Investment Incentives in Turkey – Consulting Services

In Turkey, new investment, additional investment ve renovation is supported by government. These investment incentives are also offered to the foreign investors. In order to benefit these great government incentives, investors should apply for investment incentive certificate.

Investment incentive system in Turkey depends on nature of the investment, sector, product and region (place) of the investment amount to be invested.

Investment Incentives Elements

Destek Unsurları	Genel Yatırım Teşvik Uygulamaları	Bölgesel Yatırım Teşvik Uygulamaları	Stratejik Yatırım Teşvik Uygulamaları	Proje Bazlı Teşvik Uygulamaları
VAT Exemption	+	+	+
Customs Duty Exemption	+	+	+
Corporate Tax – Income Tax Reduction		+	+
Social Insurance Premium Incentives (Employer’s Share)		+	+
Income Tax Withholding Discount		+	+
Social Security Premium Support (Employee’s Share)		+	+
Interest Rate Incentives		+	+
Land Allocation		+	+
VAT Refund			+

 

VAT Exemption

1. VAT Exemption

VAT (value added tax) Exemption incentive is available for investment projects especially for the machinery and equipment to be purchased domestically and abroad. Investors do not need to pay VAT for machinery and equipment purchased within the scope of investment project.

2. Customs Duty Exemption

Customs Duty Exemption incentive is available for investment projects especially for the machinery and equipment to be purchased domestically and abroad. Investors do not need to pay customs duty for machinery and equipment purchased within the scope of investment project.

3. Corporate Tax – Income Tax Reduction

Income and corporate tax are reduced according to “contribution to investment ratio” until the incentive amount, the portion of investment amount which is determined by Ministry depletes.  Contribution to investment ratio is calculated according to investments zones and sectors. The incentive rate vary between %15-65 of investment.

5. Social Insurance Premium Incentives (Employer’s Share)

Employer’s share of social security premium is covered by the Government which is a legal requirement to be paid by the employer. This incentive is applicable until the portion of investment amount which is determined by Ministry depletes.  Incentive amount is calculated according to investments zones and sectors. The incentive rate vary between %10-35 of investment amount up to ten years.

4. Social Security Premium Support (Employee’s Share)

Employer’s share of social security premium is covered by the Government which is a legal requirement to be paid by the employer. This incentive is valid only for investments to be made in Region-Zone 6, within the scope of investment incentive certificate. There is no upper limit for Social Security Premium Incentives and it is valid for 10 years.

6. Income Tax Withholding Discount

Income tax to be paid by employer for the sake of employee which is a legal requirement is covered by the government. This incentive is only valid for investments in Region-Zone 6. There is no upper limit for Income Tax Withholding Discount and it is valid for 10 years.

7.Interest Rate Incentives

Interest rate incentive is a financial support provided for at least one 1-year investment loans. Up to 70% of the fixed investment amount registered in the investment incentive certificate, a certain part of the interest / profit share to be paid for the loan is covered by the government. It is applicable for both Turkish Lira or FX based loans.

8. Land Allocation

Land allocation is an opportunity provided for the investors giving them to have the right to demand land allocation for their investments. However it is limited on the availability of land according to the regulations.

9. VAT Refund

VAT is refunded in building construction costs as part of strategic investments with a minimum fixed amount of investment of more than 500 million Turkish liras.