SYSTEM OF FİNANCE İN TURKEY

THE BANKING SYSTEM COVERS MOST OF THE TURKISH FINANCIAL SYSTEM.

ALMOST ALL OF THE ACTIVITIES, BOTH IN THE MONEY AND CAPITAL MARKETS ARE CARRIED OUT BY BANKS. IT IS A CONSEQUENCE OF THE COUNTRY'S

ECONOMIC AND HISTORICAL DEVELOPMENT THAT TURKEY'S FINANCE SYSTEM AND ITS BANKING SECTOR ARE

VIRTUALLY SYNONYMOUS WITH ONE ANOTHER

THE TURKISH FINANCIAL SYSTEM IS BASED UPON A UNIVERSAL BANKING SYSTEM, WHICH LEGALLY ENABLES

COMMERCIAL BANKS TO OPERATE IN ALL FINANCIAL MARKETS.

DESPITE THEIR SMALL MARKET SHARE, FOREIGN BANKS HAVE AN IMPORTANT

PLACE IN THE TURKISH BANKING SYSTEM BECAUSE OF THE NEW

CONCEPTS AND PRACTICES THEY HAVE INTRODUCED. PARTICULARLY IN THE LAST DECADE, FOREIGN BANKS HAVE

BROUGHT TO THE SYSTEM NEW ATTITUDES TOWARD COMPETITION AND

DYNAMISM. 

 TURKISH BANKS HAVE BEGUN DEVELOPING STRATEGIES TO REPLACE

UNPROFITABLE SERVICES AND ACTIVITIES, INSTALL NEW SERVICES AND INCREASE PROFITABILITY AND COMPETITIVE STRENGTH THROUGH BETTER CONTROL OF OPERATING

COSTS.

ISTANBUL STOCK EXCHANGE AND BROKER COMPANIES ARE INVOLVED IN BOTH TURKISH AND INTERNATIONAL

STOCK MARKETS.

TAXATİON

VAT as the main turnover tax is part of the fundamental criteria for full EU

membership and Turkey replaced the existing production tax with VAT (KDV) in 1985. The rise in the rates and changes in the structures of Turkish VAT as a result of

fiscal approximation clearly have major economic effects on the Turkish economy. The percent of VAT charged is different on every subject. A Tax refund is applicable

for short-term visits.

CHECK WHETHER THE PRICE ANNOUNCED ON THE GOODS CONTAINS VAT. IT IS BETTER IF YOU SEE THE LABELFIYATLARIMIZA KDV DAHILDIR WHICH MEANS,

"VAT IS INCLUDED IN OUR PRICES".YOUR EMPLOYER DEDUCTS TURKISH INCOME TAX

(GELIR VERGISI) FROM YOUR SALARY. WITH REGARD TO YOUR HOME COUNTRY'S INCOME TAX LAWS,

CONSULT YOUR CONSULATE FOR RULES AND REGULATIONS.

IF YOU HAVE YOUR OWN BUSINESS IT IS STRONGLY RECOMMENDED TO HAVE ADVICE FROM

A FINANCIAL AUDITOR

OTHER TAXES TO BE PAİD İNCLUDE:CAR TAX (TAŞIT VERGİSİ) PAİD İN TWO İNSTALLMENTS:

JANUARY AND JULY. PROPERTY TAX (EMLAK VERGİSİ) SHOULD BE PAİD İN TWO

İNSTALLMENTS: MAY AND NOVEMBER.

THE ROLE OF FINANCIAL

INTERMEDIARIES

Currently the financial sector in Turkey comprises 77 banks, six special finance houses and a large

number of brokers and foreign exchange offices. However, the financial system is dominated by thebanks, which have a nationwide branch network. Financial market reforms introduced in the early

1980s have led to diversification of financial activities. Before the reforms, banking in the country

wastightly regulated. The entry of new banks was restricted and interest rates were controlled.

Banks were not permitted to engage in activities such as merchant banking, investment banking and

brokerage.Banks are now allowed to engage in such activities as securities underwriting and trading, establishing

and managing mutual funds and securities custodian services.

Public banks and major private banks continue to have a significant share of banking business, but

with the deregulation of banking activities a number of new entrants have started operations. Increasedcompetition in the financial sector has resulted in the development of new products and services.

These developments have been particularly significant in payment services.

In less than a decade there has been rapid growth in new payment-related services

such as ACHpayments, card payments, ATMs, POS

networks, S.W.I.F.T. and the national RTGS system.

The growth and spread of these services has been unexpectedly high,

reflecting a high degree of public acceptance of these products as potential replacements for cash-based payments.

SPECİAL FİNANCE HOUSES

Special finance houses (SFHs) operate pursuant to the Special Finance Houses Decree (No. 83/7506).

Similar to commercial banks, they can collect deposits in Turkish liras and in foreign currency.

However, they operate on profit/loss sharing principles and do not pay interest on deposits. The

SFHsand their customers determine the profit/loss sharing

conditions. They participate in clearing andsettlement in the same manner as other banks.

Currently, there are six special finance houses in Turkey and their share in the total financial system is

around 2%.

ADMİNİSTRATİON OF ACCOUNTS

The Treasury, banks, financial institutions (SFHs, exchange offices), public entities

(state-ownedeconomic enterprises, ministries) and

international organisations (IMF, World Bank, Asian Development Bank) hold

accounts with the CBT. Accounts do not bear interest, and are used for funds transfers

between the account holders as well as for settlement of obligations arising from

interbank clearing systems. Banks hold giro accounts, reserve requirement accounts and TIC-RTGS accounts.

Giro accounts are mostly used for cash withdrawal and for interbank transfers in the event

of atechnical problem with the RTGS system. The funds

maintained in giro accounts are usually a smallportion of the total bank funds deposited with the CBT. A separate account, the TIC-RTGS account, is

used for payments routed through TIC-RTGS. Banks’ reserve requirements accounts are separate from

settlement accounts, although funds may be transferred between different accounts whenever

required.Accounts are decentralised and the account holders

may have accounts with more than one branch ofthe CBT. These accounts are controlled exclusively by

their holders and debits from them may bemade only on the holders’ instructions.