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Global rules on foreign direct investment (FDI)
Cross-border acquisitions and investments increasingly trigger foreign direct investment (FDI) screening requirements.
Global | Publication | July 2024
In Türkiye, companies with foreign ownership (FDI Companies) must notify foreign direct investments (FDI) to the Ministry of Industry and Technology (the Ministry), but approval is only required to establish a liaison office. In certain sectors, however, FDI is prohibited or restricted.
Since 2018, the notification process for FDI Companies is largely online and completed through the Ministry’s e-notification system. Changes to the capital and shareholding structure of FDI Companies must be notified within one month. Otherwise, FDI Companies submit annual notifications by filling out a standard form requiring general information pertaining to the FDI Company, including its trading name, address, tax identification number, and brief information regarding its subsidiaries, if any. In addition, the form requires disclosure of the FDI Company’s shareholding structure, including the percentage of equity held by foreign shareholder(s). Finally, the notification form also asks whether any FDI were made in the previous year, and if so, in what amount, whether any profit was transferred overseas, and whether any franchise, know-how, licensing or technical support agreements were signed.
Foreign entities seeking to establish a liaison office must obtain approval from the Ministry. Liaison offices may not engage in any commercial activity and therefore may not generate any income or incur any losses. Permits to establish liaison offices are limited to three years, but may be extended.
Except in certain limited sectors, foreign investors are free to make FDI in Türkiye on an equal footing with Turkish investors. The most relevant sectors in which FDI is prohibited or restricted are broadcasting, maritime activities, real estate, and aviation:
Utku Ünver, Partner on secondment to Turkish local alliance firm Pekin Bayar Mizrahi
Damla Çay, Associate, Istanbul
Publication
Cross-border acquisitions and investments increasingly trigger foreign direct investment (FDI) screening requirements.
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