Barriers and Opportunities for Enhancing Capital Flows
In the COMCEC Member Countries
38
Turkey
Laws regulating capital inflows
Foreign investors in the Republic of Turkey are not, in principle, subject to a separate legal or
tax regime. However, the Foreign Direct Investment Law, 37 dating from 2003, makes FDI
subject to a declaration rather than to authorisation. The law also provides explicit guarantees
that: (a) foreign investors are subject to equal treatment with domestic investors unless
stipulated by international agreements and other special laws; (b) foreign direct investments
are not to be expropriated or nationalised, except in the public interest and upon
compensation in accordance with the due process of law, and (c) foreign investors are free to
transfer profits, proceeds from sale or liquidation and other related funds through the banking
system.
Turkey’s capital markets are governed by the Capital Markets Law, which was most recently
renewed by the country’s parliament in 2012, to bring it more closely into line with EU norms
and strengthen investor protection.38 There are no restrictions on foreign portfolio investors
trading in the Turkish capital markets. Non-resident individuals and legal entities, including
investment trusts and funds, are free to buy and sell all kinds of securities and other
instruments. Foreign investors can also use Turkey’s markets to hedge currency risk. All
securities transactions – as well as portfolio management, investment consultancy and
underwriting activities – are required to be conducted through an institution established and
licensed in Turkey.
Institutions overseeing capital flows
The General Directorate of Incentive Implementation and Foreign Capital at Turkey’s Economy
Ministry39 is responsible for FDI policy matters, such as bilateral agreements on the protection
of investments. Under the Capital Markets Law, capital markets are regulated by the Capital
Markets Board (CMB or SPK, in its Turkish acronym). Among its many functions, the CMB40
regulates, licenses and/or supervises financial markets, financial market participants and
companies which have multiple shareholders and/or which offer shares to the public and/or
whose shares are traded on the stock exchange, together with their securities issues or
offerings.
Other actors that play a role in Turkey’s capital flows include the Under Secretariat of the
Treasury, operating under the Prime Ministry, which is responsible for sovereign debt
management, including domestic and international bond issuance; for multilateral external
economic relations; and for regulating certain institutional investors – namely insurance firms
and private pension funds. The Ministry of Finance is responsible for taxation; the Central
Bank oversees monetary policy, including lira and foreign-currency reserve requirements; the
37 See for an English translation.
38 An English translation of the law is available at
For one short commentary,
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39 More information on the work of the Economy Ministry is available at its website
40 More information on the CMB is available at its website: