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    Investment Incentive in Turkey: Regional Implementation

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    Investment incentive privately established in Turkey and having largely economic impact intends equal benefits in terms of supporting domestic and foreign investors. The investment incentive existing in Turkey aims to have reduction at a rate of current deficit in the national economy.

    It should be considered that investment incentive practices are provided for the underdeveloped regions in Turkey and specially designed in order to increase the investment in these regions. It is important in terms of the support you will have during your investment that you are informed of the incentives available in the region where you will invest for any investment activity.

    Who is Benefiting from the Investment Incentive System in Turkey?


    Certain requirements are determined in order to be included in the investment incentive system structured on equal support for domestic and foreign investors in Turkey. If these requirements are met, the specified institutions, organizations and individuals can benefit from this system.

    First of all, capital owner companies, associations and cooperatives, joint ventures and capital partnerships and natural persons have the right to benefit from this. Secondly, public institutions and organizations are included in this list. You can also receive support if you are university or professional organization in the form of a public institution in order to benefit from the investment incentive system in Turkey.

    The investor of the investment to be made by foundations, associations and foreign capital in Turkey can benefit from this system. The incentive system is realized through different applications depending on the conditions and the quality of the investment.

    Incentive for General Investment Applications


    Projects determined for investment purposes by domestic or foreign investors are supported without any regional distinction. This support can be utilized if the determined conditions and minimum investment value are met. The minimum investment amount by the regions should be as much as the minimum fixed amount determined. General investment support is implemented in two ways.

    Value added tax exemption is applied on the goods supplied for domestic or foreign investment purposes within the scope of the support plan. It is required to obtain the incentive certificate issued by the administration authorized by the Ministry of Industry and Technology in order to benefit from the exemption practice applied according to the latest regulations (VAT Law no. 3065).

    Customs Tax Exemption is applied if the goods obtained from abroad are provided with an incentive certificate. Support is provided as having an exemption for customs tax payment specified with Import Regime Decision carried out in favor of machinery or equipment for investment.

    Regional Investment Incentive Practices in Turkey


    The second application for support program planned for investment incentive in Turkey is the support program varying by region. Pursuant to the Law no. 5520, a discount is applied depending on the investment contribution rate over the income tax or corporate tax payment for the investments to be provided with regional investment incentives.

    In case of strategic investment, the investment incentive in Turkey is supported with ninety percent tax deduction. The investment contribution rate has been determined as 50%. In addition to the insurance premium support to be provided from the Ministry’s budget on behalf of the employer under certain conditions, incentives are provided for income tax withholding as of the date of investment.

    In addition, support for the place of investment, value added tax refund and supports for dividend or interest are provided. It is required to collect regional incentives only under a broader title. The review of regional incentives and the application of specific requirements depend on certain conditions.

    Large-Scale and Strategic Investment Incentive in Turkey


    The investment incentive plan offered by the government in Turkey has features set out under certain requirements. Apart from general incentive applications and regional incentive applications, incentives are provided for large-scale investments or the investments named as strategic.

    The subject included in the field called as strategic investments and provided with incentive by the government in Turkey concerns the investors intending to manufacture products which create import dependency in the country.

    Overview of the New Incentive System


    When certain conditions are met for General Incentive practices, VAT exemption and customs tax exemption are applied. The support plan provided within the framework of the Regional Incentive plan is planned under certain conditions with VAT exemption, Customs Tax exemption, tax deduction, employer share support for insurance premium, investment location allocation and interest support.

    The incentives provided for large-scale investments coincide with the support provided within the scope of regional incentives. Only interest support is restricted. For the strategic investments, the incentive program provided complies with the same support plan as the regional incentives, however in addition VAT refund support is provided.

    However, a very important detail is that it is provided with different conditions and different sanctions. The nature of the investment and the conditions to be met vary. The program provided for the investment incentive in Turkey is outlined above with the recent regulations made within the law.