Turkey’s rising profit outflows have become a sharper test of its foreign investment model: the country is again attracting capital, but a growing share of the return on that capital is leaving through dividends, interest, portfolio income and loan payments. Kısa Dalga reported the story under a lira-denominated headline, but the underlying Dünya column by Naki Bakır and the Central Bank of the Republic of Türkiye data cited in it point to a much larger dollar figure, USD 21.705 billion in primary income transferred abroad in the first nine months of 2025. For international investors, the number is not simply a warning sign. It shows that Turkey remains an investable, income-generating market, while also underlining why tax structure, foreign exchange planning, compliance and government relations now matter as much as market demand.
A Record-Like Outflow, But Not A Simple Capital Flight Story
According to Naki Bakır’s analysis in Dünya, based on CBRT balance-of-payments data, foreign investors, lenders and deposit holders transferred USD 21.705 billion out of Turkey in the first nine months of 2025 through the primary income account. That account includes profits from direct investment, income from portfolio holdings, interest on loans and deposits, and compensation paid to non-resident workers.
The composition matters. Dünya reported that USD 10.679 billion of the outflow came from interest earned on loans extended to Turkish public and private borrowers and on deposits in the banking system. Direct investment income accounted for USD 5.717 billion, while portfolio investment income reached USD 3.814 billion. In other words, the largest component was not multinational companies distributing factory profits, but the return paid to foreign creditors and financial investors.
At the same time, the first nine months of 2025 were not marked by a withdrawal of all foreign capital. Dünya reported USD 41.651 billion in foreign capital inflows across direct investment, portfolio investment, deposits and loans, against USD 25.755 billion in outward investment by Turkish residents. The resulting net inflow was USD 15.896 billion, compared with a net outflow in the same period of 2024.
That distinction is crucial for FDI analysis. Profit repatriation can be a sign of investor confidence when companies are able to earn and transfer returns under predictable rules. It becomes a vulnerability when those returns are financed primarily by short-term borrowing, high domestic interest rates and a persistent current account deficit.
Why Primary Income Has Become A Balance-Of-Payments Pressure Point
Turkey’s external accounts show why investors are watching this line item more closely. The CBRT’s July 2026 balance-of-payments release reported a monthly current account surplus of only USD 36 million, helped by tourism and transport revenues, while the annualized current account deficit reached USD 40.7 billion. The same CBRT release put the annualized goods deficit at USD 77.2 billion, the services surplus at USD 63.5 billion, and the primary income deficit at USD 25.2 billion.
That primary income deficit is the macroeconomic mirror of the profit-transfer story. Turkey earns heavily from tourism, logistics and services, but it pays substantial income to foreign capital providers. The more the economy relies on external debt, foreign deposits and portfolio inflows, the more sensitive the current account becomes to interest rates and refinancing conditions.
The Ministry of Treasury and Finance’s May 2026 balance-of-payments note showed a similar pattern, with an annualized primary income deficit of USD 24.1 billion and a current account deficit of USD 37.3 billion. By July, the CBRT data showed the gap widening further.
For a foreign corporate investor, this does not mean Turkey is closed or unstable as an operating market. It means treasury assumptions must be built into the investment case from the beginning. Currency denomination of revenue, import exposure, local borrowing costs, intra-group financing, dividend timing and hedging policy can materially change the actual return delivered to headquarters.
FDI Inflows Are Recovering, But Quality Is The Question
Turkey’s official investment narrative improved in 2025. The Presidency of Türkiye’s Investment Office said in February 2026 that the country attracted USD 13.1 billion in FDI in 2025, up 12.2 percent year on year. It cited CBRT data and said FDI excluding real estate reached USD 10.7 billion, which Treasury and Finance Minister Mehmet Şimşek described as the highest level in the past decade.
The Investment Office said the Netherlands, Luxembourg and Kazakhstan were the largest source countries in 2025, followed by Germany, the United States, France, the United Arab Emirates, Switzerland, the United Kingdom and Ireland. By sector, wholesale and retail trade accounted for 32 percent of total FDI inflows, manufacturing for 31 percent, and information and communication for 14 percent.
This recovery came in a difficult global environment. UNCTAD’s World Investment Report 2026 said global FDI rose 6 percent in 2025, but described the recovery as narrow and fragile. Against that backdrop, Turkey’s 12.2 percent increase was a positive divergence. Still, the structure of capital matters. Real-sector investment in manufacturing, logistics, technology and export-oriented services has a different balance-of-payments effect than short-term portfolio inflows or debt-financed carry trades.
That is where market entry strategy and investment incentives intersect. Turkey is trying to steer capital toward higher-value sectors. The Investment Office’s incentives guide lists technology incentives, local development incentives, strategic incentives, project-based HIT-30 packages, R&D and design center incentives, and free zone incentives. It also identifies VAT exemptions, customs duty exemptions, corporate tax reductions, social security premium support, interest support, land allocation and infrastructure support among available instruments.
For foreign companies evaluating Turkey, the question is no longer only whether demand exists. It is whether the project can qualify for incentives, operate in the right region, import machinery efficiently, meet local-content or export expectations, and manage profit repatriation after taxes.
The Legal Right To Repatriate Is Clear, The Tax Cost Is Not Static
Turkey’s Foreign Direct Investment Law No. 4875 gives foreign investors broad transfer rights. Under Article 3(c), foreign investors may transfer abroad net profits, dividends, sale and liquidation proceeds, compensation payments, license and management fees, and principal and interest payments on foreign loans through banks or financial institutions.
That legal assurance remains one of Turkey’s important advantages compared with more restrictive emerging markets. Investors generally do not need a special foreign investment license to incorporate a company, acquire shares or establish a commercial presence, although regulated sectors such as banking, insurance, energy, mining, aviation, telecommunications and capital markets involve separate licenses or approvals.
The practical issue is tax and procedure. PwC Turkey’s 2026 tax summary states that dividend withholding tax was increased from 10 percent to 15 percent by Presidential Decision No. 9286, published in the Official Gazette on 22 December 2024, unless a double tax treaty provides a lower rate. Dividend distributions to resident companies are not subject to withholding, but payments to non-resident shareholders generally are.
This makes legal and tax compliance a front-end investment issue, not an accounting afterthought. Investors must decide whether to operate through a Turkish joint stock company, limited company, branch, liaison office or acquisition vehicle. They must map treaty eligibility, beneficial ownership, transfer pricing, thin capitalization, management fees, royalty payments, shareholder loans and future exit proceeds. A structure that looks efficient at incorporation may be costly when profits are actually distributed.
Macro Conditions Keep Raising The Execution Bar
Turkey’s macroeconomic program has improved policy credibility compared with the pre-2023 period, but investors still face a complex operating environment. CBRT data published with TURKSTAT inflation figures showed annual CPI inflation at 31.51 percent in August 2026, with monthly inflation at 1.84 percent. In a September 2026 speech published by the Bank for International Settlements, CBRT Governor Fatih Karahan said the central bank cut the policy rate by 100 basis points to 37 percent in January 2026 and then maintained a tight stance because of geopolitical risks and the inflation outlook.
Karahan also said the central bank continued liquidity sterilization, macroprudential measures and policies aimed at supporting Turkish lira deposits. He noted that the share of Turkish lira deposits had risen to 62 percent and that total loan growth had declined from 34.6 percent at end-February to around 25 percent.
For investors, high inflation and tight policy produce mixed effects. They can support nominal revenue growth and financial returns, but they raise working-capital needs, wage pressure, lease escalation, local financing costs and pricing risk. Import-export planning becomes especially important for manufacturers and distributors whose input costs are in foreign currency while domestic sales are in lira. A project management approach that sequences incorporation, permits, hiring, customs, supplier onboarding and financing can reduce the risk that delays erode the expected return.
Government relations also becomes more important in this environment. Investors seeking incentives, land allocation, customs facilitation, regulated-sector approvals or participation in public programs such as HIT-30 need structured engagement with ministries, development agencies, municipalities and regulators. That engagement must be compliant and documented, particularly for listed multinationals and institutional investors with anti-bribery and sanctions obligations.
What This Means For Foreign Investors
The USD 21.705 billion profit-transfer figure should not be read as a simple negative signal. It shows that foreign capital can earn money in Turkey and, under the legal framework, can send returns abroad. That is a core condition for FDI. The concern is that a large and rising primary income deficit makes Turkey more sensitive to external financing conditions, interest rates and investor confidence.
For companies considering market entry, the practical response is disciplined preparation. Investors need a market entry strategy that tests demand, pricing power, local competition and currency exposure. They need incorporation and corporate structuring that anticipates dividend payments, shareholder loans, treaty access and exit scenarios. They need legal and tax compliance that reflects the 15 percent dividend withholding baseline, transfer pricing rules and banking documentation for cross-border payments.
For manufacturing, technology, logistics and export-oriented projects, investment incentives can materially change project economics, but only if the application is aligned with sector priorities, location rules and implementation milestones. Import-export facilitation is equally important where machinery, components or finished goods cross borders. Expo and trade-fair representation can help foreign firms test distributors, customers and suppliers before committing capital, while project management is needed to turn approvals into operational execution.
The broader lesson is that Turkey remains a market where opportunity and complexity move together. Profit repatriation is legally possible and commercially real, but the net return depends on structure, timing, tax treatment, foreign exchange management and regulatory execution. That is the terrain where an FDI advisory firm such as fdiconsultancy.com adds value: translating macro opportunity into an investable, compliant and operationally realistic plan.