Turkish Minister of Economy Nihat Zeybekci stated that Turkey and Uzbekistan complete each other and together they have a population of 110 million. Total bilateral trade volume is 1.2 billion USD, as a result, export mobilization has been initiated in both countries. He called out for partnerships in the areas of agriculture, textile-confection, tourism, and logistics. Investment Protection and Incentive Agreement signed on 1995 will be revised to avoid double taxing. There is an agreement that has been signed yet still has not been executed, we will activate this agreement. We will come together more often and 2017 will be a restoration year in terms of economic relations, legal and technic infrastructure.
Turkey has reached a trade volume of 160 billion USD with European Union thanks to Customs Union. It must be revised until the first half of 2018 to include topics of agriculture, service and public procurement. Projects that have been carried out by Turkish companies in Uzbekistan have a value of 2 billion USD, nevertheless, approximately 110 Turkish companies operate in Uzbekistan yet this is not sufficient. Turkey will follow a win-win strategy with Uzbekistan from now on.

Uzbekistan Deputy Prime Minister Rustam Azimov reminded that Turkey is the first country to recognize Uzbekistan’s independence and Uzbekistan will never forget this favor. Uzbekistan is always ready to collaborate with the Turkish Business Community and extend its partnership with Turkey. Uzbekistan has set 5 principles: economy’s superiority over politics, superiority of law, reformist government, strong social policy and free market economy.
With a growth rate of 8%, Uzbekistan is one of the fastest growing economies according to International Monetary Fund (IMF). Uzbekistan targets Southeast and East Asia, European Union, Middle East and African markets. Azimov stated that structural reforms have been enacted to achieve macroeconomic stability. There are business opportunities in the fields of hydrocarbon, chemical, petrochemical, precious metals, construction, leather and footwear industry, textile, pharmaceutical industry, vegetable-fruit, meat and dairy products, food processing and tourism. He called Turkish investors to invest in Uzbekistan.

DEİK Vice President and TİM President Mehmet Büyükekşi stated that collaboration between two countries will advance further. There is huge potential in the fields of tourism, health, mining and leather. Turkish companies are ready to establish bonds with Uzbekistani business community.

Turkey-Uzbekistan Trade Figures (Ministry of Economy- 2016)
Turkish export to Uzbekistan: 553 Million USD
Major export items: Miscellaneous manufactured goods, machinery and mechanical appliances, plastics and articles thereof; rubber and products and chemical industry and related industrial products
Turkish import from Uzbekistan: 709 Million USD
Major import items: Articles of precious metals, plastics and articles thereof; rubber products and herbal products.
Trade volume: 1.2 billion USD
Trade balance: 176 million USD in favor of Uzbekistan

Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.

Legal Framework of Foreign Direct Investment
1. Foreign Direct Investment (FDI) Law No. 4875

The aim of the Foreign Direct Investment (FDI) Law No. 4875 is:

• to encourage FDI in the country
• to protect the rights of investors
• to align the definitions of an investor and investment with international standards
• to establish a notification-based system rather than an approval-based one for FDI
• to increase the volume of FDI through streamlined policies and procedures

The FDI Law provides a definition of foreign investors and foreign direct investments. In addition, it explains important principles of FDI, such as;

• freedom to invest,
• national treatment,
• expropriation and nationalization,
• freedom of transfer,
• national and international arbitration and alternative dispute settlement methods,
• valuation of non-cash capital,
• employment of foreign personnel,
• liaison offices.

The Regulation on the Implementation of the FDI Law consists of specifying the procedures and principles set forth in the FDI Law. The aim of the FDI Law with regard to the work permits for foreigners is:

• to regulate the work carried out by foreigners
• to stipulate the provisions and rules on work permits given to foreigners

  2. Bilateral Agreements
  2.a. Bilateral Agreements for the Promotion and Protection of Investments
  Bilateral Agreements for the Promotion and Protection of Investments were signed from 1962 onwards with countries that show the potential to improve bilateral investment relations. The basic aim of bilateral investment agreements is to establish a favorable environment for economic cooperation between the contracting parties by defining standards of treatment for investors and their investments within the boundaries of the countries concerned. The aim of these agreements is to increase the flow of capital between the contracting parties, while ensuring a stable investment environment. In addition, by having provisions on international arbitration, they aim to prescribe ways to successfully settle disputes that might occur among investors and the host state. Turkey has signed Bilateral Investment Treaties with 94 countries. However, Turkey is a dualist country, where an international treaty has to be ratified and promulgated in order to become part of the national legal system. Within this regard, 75 Bilateral Investment Treaties out of these 94 have gone into effect so far.

75 countries
Afghanistan, Albania, Argentina, Australia, Austria, Azerbaijan, Bangladesh, Belarus, Belgium-Luxembourg, Bosnia and Herzegovina, Bulgaria, China, Croatia, Cuba, Czech Republic, Denmark, Egypt, Estonia, Ethiopia, Finland, France, Georgia, Germany, Greece, Hungary, India, Indonesia, Iran, Israel, Italy, Japan, Jordan, Kazakhstan, Kuwait, Kyrgyzstan, Latvia, Lebanon, Libya, Lithuania, Macedonia, Malaysia, Malta, Moldova, Mongolia, Morocco, Netherlands, Oman, Pakistan, Philippines, Poland, Portugal, Qatar, Romania, Russian Federation, Saudi Arabia, Senegal, Serbia, Singapore, Slovakia, Slovenia, South Korea, Spain, Sweden, Switzerland, Syria, Tajikistan, Thailand, Tunisia, Turkmenistan, Ukraine, United Arab Emirates, United Kingdom, United States of America, Uzbekistan, Yemen
Source: Ministry of Economy

2. b. Double Taxation Prevention Treaties
Turkey has signed Double Taxation Prevention Treaties with 80 countries. This enables tax paid in one of two countries to be offset against tax payable in the other, thus preventing double taxation.

80 countries
Albania, Algeria, Australia, Austria, Azerbaijan, Bahrain, Bangladesh, Belarus, Belgium, Bosnia and Herzegovina, Brazil, Bulgaria, Canada, China, Croatia, Czech Republic, Denmark, Egypt, Estonia, Ethiopia, Finland, France, Georgia, Germany, Greece, Hungary, India, Indonesia, Iran, Ireland, Israel, Italy, Japan, Jordan, Kazakhstan, Kuwait, Kyrgyzstan, Latvia, Lebanon, Lithuania, Luxembourg, Macedonia, Malaysia, Malta, Moldova, Mongolia, Morocco, Netherlands, New Zealand, Norway, Oman, Pakistan, Poland, Portugal, Qatar, Romania, Russian Federation, Saudi Arabia, Serbia and Montenegro, Singapore, Slovakia, Slovenia, South Africa, South Korea, Spain, Sudan, Sweden, Switzerland, Syria, Tajikistan, Thailand, Tunisia, Turkish Republic of Northern Cyprus, Turkmenistan, Ukraine, United Arab Emirates, United Kingdom, United States of America, Uzbekistan, Yemen
Source: Revenue Administration

Turkey is continuing to expand the area covered by the Double Taxation Prevention Treaty by adding more countries on an ongoing basis.

2. c. Social Security Agreements
Turkey has signed Social Security Agreements with 26 countries. These agreements make it easier for expatriates to move between countries. The number of these countries will increase in line with the increased sources of FDI.

26 countries
Albania, Austria, Azerbaijan, Belgium, Bosnia and Herzegovina, Bulgaria, Canada and the Province of Quebec, Croatia, Czech Republic, Denmark, France, Georgia, Germany, Libya, Luxembourg, Macedonia, Netherlands, Norway, Romania, Slovakia, Serbia, South Korea, Sweden, Switzerland, Turkish Republic of Northern Cyprus, United Kingdom
Source: Social Security Institution (SSI)

3. Customs Union and Free Trade Agreements (FTA)
A Customs Union Agreement between Turkey and the European Union has been in effect since 1996. The agreement allows trade between Turkey and the EU countries without any customs restrictions. The EU-Turkey Customs Union is one of the steps toward full Turkish membership of the EU itself.

Turkey has FTAs with 37 countries, creating a free trade area in which the countries agree to eliminate tariffs, quotas and preferences on most goods and services traded between them. This framework explains why many global companies are now using Turkey as a second supply source and manufacturing base, not only for the EU and rapidly growing Turkish markets, but also for the Middle East, Black Sea and North African markets, with the added advantage of a relatively low-cost but well-educated labor force, coupled with cost-effective transportation.

37 countries
Albania, Bosnia and Herzegovina, Egypt, Georgia, EFTA, Israel, South Korea, Macedonia, Morocco, Malaysia, Mauritius, Palestine, Jordan, Syria*, Tunisia, Montenegro, Serbia, Chile
Countries that have finalized the negotiation process: Faroe Islands, Ghana, Kosovo, Lebanon, Moldova, Singapore
Countries in the negotiation process: Democratic Republic of the Congo, Cameroon, Colombia, Ecuador, Gulf Cooperation Council, Japan, Libya, Mexico, Mercosur, Peru, Seychelles, Ukraine *suspended
Source: Ministry of Economy

 Date: 13 March 2017

Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.