BNP Paribas Turkey

Turkey is among the 20 world largest economies ($719bn nominal GDP in 2020) and countries (84 million inhabitants). The country has diversified trade relationships with Europe, the Middle East and Asia.

Real GDP growth averaged 5.7% from 2002-2018, the result of deep structural reforms in the aftermath of the 2000-01 crisis. However, this performance was increasingly achieved through growing policy support and related macroeconomic imbalances. The country has experienced several boom-bust cycles during the last years, with two severe economic shocks: a currency crisis followed by a recession period in 2018, and the Covid outbreak in 2020Q2.

The country has coped with the COVID-19 outbreak through strong policy support (large public debt and domestic credit increases). Public debt is still low (40% of GDP in 2020), but significant inflation (above 10% during the past 4 years, with no sign of disinflation) and the low level of foreign reserves put significant pressure on the exchange rate.

Moreover, structural current account deficits (2.8% of GDP in 2021) are increasing its vulnerability to debt refinancing and exchange rate pressure. The consequence of the domestic credit build-up that helped to cope with the COVID-19 shock should also be monitored carefully in terms of bank balance-sheet risks.

SUMMARY

BNP Paribas’s subsidiary TEB is a leading bank in Turkey, with 515 retail brances and 17 business centres. TEB has direct access to local clearing and one of the most complete cash and trade offerings in the country.

CURRENCY

  • Turkish lira (TRY).

BANK ACCOUNTS

  • A company is considered resident in Turkey if its legal seat or place of effective management is located in Turkey.

BNP PARIBAS CASH MANAGEMENT CAPABILITIES

Physical cash poolingChecked
Notional pooling – Balance compensationNot checked
Notional pooling – Interest optimisationNot checked
CheckedSupported by BNP Paribas
Not checkedNot required / permitted in TURKEY or not supported by BNP Paribas

PAYMENTS & COLLECTIONS

Electronic credit transfers are the most common method of payment used by companies to pay suppliers, the government and, increasingly, payroll. Payment cards, predominantly credit cards, are used by consumers to make retail purchases. Other electronic payment methods are available, including the TROY prepaid card and the digital wallet platform, BKM Express.

The Turkish government has declared it wants to become a cashless society by 2023. To encourage the use of electronic payment methods, a number of initiatives have been launched, including the launch of a national QR code, the Turkish QR Code, in August 2020. The use of contactless payments is increasing, with 89.6 million contactless payments made in 2020.

Electronic banking services are available from all banks. There is no national electronic banking system in Turkey, so companies use banks’ proprietary services. Transaction and balance reporting and some transaction initiation services are available.

Online and mobile banking services are available. There are approximately 74.8 million registered online banking users and 94 million registered mobile banking users.

CHANNELS

LIQUIDITY MANAGEMENT

  • Domestic notional cash pools are not available in Turkey.

SHORT TERM INVESTMENTS

Interest payable on credit balances

  • Interest-bearing accounts are permitted.

Demand deposits

  • Demand deposits are available for various terms. These can be denominated in TRY or major foreign currencies.

Time deposits

  • Time deposits are available in TRY or major foreign currencies with terms of one, three, six or 12 months.

Certificates of deposit

  • Banks issue certificates of deposit with terms  up to one year.

Treasury (government) bills

  • The Undersecretariat of Treasury issues Treasury bills with terms of three, six and nine months or one year.
  • Investment banks and development banks also offer bank bills, in the form of promissory notes.

Commercial paper

Money market funds

  • Mutual investment funds are available.

Repurchase agreements

  • Repurchase agreements with maturities of one, two and four weeks or three months are available on government securities. Longer terms are sometimes available.

Banker’s acceptances

  • Banker’s acceptances are available in Turkey.

BNP PARIBAS TRADE FINANCE CAPABILITIES

Documentary creditsChecked
Documentary collectionsChecked
CheckedSupported by BNP Paribas
Not checkedNot required / permitted in TURKEY or not supported by BNP Paribas

INTERNATIONAL TRADE

  • Turkey has established a customs union with the EU and implements the EU customs code. 
  • As a member of the Economic Cooperation Organisation (ECO), Turkey is expected to remove trade barriers with members to promote intra-regional trade.
  • Turkey has 19 free trade zones.

TRADE FINANCE – IMPORTS

  • The following documentation is required in order to import goods from Turkey:
    • customs declaration
    • commercial invoice
    • bill of lading
    • certificate of origin.

TRADE FINANCE – EXPORTS

  • The following documentation is required in order to export goods from Turkey:
    • customs declaration
    • commercial invoice
    • bill of lading
    • packing list
    • certificate of origin.

REGULATORY REQUIREMENTS

  • All transactions between resident accounts and accounts held by non-residents must be reported to the Central Bank for balance of payments (BoP) purposes on an aggregated basis.
  • Any direct investments, loans, or foreign currency transactions (not reported as imports, exports, trade in services, and capital flows) that exceed USD 50,000 must be reported on an individual basis.

TAXATION

  • A company is considered resident if its seat and/or place of effective management is located in Turkey.

Tax authority

  • Ministry of Finance (Maliye Bakanliḡi).
  • Presidency of Revenue Administration.

Tax year/filing

  • A company’s tax year need not necessarily coincide with the calendar year, although to do so is the norm.
  • Corporate tax returns must be filed between the first and 30th days of the fourth month following the end of the tax year.
  • Corporate income tax is payable by the end of the month in which the tax return is due (i.e. by the end of April for companies using the calendar year).
  • Corporations are required to pay advance corporate tax at 20% based on their quarterly profits. Advance payments made during the year are offset against the ultimate corporate tax liability, which is determined in the annual corporate income tax return. Advance corporate tax returns must be submitted by the 14th day of the second month following the quarterly period, and the tax is payable by the 17th of the same month (the Ministry of Finance may extend the deadline for submission of quarterly advance tax returns).
  • Turkey does not allow for tax consolidation and each company in a group must file its own corporation tax return.