Incentives

Who Can Benefit From Investment Incentives?

Incentive schemes granted by the new program can be applied by a real person of foreign nationality through a joint-stock or limited liability company, and by a foreign company based in foreign countries through a joint-stock, limited liability company or a branch established in Turkey.

What are the Instruments?

Value Added Tax (VAT) Exemption

Investment machinery and equipment imported and/or locally provided within the scope of the incentive certificate will be VAT exempt.

Customs Duty Exemption

Investment machinery and equipment imported within the scope of the incentive certificate will be exempted from customs duty set in the Import Regime Decree. Customs duty rates based on relevant Chapters are shown in the attached lists of “Decree on Import Regime”.

Tax Deduction

Reduced income or corporate tax rates will be imposed on the investor’s income under the incentive scheme according to the characteristic of the investment until the amount calculated on the basis of government’s contribution rate, determined by the same scheme and corresponding to a certain percentage of the fixed investment amount, is reached. The contribution rate to investment refers to the rate of the fixed investment subject to tax deduction, whereas tax deduction refers to the rate of income or corporate tax to be reduced until the contribution rate is reached.

Social Security Premium (SSP) Support for Employer's Share

This incentive facilitates that for any additional employment created by an investment with an incentive certificate solely under Strategic Investment Incentive Schemes, the amount corresponding to the employer’s share of the social security premium on legal minimum wage, paid by the investor, is covered by the Ministry. In order for an investor to benefit from this support, the project should be concluded and a completion visa should be granted.

Land Allocation

Government land will be allocated for investments with incentive certificate under large scale, strategic and regional incentive schemes in accordance with the rules and principles defined by the Ministry of Finance, depending on the availability of such land in the provinces where investments are made.

VAT Refund

VAT collected on the building & construction expenses made for Strategic Investments will be rebated provided that the fixed investment amount is over 500 million TL.

Investment Schemes

  • General Investment
    Incentive Scheme
  • Regional Investment
    Incentive Scheme
  • Large-Scale
    Investment Incentives
    Scheme
  • Strategic Investment
    Incentive Scheme

Only VAT and Custom Duty exemptions are applicable in this type of incentive.
There are two requirements to benefit from this incentive mechanism in Istanbul, which are “the investment topic must not be listed among ‘not to be supported’ section” and “the minimum fixed investment amount must exceed TRY 1 million level.”

Vat Exemption, Customs Duty Exemption, Tax Reduction, Social Security Premium Support and Land Allocation are available in Regional Investment Incentive Scheme. Regional system aims to eliminate inter-regional imbalances by means of encouraging pre-determined sectors. Therefore, investment topics to be supported have been identified by taking into consideration of the economic potentials of each province and economies of scale. Through the new regime, 81 provinces of Turkey are classified under 6 investment regions. Istanbul, which is the most developed region of Turkey, is classified in the 1st degree regional list.

Incentives Instruments Istanbul (Region 1)
VAT Exemption Available
Customs Duty Exemption Available
Tax Reduction (Rate of Contribution to Investment %) 50% (out of OIZ Rate of Contribution to Investment %15)
55% (in OIZ Rate of Contribution to Investment %20)
Social Security Premium Support (Employer’s Share) 2 years (out of OIZ)
3 years (in OIZ)
Land Allocation Available

Sectors below are able to benefit from Vat Exemption, Customs Duty Exemption, Tax Reduction, Social Security Premium Support and Land Allocation.

Sectoral Code

Investment Topics

Minimum Amount of Investment /Capacity

1911

Leather Tanning, Processing (Only in Istanbul Deri İhtisas OIZ and Tuzla OIZ)

1 million TL

2423

Medicine and Pharmaceuticals

4 million TL

2929

Industrial Patterns

4 million TL

30

Office, Accounting and IT Processing Machines

4 million TL

32

Radio, TV, Communication Equipments and Devices

4 million TL

33

Medical Devices, Sensitive and Optic Devices

1 million TL

5510.3.01

Dormitories

100 students

80 (809 Excluded)

Education (Schools, Universities)

1 million TL

8511.0.01-05

Hospitals, Nursing Home

Hospital: 1 million TL

Nursing Home: 100 persons

8511.0.99

8531.0.01-03

-

Waste Management and Recycling Facilities

1 million TL


In addition, the sectors below are applied the intensity of 5th region incentives.

  • Mining Investments
  • Railroad and maritime transportation investments
  • Test facilities, wind tunnel and similar investments
  • Tourism investments in Cultural and Touristic Preservation and Development Regions
  • International fairground investments with a minimum covered area of 50.000 m2
  • Primary, Middle and High School investments by private sector
  • Specific medical investments and Defence Industry investments with minimum investment amount of 20 Million TL
  • Investments made to produce products developed by an R&D Project which is supported by Ministry of Science, Industry and Technology

Vat Exemption, Customs Duty Exemption, Tax Reduction, Social Security Premium Support and Land Allocation are available in Regional Investment Incentive Scheme. The goals of this scheme are to improve technological and R&D capacity of regions and to provide a competitive advantage in the global arena. The listed investment topics that exceed the designated minimum amounts are eligible in Istanbul.

Incentives Instruments Istanbul (Region 1)
VAT Exemption Available
Customs Duty Exemption Available
Tax Reduction (Rate of Contribution to Investment %) 50% (out of OIZ Rate of Contribution to Investment %15)
55% (in OIZ Rate of Contribution to Investment %20)
Social Security Premium Support (Employer’s Share) 2 years (out of OIZ)
3 years (in OIZ)
Land Allocation Available


The sectors to be given incentive include the fallowings:

No Investment Topics Min. Investment Amount (Million TL)
1 Refined Petroleum Products 1.000
2 Chemical Products 200
3 Harbors and Harbor Services
4 Automotive OEM and Side Suppliers
4-a Automotive OEM Investments 200
4-b Automotive Side Suppliers Investments 50
5 Railway and Tram Locomotives and/or Railway Cars

50

6 Transit Pipe Line Transportation Services
7 Electronics
8 Medical, High Precision and Optical Equipment
9 Pharmaceuticals
10 Aircraft and Space Vehicles and/or Parts
11 Machinery (including Electrical Machines And Equipments)
12 Integrated Metal Production

There are two main goals of strategic investment incentive scheme, which are to support production of intermediate and final products with high import dependence with a view to reduce current account deficit and to encourage hightech and high value added investments with a potential of strengthening Turkey’s international competitiveness. Investments meeting four criteria below are supported within the frame of the Strategic Investment Incentive Scheme.

  • Minimum Investment Amount of TRY 50 million
  • Domestic Production of the Related Product must be less than the Importation of that Product
  • Value Added through the Investment must be at least 40%
  • Related product’s last year’s importation must exceed US $50 million level.

VAT Exemption

Available

Customs Duty Exemption

Available

Tax Reduction

%90 (Rate of the contribution to investment 50% )

Social Security Premium Support (Employer’s Share Exemption)

7 Years (Rate of the contribution to investment %15)

Land Allocation

Available

VAT Refund

The building and construction costs of investments of more than 500 Million TL

Interest Payment Support

Limited to 5% of total investment amount and with a cap of 50 Million TL

Advantageous Zones

  • Technological Development Zones
  • Organized Industrial Zones
  • Free Trade Zones

The main objectives of Technological Development Zones (TDZs), aka Technoparks, in Turkey are to produce and commercialize technological knowhow, to develop innovations in products and production methods and to create investment opportunities in high-tech industries. These zones are usually located in or around college campuses in order to boost academy-industry cooperation. Istanbul has 7 TDZs, which are Ari Teknokent of Istanbul Technical University, Yildiz Teknopark of Yildiz Technical University, Istanbul Teknokent of Istanbul University, Bosphorus Teknopark of Bosphorus University, Teknopark Istanbul of Istanbul Commerce University, Istanbul Finans Teknopark of Boğaziçi University and Marmara Teknopark of Marmara University.

Why to launch your business in TDZs?

  • Revenues from R&D and software activities of R&D companies are exempt from corporate tax and income tax
  • Wages of researchers, software developers and R&D personnel working in the zone related to R&D projects are exempt from income taxes
  • 50% discount on Social Security Premium of Employees
  • Sales of application software produced in TDZs are exempt from VAT

Industrial infrastructure is at the top of Turkey’s economic development agenda. Turkish Government has taken a promoting and organizing role in industrialization instead of making industrial investments directly; and undertook investments in infrastructure and put great emphasis on energy, transportation and communication. In this context, Organized Industrial Zones (OIZs) are designed in a way that allow companies which provide goods and services to operate within approved boundaries with the necessary infrastructure, technoparks and social facilities. Basic objectives of OIZs are to allow more rational production for industrial firms that complement each other and encourage others’ production, working together under a certain program aligned with environmental regulations, to enable the relations among industries to grow easily and to establish a sound, inexpensive and reliable infrastructure and common social facilities.

There are 2 OIZs in the European Side of Istanbul, which are Beylikdüzü OIZ and İkitelli OIZ; 6 OIZs in the Asian Side, which are Dudullu OIZ, Tuzla OIZ, Birlik OIZ, Leather OIZ, Anatolian Side OIZ and Tuzla Chemical Industrialists OIZ.

Why to launch your business in OIZs?

  • VAT exemption for land acquisitions
  • Exemption from real estate duty for 5 years starting after the construction of the plant
  • Exemption from municipality tax for construction and usage of plant
  • Lower costs on utilities

Turkish Free Trade Zones (FTZs) are the areas specified by the Council of Ministers of Turkey within the political borders of Turkey but considered outside the customs borders, where all types of industrial, commercial and certain types of service activities are encouraged through certain tax exemptions and incentives. The objectives of FTZs are to increase export-oriented investment and production, to accelerate the inflow of foreign capital and technology, to procure the inputs of the economy in an economic and orderly fashion, and to increase the utilization of external finance and trade possibilities. There are 3 FTZs in Istanbul; 2 in European Side (Thrace FTZ and Ataturk Airport FTZ) and 1 in Asian Side (Industry & Trade FTZ).

  • Profit/capital transfer option without any tax to 3rd parties & countries
  • Exemption from customs duties & other related duties
  • Exemption from corporate income tax for manufacturing companies
  • Exemption from income tax on employees’ salaries
  • Exemption from VAT and special consumption tax
  • Goods can remain in free zones for an unlimited period