Incentive guide for Turkey
In the global competition environment, foreign direct investment is increasingly important.
In the global competition environment, foreign direct investment increasingly gains importance. Of course, Turkey also wants to get a share of this market. Therefore, Turkey, in respect of investments held many institutional and legal arrangements. In this article, I would like to address investment incentive arrangements.
Which incentives are in place in Turkey?
Turkey provides various incentives and grants to investors for the purpose of facilitating larger investments and capital contributions by local and foreign investors and eliminating regional imbalances. There is no discrimination between local and foreign investors with respect to the application of incentives.
Incentives generally comprise a mix of tax and non-tax incentives. Investors may qualify for the following general incentives based on the location, scale and other qualifications of the investment:
· Exemptions from customs duties
· VAT exemption
· Support for interest payment
· Social security premium support
· Reduced corporate tax
· Investment location allowance
· Moving support
The application for incentive certificates is made to the undersecretariat of the Treasury by foreign investors. Obtaining an incentive certificate is an easy procedure. Without region discrimination, VAT and customs duty exemptions, support for interest payments is applicable for investments relating to R&D and environmental issues.
[HH] Exemptions from customs duties
Customs duty exemptions are provided to all investments that exceed the minimum investment amounts excluding investments made in industries that are not provided with incentives and the investments that do not satisfy the required conditions set out in the decision.
[HH] VAT exemption
In Decree No. 2009/15199 it is stated that VAT exemption is provided to the export and local delivery of machinery and equipment that are in the scope of the investment certificate and in line with the VAT code.
[HH] Support for interest payment
In order to benefit from interest payment support:
• Investments should regard research and development, environmental protection and regional support.
• Loans should be taken from banks.
• Loan maturity should be at least one year.
[HH] Social security premium support
The employer’s portion of the social security premium limited with the premium amount calculated over the official minimum wage shall be borne by the Treasury for big investment projects and regional investments. Exemptions apply.
• In completely new investments this applies to employees that start working on that project.
• In others, subsequent to the completion of the investment, this applies to employees recruited by the company in addition to the average employee number calculated from the monthly submitted declarations of the company to the Social Security Institution within the six-month period before the commencement of the investment.
[HH] Reduced corporate tax
Both corporate taxpayers and income taxpayers can benefit from reduced tax rate incentives. Reduced tax rate incentives are applicable for big investment projects and regional investments.
[HH] Investment location allowance
Land shall be granted to big investment projects and regional support investments.
According to Law No. 5520, however, companies operating in finance and insurance, joint ventures, investments made under Law No. 4283 related to the build-operate model and the building and operating of electrical energy production facilities, and investments made under Law No. 3996 regarding the build-operate-transfer model are excluded.
Hurriyet Daily News/07.05.2010
In the global competition environment, foreign direct investment increasingly gains importance. Of course, Turkey also wants to get a share of this market. Therefore, Turkey, in respect of investments held many institutional and legal arrangements. In this article, I would like to address investment incentive arrangements.
Which incentives are in place in Turkey?
Turkey provides various incentives and grants to investors for the purpose of facilitating larger investments and capital contributions by local and foreign investors and eliminating regional imbalances. There is no discrimination between local and foreign investors with respect to the application of incentives.
Incentives generally comprise a mix of tax and non-tax incentives. Investors may qualify for the following general incentives based on the location, scale and other qualifications of the investment:
· Exemptions from customs duties
· VAT exemption
· Support for interest payment
· Social security premium support
· Reduced corporate tax
· Investment location allowance
· Moving support
The application for incentive certificates is made to the undersecretariat of the Treasury by foreign investors. Obtaining an incentive certificate is an easy procedure. Without region discrimination, VAT and customs duty exemptions, support for interest payments is applicable for investments relating to R&D and environmental issues.
[HH] Exemptions from customs duties
Customs duty exemptions are provided to all investments that exceed the minimum investment amounts excluding investments made in industries that are not provided with incentives and the investments that do not satisfy the required conditions set out in the decision.
[HH] VAT exemption
In Decree No. 2009/15199 it is stated that VAT exemption is provided to the export and local delivery of machinery and equipment that are in the scope of the investment certificate and in line with the VAT code.
[HH] Support for interest payment
In order to benefit from interest payment support:
• Investments should regard research and development, environmental protection and regional support.
• Loans should be taken from banks.
• Loan maturity should be at least one year.
[HH] Social security premium support
The employer’s portion of the social security premium limited with the premium amount calculated over the official minimum wage shall be borne by the Treasury for big investment projects and regional investments. Exemptions apply.
• In completely new investments this applies to employees that start working on that project.
• In others, subsequent to the completion of the investment, this applies to employees recruited by the company in addition to the average employee number calculated from the monthly submitted declarations of the company to the Social Security Institution within the six-month period before the commencement of the investment.
[HH] Reduced corporate tax
Both corporate taxpayers and income taxpayers can benefit from reduced tax rate incentives. Reduced tax rate incentives are applicable for big investment projects and regional investments.
[HH] Investment location allowance
Land shall be granted to big investment projects and regional support investments.
According to Law No. 5520, however, companies operating in finance and insurance, joint ventures, investments made under Law No. 4283 related to the build-operate model and the building and operating of electrical energy production facilities, and investments made under Law No. 3996 regarding the build-operate-transfer model are excluded.
Hurriyet Daily News/07.05.2010
