4. Which Industry and Business Areas Have Priority under the IFC Regulation?
Subject to obtaining the necessary permits and approvals according to the relevant Turkish legislation, the below industry and business areas have priority under the IFC Regulation:
- Services and transactions related to financial activities,
- Transportation by sea, air, land, and rail, customs and logistics services related to all kinds of commodities that may be subject to international trade, especially precious metals and minerals, commodity trading and storage services on organized markets, and financial advisory services related to these commodities,
- Support and ancillary services related to financial activities, such as auditing, accounting, rating, valuation, electronic infrastructure and software, telecommunications, media, intellectual and industrial property, legal consultancy, and similar services,
- High-value-added sectors, primarily energy and infrastructure, and any one or more of their divisions, health and healthcare technologies, agriculture and agricultural technologies, artificial intelligence, and similar fields, as well as investment and financing services related to these areas,
- Financial services supporting green finance, sustainable finance, and international trade,
- Financial services that are in line with the strategic priorities of the IFC or other activities supporting the financial sector.
This means that applicants working in those areas or industries will be given priority, can benefit from this advantaged position under the new IFC legislation, and are highly likely to obtain a participant certificate from the management company.5. Other Important Insights about the New IFC Regulation
One important question is whether incorporated companies can operate at the IFC. The newly published secondary legislation does not give details, but it states that participants can operate there with their company, branch, and rep offices.
This means that existing companies can work at the IFC by simply moving there and transferring their business addresses. It is also understood that a company not residing at the IFC can establish a branch there and can thus benefit from the available incentives. Non-resident companies can even establish rep offices at the IFC. Please also note that the regulations still apply to that group of entities, and, for instance, in order to establish a rep office, they are still required to receive approval from the Ministry of Economy. Nevertheless, the one-stop office will make those processes shorter and more efficient.
Participants that will operate at the IFC and participants who are active in at least three countries can employ foreign personnel in their regional treasury and financial management centers with a work permit issued by the Ministry of Labor and Social Security in accordance with International Labor Law No. 6735 dated 28/7/2016. The work permit application is made through the e-Government portal by the real or legal person whose participant certificate is to be issued. The technical and administrative support required for the application is provided within the one-stop office. For work permit applications to be made from within the country, the foreigner must have a valid visa, visa exemption or residence permit in accordance with the Foreigners and International Protection Law No. 6458 dated 4/4/2013.
Based on the above, participants can relocate their employees to work for their offices at the IFC. We understand from the IFC Regulation that foreigners will not be subject to the 5:1 rule (which requires companies to hire at least 5 local people per foreigner) and exemption rules will be applicable for those who meet the criteria and are approved by the Ministry of Labor and Social Security.
Further, it is permitted to acquire office space at the IFC. Owners of immovables at the IFC may allocate office space to their subsidiaries and partners or rent office space directly at the price determined by the management company, provided that they apply for a participant certificate with public institutions and organizations. In this case, the owners are obliged to inform the management company of the office space rentals and allocations of places they will make to public institutions and organizations and their affiliates and partners.
In addition to the above, according to the IFC Regulation participants will pay management fees. The amount of those fees is not defined in the Regulation but it is stated that the fees will be determined by the management company. We expect that management fees will be paid on an annual basis and most likely a single payment will be required.6. Take Away
By establishing the IFC with the participation of many financial institutions, the government hopes that the number of highly-qualified employees will grow. The aim is to accelerate economic growth by improving financial mobility, financing and investment opportunities in Türkiye.
It is obvious that the IFC will attract investors active in the following areas: asset management, capital markets, digital banking, family offices, financial leasing, factoring and financing, fintech, fund management, green finance, insurance and reinsurance, investment banking, open banking, participation finance, portfolio management, private banking, private equity, regional management centers, retail banking, tax, law and consulting.
We also believe that the IFC is the right place for transit trade companies, given the important tax incentives for such activities. In this respect, we have observed high demand for the IFC, and many foreign investors are already in the process of establishing entities there.
Given the vibrant Turkish economy, the IFC is expected to become a leading financial services ecosystem bringing together organizations from across the sector — from major financial institutions to innovative start-ups.
Please contact us for our newsletter and your queries about the IFC, and we can guide you during the entire application process, including renting office space.