(x) A-P indicates those agencies which receive provisional operating certificate

Turkish travel agencies offer wide range of products to satisfy demand of any segment of market; most travel agencies diversified their field of activity while some others are specialized in specific areas.

Turkish travel agencies have gained valuable experiences through decades when tourist trends were fluctuating because of internal and external problems. Some agencies have also established travel agency and tour operation business abroad and accomplished success under severe competitive market situation.

TURSAB awards travel agencies, which bring annually more than one million dollars foreign currency in Turkey. Awarded agencies have increased from 58 in 1986 to 155 in 1997.

OTHER PRIVATE ORGANIZATIONS

Hoteliers are organized under different associations. Turkish Hotel Association TUROB is one of the leading sector organizations, which represents an important part of Turkish accommodation industry.

Turkish Tourism Investor Association TYD, is another leading organization of tourism sector which represents major investors in tourism.

Private airline companies have a similar Association titled TOSHID ‘Turkish Private Air carriers Association’. Turkish Airlines at present is a state economic enterprise.

Coach operations or bus companies have also been united under the title of Association of Bus Operators. So are the tourists guides, as they also have their own associations.

To sum up the organizational structure, all branches of tourist industry have established their own independent organization or association. The only Association which has been established by a special law is the Association of Turkish Travel Agencies. (TURSAB)

LEGAL FRAMEWORK

There are a large number of legislations directly or indirectly related to tourism. However the main ones pertaining to tourism are as follows.

Five Year Development Plans are prepared by the State Planning Organization and following the legal procedures they are put in effect when the bill is passed by Parliament. They are imperative for the public sector while they provide guidelines for the private sector.

Decree Law on The Organisation and Duties of the Ministry of Tourism No.355 came in force on 03 March 1989. (The Ministry was established in 1963 by Law Number 265)

Travel Agencies and Union of Travel Agencies Law No.1618 was put in effect on 29 September 1972.

Encouragement of Tourism Law No.2634 passed by Parliament on 12 March 1982 and replaced Law No.6086 which was in operation since early 1960’s. The basic philosophy has remained the same however more incentives were introduced and the Ministry was given more authority in certain areas. The law also introduced articles for special segments of industry expanding the scope of activities previously covered.

Incentives based on the new legislation and Government economic policies were:

• Allocation of public lands to investors on long term basis,

• Provision of main infrastructure by state,

• Long, medium and short term credit facilities for construction, furnishing and operation respectively,

• Preferential tariff rates for electricity, water, and gas consumption, in priority areas and centres,

• Priorities for communication installation,

• Foreign personnel employment in compliance with law up to 20 % of total,

• Some exemptions from customs tax,

• Encouragement premium,

•  Investment allowance,

• Resource utilization support fund premium,

• Exemption of tax, duties and fees for long and medium term investment credits,

• Exemption from building construction duties,

• Postponement of value added taxes .

The basic concept of the first Tourism Encouragement Law was, to build up a new modern tourist industry, more specifically on accommodation industry and tourist facilities rather than controlling the existing ones and grading them. Thus the law did not necessarily cover the whole industry contrary to those in many other countries, but it set out certain standards through relevant regulations for those enterprises who might wish to enjoy certain incentives and encouragement measures introduced by law.

Facilities as such, used to be and are still licensed by The Ministry of Tourism provided that they conform to the terms and regulations of the said law as well as the nation-wide standards required.

Those facilities which did not conform to the standards or were unwilling to obtain a tourist license from the Ministry, remained under the control of local authorities namely Municipalities. However they can always obtain a license from the Ministry provided that they satisfy terms and conditions of the above mentioned legislation.

Important Regulations Pertaining to Tourism are;

• Regulations Pertaining to Travel Agencies.

• Regulations Pertaining to Association of Travel Agencies.

• Regulations concerning the Establishment of Tourism Training Centers

• Regulations on Basic Training Courses of Accommodation and Catering Establishments.

• Regulations on Professional Tourist Guides.

• Regulations on Inspection of Investments and Operations.

• Regulations on Allocation of Public Land for Tourism Investments.

• Regulations on the Qualifications of Tourism Investments and Operations.

• Regulations on Foreign Personnel and performing Artists in Licensed Tourism Establishments.

• Regulations, Pertaining to Preparation of Implementation Plans and Approval of Tourism Areas and Tourism Centers.

• Regulations on Yacht Tourism.

The legislation above includes important laws and regulations directly related to tourism.

There is a long list of other laws and regulations concerning tourism such as Coastal Law, Environmental Law, Forestry Law, Reconstruction Law, Turkish Commerce Law, Foreign Capital Investments Law, Tax Laws etc.

According to the 1994 Census of  Business Establishments ,the total number of tourism  establishments Hotel , Motel, etc is 6316 and the Small and Medium  establishments comprises the 97.2 % . Restaurants, Cafes, Bars, etc. is  110826and 100 % of them can be categorized as Small and Medium  establishments. The Table  , gives the number and share of the Turkish small, medium and large tourism  enterprises in terms of the total number of establishments, and the number of workers employed.  It is clear from the Table  , that ,Small and Medium Tourism  Enterprises are predominant in Turkey ,  When the people who are not affiliated with social security organizations are taken into account , this ratio is evidently grow.

Table : Distribution of Business Establishments in Tourism  Sector and Number of Employees for the Year of 1992

However , if we consider  the establishments  licensed by  Ministry of Tourism ;

Table  : Accommodation establishments by types licensed by  Ministry of Tourism( 31.12 . 1998 )

Table  ; Distribution of accommodation establishments license by  Ministry of Tourism according to the geographic regions (31.12.1998)

STATE AIDS for INVESTMENT TO TOURISM SECTOR

Encouragement of Tourism Law No.2634  introduced articles for special segments of industry expanding the scope of activities previously covered.

Incentives based on the new legislation  were:

• Allocation of public lands to investors on long term basis,

• Provision of main infrastructure by state,

• Long, medium and short term credit facilities for construction, furnishing and operation respectively,

• Preferential tariff rates for electricity, water, and gas consumption, in priority areas and centers,

• Priorities for communication installation,

• Foreign personnel employment in compliance with law up to 20 % of total,

• Some exemptions from customs tax,

• Encouragement premium,

•  Investment allowance,

• Resource utilization support fund premium,

• Exemption of tax, duties and fees for long and medium term investment credits,

• Exemption from building construction duties,

• Postponement of value added taxes .

Also according to ,DECREE CONCERNING STATE ENCOURAGEMENTS TO INVESTMENTS AND THE INVESTMENT ENCOURAGEMENT FUND ;There are two aspects of State aids for Investment in Tourism sector , First concerns the fund-based credits and the second covers the exemptions from VAT, customs taxes, stamp and duties and the investment allowances (tax holidays).

In order to benefit from the elements of encouragement, it is necessary to obtain an investment encouragement certificate, for which the application principles are determined by the Undersecretariat of Treasury .In order to receive an encouragement certificate, the investment must have a minimum amount of 25 Billion Turkish Lira (TL) ( ~ 50.000 $ ) as fixed investment, if the investment is in the Priority Development Region, and a minimum amount of 50 Billion TL ( 100.000 $ )for investments in other regions.

According to the investment incentive certificate The State aids are;

• Exemption from Customs Duties and Fund Levies: The machinery and equipment imported according to the Investment Incentive Certificate have exemption from Customs Duties and Fund Levies for 100%.
• Exemption from VAT: If the Investment Incentive Certificate has shown on the Customs both export and locally purchased machinery and equipment for production line have exemption from VAT.
• Exemption from Investment: Addition with the total price of the machinery and equipment and total amount of investment cost. The result should be substracted from the taxable values.
• Exemption from the Taxes, Duties and Fees: The investors who commit to realize 10.000 US Dollars of exports upon the completion of the investment are granted exemption from the taxes, duties and fees.
• To benefit from the Encouragment Fund: The installment of the yearly taxes which have been paid to the government could be postponed. Because the payable tax amount will be used for the Investment Encouragement.
• Exemption from Income Tax and Corporate Tax: In First Priority and Extraordinary Situation Regions, the companies who are newly established and have more than 10 employees are exemption from Income Tax and Corporate Tax for five years.
• Other Taxes and Fees: In First Priority and Extraordinary Situation Regions, the companies who have the investment incentive certificate granted exemptions from housing taxes, stamp tax, bank tax, inheritance tax and other taxes which have to be paid to the Municipalities.
• Energy Incentives: This incentive measure enables the investors to benefit from a 50% reduction in their electricity expenses within the following city boundaries: Van, Diyarbakır, Siirt, Tunceli, Şırnak and Hakkari. This incentive shall be applied during the validity of the incentive certificate.
• Investment in the Developed Regions: The investments which might be granted the investment incentive certificate in the Developed Regions as follows:
  1. Electricity production
  2. Infrastructure investments
  3. Investments under the BOT and/or BOO scheme
  4. Investments related to R&D, design and producing new products or models
  5. Investments for environmental protection
  6. Priority technology investments determined by the Higher Council of Science and Technology
  7. Electronic sector investments
  8. Boat and yacht construction
  9. Shipyard investments
  10. Technopark, information technology, education, health, tourism telecommunication and certain service sector investments
  11. Capacity increase, modernization, quality improvement and integration investments
  12. Projects which are over 50 million US Dollars with at least one of the following requirements; high-tech, increasing employment, high level of value added and increasing tax revenues.
• Exception from the tax and fees: According to the temporary article 2, of 3505 numbered law, dated 3.12.1988; If an investor committed that he can make exportation for 10.000 US Dollars in two years after completion of the investment:
  • Establishment of a company
  • in the investment period, not to pass the total amount of the investment could be multiplying according to the investment incentive certificate
  • According to the investment incentive certificate, the credits granted from both international and the local banks. The credit amounts should be less than the foreign investment cost.
  • About the incentive certificated investments have a building/land etc. should be registered to the deed office as an own good of the investor.
• Credit Allotment from the Encouragement Fund: The frame of the instruction from the Undersecretariat of Treasury, investors may grant an allotment from the Encouragement Fund for R&D, technopark, environmental protection and KOBI investments.
• Change of Investment Place and Investment Subject: It is necessary to inform to the Undersecretariat about investment place changes. The Undersecretariat takes the necessary action according to the law terms to prepare / un prepare new incentive certificate. If the old investment place have more state aid elements than the new place the Undersecretariat will take back some state aid elements from the investor. In the event of investment subject change, the investor has to provide a new information form to the Undersecretariat. According to the information form the Undersecretariat will take the necessary actions to revise the investment incentive certificate.
• Revising of the Incentive Certificate: The recorded elements on the investment incentive certificate never be finalized. They can be changed every step of the investment. Investors could be provided above mentioned changes to the Undersecretariat with the documentation any step of the investment. The investment value might be upgraded/downgraded 100% as well. In this case, the Undersecretariat will revise the investment incentive certificate appropriately.
• Time Extension: The investments have to be finished the foreseen timeframe on the investment intensive certificate. If the investments would not be completed foreseen timeframe, the investor has to apply for time extension, 6 months before or 6 months after the expiration date either to the Chamber of Commerce or the Undersecretariat. If the time extension request approves by the Chamber of Commerce the documents will be forwarded to the Undersecretariat for the necessary procedures. On the investment incentive certificate foreseen time extension (including additional time) would be six (6) months. If the investment will not be completed during this timeframe the investment incentive certificate will be cancelled.
• Transfer, Sell and Import of the Certificate: According to the laws, Investment Incentive Certificate which completion visa has not given yet can be examined again by the Undersecretariat and can be provided the revised certificate to the investor.
• To import used Machinery Equipment and Facilities: The complex facility used according to the investment incentive certificate could be imported after studying the projects by the Undersecretariat. The used machinery and equipment could be imported according to the Importation Regime Decision. The used motor vehicles can not be imported.

Tourism investments (overnight encampment facilities) with an Investment Encouragement Certificate issued in accordance with the previous Decree No. 94/6411 dated 26.12.1994;

• must be confirmed by a report from the Turkish Emlak Bank, within a period of one year after the date of publication of this Decree, taking into account the escalated values, and indicating that the physical realization rate of the investment (including land), is at least 70%.
• must not have benefited from the Fund Sourced Credit, in relation with the previous provisions of the framework concerning Partially Completed Tourism Investments legislation (if the investment has partially benefited from the credit mechanism previously, the difference between the credit to be allocated in accordance with this Decree and previously used amount shall be taken into evaluation),
• must have the characteristics of a completely new investment.

The capacity increases realized after the publication of this Decree shall not be taken into consideration ,With these conditions stated above, if an application is submitted to the Undersecretariat within one year after the publication of this Decree, in order to finance the incomplete portion of the investment, maximum 70% of the remaining investment can be credited from the Fund. This credit has 50% interest rate, having 2 years grace period, and 5 year maturity term.

Investments to be financed in this framework should be completed at the latest within one year period and application should be given to the Undersecretariat for the completion visa. Otherwise, the encouragement elements shall be taken back with sanctions.

SME's, in other words, the enterprises that qualify for the state aids are defined by the published in State Aids Decree as follows: “Businesses that employ a maximum of 150 workers, the net value of machinery and equipment, plants, vehicles, tools and appliances, furniture and fixed inventory excluding the land and buildings recorded in their legal books and documents is at most 100 billion TL.” However, of such businesses, the ones that operate in the services sector and tourism do not qualify. It is compulsory that they are in the manufacturing sector. The total net value of TL 100 billion of balance sheet and machinery and equipment is applicable until the end of this year. This figure will be increased every year .

HALKBANK TOURISM CREDITS ;Halk Bank will carry out special loan program for tourism,

INPUT / OUTPUT ANALIS  of TOURISM SECTOR

% of Input   from Related Sectors  to Tourism Sector

PROJECTS Of TURSAB  for 2000