Edition 20: 18 April 2016
Editorial Team:
Dr. E. Seyfi Moroğlu, LL.M., Işık Özdoğan, LL.M. and Bora İkiler, LL.M.
Turkey Widens Scope of Government Incentives for Investments in Certain Industries or Regions

Turkey has widened the scope of government incentives offered for investments in certain industries. Changes to the Investment Incentive Scheme are intended to update the existing framework to keep pace with Turkey’s market needs and address recent developments. Changes particularly apply to investments into airports, tourism and production of certain flat aluminum goods. Conditions for the government incentives are also outlined in a more detailed manner than previously.

Governmental grants for enterprises are outlined by Cabinet Decision 2012/3305, which entered into effect on 15 June 2012. The Decision Amending the Decision Regarding Governmental Grants on Investments (“Amendment Decision”) was published on 29 February 2016, entering into effect on 8 April 2016.

The Investment Incentive Scheme allows entrepreneurs to receive incentives depending on the scale of investment, sector, region and the goods/services which will be produced. The scheme has four main aspects:

– Regional Incentives.

– Large Scale Investments Incentives.

– Strategic Investments Incentives.

– General Incentives.

Significant changes introduced by the Amendment Decision include:

– Applications for Strategic Investments will be accepted up to 31 December 2016.

– Employers will receive support for their national insurance contribution with regard to Large Scale and Regional Investments within the scheme, for certain time periods and regions, as outlined in the Amendment Decision.

– For large Scale investments which had begun by 31 December 2016, income or corporate tax will be reduced until the amount reaches the defined contribution amount.

– Integrated investments regarding production of flat aluminum goods via direct frigorific slab casting and hot rolling are now included in the scheme.

– Tourism investments and investments into operating permitted sea tourism facilities are now included in the Regional Incentives aspect of the scheme.

– Airport investments are now included in the Large Scale Incentives aspects of the scheme.

– For investments which remain unfinished due to safety issues, entrepreneurs can request extra time to receive the incentive and continue to work, provided the Investment Incentive Documentation was finalized before 1 June 2015.

Please see this link for the full text of the Amendment Decision (only available in Turkish).

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Turkey Widens Scope of Money Laundering and Terror Financing Regulations

Turkey’s Ministry of Finance has amended various aspects of the legal framework regarding money laundering, terror financing and financial crimes investigation. Amendments are intended to update the laws in accordance with recent developments. The scope and volume of obligations has increased to include new types of companies, as well as public authorities and institutions. Certain precautions are also outlined in a more detailed manner than previously.

Key changes introduced by the amendments include:

– The scope of application has widened the Regulation on Precautions Regarding the Prevention of Laundering of Crime Revenues and Prevention of Financing of Terror. The following entities must now also meet related requirements for monetary transactions:

– Financing and factoring companies.

– Capital market intermediary institutions.

– Portfolio management companies.

– Payment agents and electronic payment agents.

– Borsa İstanbul Anonim Şirketi (limited to custodian service regarding the Precious Metals and Precious Stone Market).

– Posta ve Telgraf Teşkilatı A.Ş. (the national postal service).

– Courier companies.

– Precious metals intermediary institutions.

– The scope has widened for parties which are only required to assign a compliance officer (without being required to develop a compliance program) under the Regulation on Program of Compliance with the Obligations to Combat Money Laundering and the Financing of Terror. The following entities must now assign a compliance office within 30 days of receiving activity authorization:

– Financing and factoring companies.

– Payment agents.

– Portfolio management companies.

– Courier companies.

– Lower and upper monetary thresholds are changed for transactions by electronic cash institutions and retirement operations under General Communiqué No: 5 of the Financial Crimes Investigation Board. Also, detailed precautions are now outlined for how these transactions should be performed.

Please see the links below for the amended text of regulations and communiqué (only available in Turkish):

– Regulation on Precautions Regarding the Prevention of Laundering of Crime Revenues and Prevention of Financing of Terror

– Regulation on Adoption Program Regarding Prevention of Laundering of Crime Revenues and Prevention of Financing of Terror

– General Communiqué No:14 Amending the Comminique no:5 of the Financial Crimes Investigation Board Comminique

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Turkey Introduces Rules for Social Security Institution to Purchase Medical Services

Turkey has introduced regulations outlining principles and procedures for financial arrangements between health care service providers (“Service Providers”) and the Social Security Institution (“Institution”), including supplementary arrangements. In particular, the new requirements for the agreements or protocols aims to provide high quality and accessible health care service, in line with common medical rules.

The Regulation on Drafting and Concluding Social Security Institution’s Medical Services Purchase Agreements/Protocols (“Regulation”) was published in Official Gazette number 29665 on 26 March 2016, entering into effect on the same day.

Key aspects introduced by the Regulation include:

– The Institution must draft agreements/protocols, except for certain stated exceptions.

– Agreements/protocols become valid once the following has been obtained:

– Approval by the Institution.

– Approval by the competent public authority.

– Party signatures.

– The Institution chooses the Service Provider to purchase health care services from and determines rules regarding such purchase.

– Agreements/protocols must include provisions requiring the Service Provider to act pursuant to relevant confidentiality legislation regarding information about persons and the Institution.

– Transferring operational rights (including leasing) will be deemed to be a transfer of operations. The transferor and transferee will be jointly and severally liable for the debt owed to the Institution.

– Agreements/protocols cannot be shorter than six months.

Any agreement/protocol concluded after 26 March 2016 must comply with the Regulation’s provisions. The Regulation does not apply to agreements/protocols which are already in force.

Please see this link for the full text of the Regulation (only available in Turkish).

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Turkish Competition Authority Considers Movie Cinemas in Sector Report

The Turkish Competition Authority has published a report on movie cinemas, outlining competition law-related conditions in different aspects of the sector, such as production, distribution and screening (“Report”). The report has been updated to include information about the recent merger of AFM and MARS and its effect of the sector. Notably, the report comments on the link between movie cinemas and shopping malls in Turkey.

The Report includes four sections:

– General information on cinema sector

General information about the Turkish cinema sector, with determinations about production, distribution and screening markets. The Report notes that there appear to be no competition-restricting practices in Turkey, such as mandatory price or quantity restrictions in the production chain.

Movie theaters began to be located in shopping malls from the 2000s in Turkey, with 71% of movie theaters currently located in shopping malls. This factor is an increasing issue within competition law examinations.

– Sector shaping digital transformation progress

The Report considers transformation of 35mm film to digital copies and the digital transformation progress. It examines the virtual print fee system and effects of this system on the Turkish cinema sector.

– Notable Court decisions regarding the cinema sector

The Report considers important decisions from the United States, European Union and Turkey. It particularly mentions:

– Paramount Pictures (United States).

– Acquisitions discussed by English courts.

– Warner Bros.-2 (Turkey).

– MARS/AFM merger (Turkey).

– Sector state after MARS/AFM merger

The Report thoroughly reviews the AFM/MARS decision, making determinations about the state of the sector after the decision. The Report observes that growth in screening appears to be moving in parallel with the growth of the shopping mall sector. The report notes that movie theaters which will be built in all of the 61 new shopping mall projects and MARS will operate 33 of these movie theaters.

The Report also comments that from the end of 2014, MARS began operating in the production, distribution and screening markets, constituting vertical integration. Although this situation worries some in the sector, a recent Competition Board decision states there is no proof that MARS has undertaken any competition-restricting acts while benefiting from this vertical integration.

Please see this link for the full text of the Report (only available in Turkish).

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Turkey Approves 2016-2019 Strategy and Action Plan for Automotive Sector to Increase Global Competitiveness

A Strategy and Action Plan for the Turkey’s Automotive Sector (“Action Plan”) has been approved by the High Planning Council for the 2016-2019 period. The Action Plan includes updated sectoral information, analysis of trends and obstacles, as well as sets objectives for the period. The objectives aim to support local players to become more competitive globally.

The Action Plan considers the key problems currently facing the sector. In particular, it outlines:

– Current situation in Turkey’s automotive sector.

– SWOT analysis and envisaged problems.

– Vision, general purpose, objectives and actions prescribed for the sector.

– Monitoring and review of the Action Plan.

– Relationship of the Action Plan with the tenth development plan.

The Action Plan includes specific strategic objectives for 2016-2019:

– Form the substructure required to manufacture local brand vehicles.

– Amplify the sector’s branding capability and global competitiveness.

– Improve legal and administrative regulations in order to amplify the automotive sector

The approval decision and the Action Plan was announced in Official Gazette number 29672 on 2 April 2016. Please see this link for the full text (only available in Turkish).

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Turkey Tightens Regulator Oversight and Powers to Terminate Licenses for Games of Chance

Turkey has amended regulations regarding games of chance, as well as related license agreements. Changes apply to exclusivity of licenses and restrictions on license assignments, as well as clarification on use of subcontractors. Changes also apply to consents required from the General Directorate of the National Lottery (“Directorate”) for share transfers and changes to partnership structures, as well as removes appeal processes in certain license termination circumstances.

The Regulation Amending the Licensing of Chance Games, Regulation and Control of Licensed Activities Regulation (“Amendment Regulation”) was published in Official Gazette number 29671 on 1 April 2016, entering into effect on the same date.

Significant changes introduced by the Amendment Regulation include:

– During the license term, the licensee is now exclusively entitled to operate the licensed games of chance.

– Licenses cannot be assigned, either in whole or in part. However, the Amendment Regulation provides that the operation and support services received by licensee will not be deemed to be an assignment of license, nor will changes to a licensee’s partnership structure which are in line with the regulation.

– Clarification that games of chance are prohibited from being completely or partially carried out by subcontractors.

– Introduction of a provision prohibiting the Directorate from organize the licensed games of chance, or giving another license for such games, during the license term.

– During the license term, the Directorate’s consent is now required to change partnership structure, as well as directly or indirectly buy and sell 10% of shares or more, or transfer shares causing transfer of the company’s control.

– License agreements enter into force on signing by the Directorate of Privatization Administration, the Directorate and the successful tenderer licensee. Previously, the Council of State’s consent was also required.

– If a licensee hides income during the license term on three occasions, license agreement can now be terminated without appeal.

– If certain circumstances in Article 19 exist, license agreements can now be terminated without appeal.

– If a license is terminated, the Directorate is entitled to operate or use the licensee’s central game system, network, terminals, equipment, or software, along with all their components. Before the Amendment Regulation, the intellectual and industrial property rights were also transferred to the Directorate. The licensee cannot restrain use of these rights nor demand payment for the Directorate’s use of these rights. 

Please see this link for full text of the Amendment Regulation (only available in Turkish).

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