LAW FOR ENCOURAGEMENT OF FOREIGN INVESTMENT
NO: 6224
Subject and Scope of the Law

Article 1 - This law applies to foreign capital and foreign credit loans obtained from abroad and to be procured from abroad upon decision of the Committee for the Promotion of Foreign Investment, and approval and ratification by the Council of Ministers, provided that the subject of investment is: a) of benefit to the economic development of the country, and b) in a field of activity open to Turkish private enterprise. Moreover, foreign capital to be brought into Turkey may not acquire a majority share of institutions carrying out activities on a monopoly basis within the country. The "Committee for the Promotion of Foreign Investment" mentioned in this Article and established in accordance with Article 8, shall hereafter be referred to as the "Committee".
* The functions of this Committee were transferred to the Undersecretariat of Treasury by the Law No:4059

Principal Foreign Capital

Article 2 - For the purposes of implementation of the present Law, the term "Principal Foreign Capital" shall mean the total of various values determined and evaluated as follows; a) The following assets allocated for the efficient establishment, expansion or revival of a business included in the scope of the present law, and to be imported from abroad:

1. Capital funds in the form of foreign currency,

2. Machinery, equipment, tools and similar goods, machinery components, spare parts and materials, and other necessary commodities to be approved by the Committee,

3. Services and rights over intangible property such as patent rights, licenses and trade marks,

4. Portions of profit converted into and integrated with investment capital, by way of reinvestment in accordance with Article 3 thereunder.
b) The values of imported assets, whether in goods, services or proprietary rights, as well as their necessity and appropriateness for the approved enterprise are determined by experts to be appointed by the Committee.

The values assessed by experts may be reexamined and reappraised by the Committee.

The assessment shall be made both in the currency of the country of origin and in Turkish lira at the official rate of exchange prevailing at the time of importation.

With the condition that objection rights indicated in Article 8 are reserved, the decision of the Committee concerning the evaluation of assets is final.

Conversion of Profits into Capital

Article 3 - Subject to the decision of the Committee, the shares of profits accruing in favour of principal foreign capital investors may, either in whole or part, be added to the principal foreign capital or reinvested in another enterprise which meets the qualification requirements indicated in Article 1 above.

Transfer of Profits and Principal Capital

Article 4 - a) Pursuant to the provisions of paragraph (c) of this Article, the following profits and capital funds shall be transferred abroad in the national currency of the principal foreign capital at the current official exchange rate:

1. Net profits accruing in favour of the owner of the principal foreign capital out of income realised after 31 December 1953 and calculated in accordance with the tax laws in force,

2. In case of a partial or total liquidation of an enterprise established under the present law, the share accruing in favour of the owners of the principal foreign capital at reasonable prices,

3. Proceeds obtained from the sale, at a reasonable price and whether in whole or in part, of the principal foreign capital invested in a business founded or working under the terms of this Law,

4. Repayment instalments and interest payments, as they become due and payable in accordance with the respective foreign loan agreements, over a credit loan contracted pursuant to the terms and provisions of Article 6 of this Law.

b) If deemed necessary, the Ministry of Finance or the Committee may:

1. Order the examination of the accounting books and tax declarations of an enterprise established under this Law, in order to determine the amount available for transfer under sub-paragraph (1) of paragraph (a) of this Article,

2. Order an inquiry in order to ascertain whether the sale of capital shares, liquidation sale of assets, or credit loans are executed in good faith.

c) Upon application for the transfer of profit shares, sales proceeds, loan repayment instalments and interest payments of the sort classified as transferable in paragraph a).of this Article, the Ministry of Finance will grant permission for such transfers.

Transfer of Shares

Article 5 - a) Therefore, the Ministry of Finance will undersign, on request the following guarantee for the registered shares, share certificates or provisional receipts of a Turkish company representing the principle foreign capital as defined in Article 2:

"The dividends on this share, upon presentation of this share certificate or provisional receipt to the Central Bank of the Republic of Turkey or to authorised representatives of the said Bank abroad, will be immediately transferred..... (in the foreign currency of origin).... converted at the current rate of exchange at the time of transfer. Proceeds from the sale of this share certificate or provisional receipt from the proceeds of liquidation of the enterprise shall be transferable to the rightful holder of this share or provisional receipt (in the currency of the country of origin).... in accordance with Article 4 of Law No. 6224 of the Republic of Turkey".

The Minister of Finance
or
his Authorised Officer

b) The registered share certificates or provisional receipts bearing this guarantee will freely circulate among persons of all nationalities, both within and outside Turkey. Prior to the sale of these share certificates or provisional receipts to real persons or legal entities in Turkey - whether or not new share certificates or provisional receipts are issued to replace these - they must be submitted to the Ministry of Finance for cancellation of the guarantees thereon.

Guarantees on Credit Loans

Article 6 - a) The Ministry of Finance may, by a decision of the Council of Ministers, issue a guarantee on the principal sum and interest of a foreign credit loan to be contracted by an enterprise which meets the qualification requirements in Article 1 of this Law, up to a ceiling of one billion Turkish Liras, and against counter-guarantees or collateral.

b) Such guarantees shall automatically be abolished for the repaid portion of the principal or interest of the loan.

Employment of Foreigners

Article 7 - a) During the survey, foundation and operation phases of an enterprise established pursuant to this Law, the terms, conditions and restrictions imposed by Laws No. 2007 and 2818 shall not apply to foreigners investing in such enterprises, to foreigners acting as agents or representatives of such investors, to experts, foremen and to other skilled personnel, for a period of time which is considered necessary by the Committee tor the efficient establishment, expansion or operation of the business or for it to be restored for activity.

b) The above provision shall also apply to foreign experts, foremen and other skilled or trained personnel to be employed by domestic enterprises, provided that such enterprises are accepted by the Committee as meeting the conditions set forth in Article 1 of this Law.

c) Foreigners to be employed in accordance with the terms and provisions of this Article may for the purpose of providing subsistence to their immediate families or accumulating normal and reasonable savings, transfer abroad such parts of their earnings as shall be duly specified in their employment contracts, in the currencies of their countries of origin and subject to conversion at the current rates of exchange subject to obtaining in advance the Ministry of Finance's approval.

Committee for the Promotion of Foreign Investment

Article 8 - a) With the aim of implementing the provisions of this Law, a Committee has been established under the Chairmanship of the General Director of the Turkish Central Bank. This Committee consists of the General Director of the Treasury, General Director of Internal Trade, General Director of Industrial Affairs, the head of the Research and Planning Department in the Ministry of State Administration and the General Secretary of the Union of Chambers of Commerce, Industry and Commodity Exchanges, in cases where it is deemed necessary, the Committee may consult other ministries, as well as the representatives of other institutions. The issues submitted to the Committee shall be decided upon within 15 days from the date of submission to the Committee.
The General Director of Internal Trade shall act as the General Secretary of the Committee and in cases when it is deemed necessary, the General Secretary may convene the Committee for meetings.
The remuneration to be paid to the Chairman and members of the Committee shall be determined by the Council of Ministers.

b) Appeals to be raised against the Committee's decision must be carried out within 30 days from the date when the decision is announced to the parties concerned. Appeals must also be directed to the Minister of Finance, the Minister of the Economy and Commerce, and the Minister of State Administration. The decisions issued by these officials are final.
 

Article 9 - a) The Ministry of the Economy and Commerce is responsible for the implementation of this Law.

b) Upon the decision to be taken by the Committee, the Ministry of the Economy and Commerce shall issue orders to the relevant Customs Office regarding the importation of the real capital into the country.

Equal Treatment For Domestic and Foreign Capital

Article 10 - All rights, exemptions, privileges and facilities recognised for domestic capital and enterprises shall be equally applicable to foreign capital and foreign enterprises engaged in comparable fields of business.

Article 11 - a) All rights granted to persons engaged in investment activities in accordance with Article 31 of Decree No. 13 issued under the authority of Law No. 1567 and Laws No. 5583 and 5821, are reserved.

b.) All investments realized pursuant to Law No. 5821 in the period between 1 August 1951 and the date when this law comes into force shall benefit from the provisions granted by this Law.

Repeal of the Former Law

Article 12 - Law No. 5821 is hereby repealed.

Coming into Force

Article 13 - This law shall come into force on the date of its publication.

Article 14 - The Council of Ministers is entrusted with the enforcement of this law.