Governmental Investment incentives in Turkey
Governmental Investment Incentives in Turkey
Governmental support programs
Investors in Turkey enjoy a package investment of incentives, tax reductions, customs exemptions, and other incentives, aimed to attract the largest number of investors and cash capital to the country, seeking job opportunities increases for Turkish citizens, and other economic and social goals that will be achieved as a natural result of increasing investments in the country.
The latest update of these incentives, which means (Teşvik) in Turkish language, and issued by the Investment Office of the Presidency of the Republic of Turkey. The investment incentives package has been updated, and the investor may benefit from a number of them according to the type of investment, the value of the invested capital, as well as the geographical area of ​​the investment.
These incentives include several forms of support packages:
VAT Exemption
Customs Duty Exemption
Purchasing Guarantee
Cash Support
Social Security Premium Support
Capital Contribution
Interest Rate Support
Land allocation
R&D, Design discount
Other exemptions and benefits
In this article, we will talk about these benefits in detail, which the investor may derive from some of them according to the type and size of the investment and the location of the investment within the Turkish states.
General exemptions:
Regardless of the investment region and type, the minimum investment requirement is 500,000 Turkish liras in order for the project to obtain the following benefits:
Exemption from VAT on purchases 18%: Exemption of purchases of machinery and equipment designated for the project from value-added tax.
Exemption from customs duties 2%: on imports of machinery and equipment designated for the project from customs duties.
Exemptions for development areas:
The Turkish provinces were divided into six regions so that the less developed states received the largest percentages of support. In addition to the general support mentioned in the first clause, the states within the 3,4 regions (the least developed states) will receive the following support:
Exemptions from corporate income tax of up to 30% of the capital value as a maximum.
Exempting the employer from his share of social insurance for a period of 6 years.
Low-interest rate loans, whereby the investor benefits from a maximum of 1 million Turkish liras of reduced interest.
Exemptions for medium and high-tech investments:
In addition to the general support, the investor in the medium and high technology sector receives the following support:
Exemptions from corporate income tax of up to 30% of the capital value as a maximum.
Exempting the employer from his share of social insurance for a period of 6 years.
Low-interest rate loans, in which the investor benefits from a maximum of 1.2 million Turkish liras of reduced interest.
Exemptions for Zone 5 from Turkish states and priority investments:
In addition to the general support, the investor in this region receives the following support:
Exemptions from corporate income tax amounting to a maximum of 40% of the capital value.
Exempting the employer from his share of social insurance for a period of 7 years.
Low-interest rate loans, in which the investor benefits from a maximum of 1.2 million Turkish liras of reduced interest.
The allocation of lands for the project by the state.
Exemptions for the sixth region of the Turkish states:
In addition to general support, the sixth region of the Turkish states receives the following support:
Exemptions from corporate income tax amounting to a maximum of 55% of the capital value.
Exemption of the employer from his share of social insurance for a period of 10 years.
Exemption of employees for a period of 10 years from their share of social insurance.
Low-interest rate loans, whereby the investor benefits from a maximum of 1.8 million Turkish liras, with reduced interest.
Exemptions from the WHT taxes amounting to 1.86 million TL max.
The allocation of land for the project by the state.
Exemptions for strategic investments:
Strategic investments get additional support in the following form:
Exemptions from corporate income tax of up to 50% of the capital value as a maximum.
Exempting the employer from his share of social insurance for a period of 7 years. Low-interest loans, in which the investor benefits from a maximum of 5 million Turkish liras, with reduced interest.
The allocation of land for the project by the state.
Strategic investments were defined as producing local goods in which imports exceed the volume of domestic consumption, the capital value of the project exceeds 50 million Turkish liras and the final product contains 40% of locally produced materials, and the product which the value of imports reached 50 million US dollars during the past year.
Exemptions for some projects:
They are the projects that are concerned with the production of commodities that are not available locally or are produced in small quantities that are not sufficient for the local market. And also the high-tech industries that the country needs.
In addition to the general grants, these projects receive the following grants:
Non-refundable financial grant.
Exemptions from corporate income tax amounting to a maximum of 200% of the capital value.
Exempting the employer from his share of social insurance for a period of 10 years.
Exemption from suspension tax for a period of 10 years.
Financial support for the salaries of highly qualified employees, which the project needs for a period of 5 years.
Energy subsidy of up to 50% of the cost for a period of 10 years. Low Interest 10 Years Loans.
Governmental share capital of 49%.
Governmental land allocation for a period of 49 years. Support for the infrastructure of the project.
State purchase guarantee. Facilitating licensing procedures for the project. Refund of value-added tax for purchases related to the construction of the project.
Governmental Employment Support IÅžKUR:
The government IÅžKUR program for private sector employment has encouraged companies to hire and train Turkish citizens in exchange for incentives and compensation for the investor who owns the facility.
Governmental support for research and development centers and TUBITAK technology centers:
These centers receive government support as well, provided they fulfill some conditions and standards.
Support the government to transfer the headquarters of international companies to Turkey.
KOLAYDESTEK export incentives:
The Turkish government pays special attention to exports and gives exporters special benefits and exemptions.
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