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This chapter examines the tax environment in Turkey, looking at a pending new income tax as well as how the tax law deals with corporations. It also includes an analysis on the various ways that Turkey’s investment climate could be improved in the context of taxation.

With a selection of archaeological ruins to rival that of Italy and Greece, 7200 km of scenic coastline, Istanbul’s unique blend of rich heritage and cosmopolitan culture, and an advantageous location at the crux of three continents, Turkey’s diverse visitor offerings have seen its popularity grow rapidly over the past decade and the country is now becoming a leading international tourism hotspot. The country ranks as the world’s sixth-most-popular tourist destination, after France, the US, Spain, China and Italy. In terms of source markets Germany remains the number one tourist market for Turkey, recording 5.2m visitors in 2014, and is closely followed by Russia (4.48m) and the UK (2.6m). The country is well on its way towards meeting many of its Vision 2023 tourism goals, including the overarching goal of welcoming 50m visitors annually. With new hotel and transport infrastructure, as well as increased government promotion of various tourism sub-segments, the sector is expected to remain healthy.

Driven by government reforms, increased private sector investment, and one of the largest and youngest populations in Europe, Turkey’s education sector has grown and matured impressively over the past decade. As the country moves forward on a host of education targets, including Vision 2023’s goal of reducing unemployment to 5%, key indicators such as literacy and enrolment have shown improvement. However, stakeholders have highlighted continuing challenges, including low enrolment across the secondary and tertiary levels, gender and regional disparities at the primary and secondary levels, and serious capacity constraints in the post-secondary system. The government has taken note, increasing its annual education budget each year and launching new projects aimed at expanding research and development (R&D) at post-secondary institutions. Turkey’s sizeable young population is poised to capitalise on a growing and increasingly inclusive education system that should help to improve employability and employment levels in the years to come. This chapter contains an interview with Turgut Şenol, General Manager, Teknopark Istanbul.

Great strides have been made in Turkey’s health care sector since 2003, when the government launched its far-reaching Health Transformation Programme (HTP). The HTP eventually led to the establishment of universal health insurance, while opening services and private hospitals to the majority of Turks. Improvements in patient satisfaction and health indicators have been steady, with infant and maternal mortality declining while life expectancy rises. Ratios of hospital beds, doctors and nurses to patients remain low by European standards. There are also concerns that the national health insurance system may not be sustainable in the long term, as the import-dependent pharmaceuticals market has shown tremendous growth in recent years, while patient numbers and hospital visits continue to rise. The private sector offers some solutions: public-private partnerships will see the number of doctors and hospital beds increase and patient care improve, while rapid expansion in medical tourism will bolster revenues and help the sector mature. As Turkey builds more facilities, 2015 should see a continuation of the trends that have already brought investors, professionals and new patients flocking in. This chapter contains an interview with Hasan Ulusoy, Chairman, Nobel İlaç.

Turkey has easy and direct access by road, sea and, to a lesser extent, rail to markets with 1.5bn people and a combined GDP of $25trn. In 2012 Turkey handled 1.2% of global trade, and this is expected to exceed 1.5% by 2025. The 2014 budget allocated €16.72bn to transport, of which €2.04bn was earmarked for rail, almost double that going to the road network. At €3.27bn, the Marmaray project topped the list of spending in 2014. Dozens of construction projects are on the current agenda. Among them are high-speed rail links, bridges, motorways, the world’s largest airport and a 50-km channel that will transform half of Istanbul into an island. Carrying out so many grand plans will prove costly, and inevitably some will be scaled back or scrapped altogether, but judging by what Turkey has accomplished so far, many of these projects may well be realized. This chapter contains interviews with Turgut Erkeskin, President, Association of International Forwarding and Logistics Services Providers, and Mümin Kahveci, General Manager, Istanbul Electric Tramway and Tunnel Establishments.

Substantial rainfall in the winter and spring, coupled with heavy snow in many regions, broke the drought that hit Turkey’s agriculture sector hard in 2013-14, with farmers looking forward to improved yields and higher earnings, and rebounding from a lean year that saw one of the region’s leading agriculture producers having to import grain and other foodstuffs. Agriculture provides jobs for around a quarter of the workforce, a figure that rises further when the value-added component of processing and agribusiness is factored in. Self-sufficient in many products, Turkey is also a major agricultural powerhouse internationally. It is ranked first in Europe in terms of agriculture output and seventh globally. Yet, obstacles to investment persist, primarily the fragmented landholding structure. The government has said it wants to unify the rest of Turkey’s fragmented farms and bring water to all irrigable areas by 2020. This will help the country reach its 2023 target of $150bn in gross harvests.