&A sessions; Consider points relevant to the Post-Merger (PMI) phase;
Parties Involved CFO; Head of M&A; Accountants; Corporate finance advisors; Consultants.
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