New investment incentives in Turkey

General investment incentives

General investment incentives are independent of geographical region. Any kind of investment that meets the conditions set out by the incentives regulations, such as specific capacity and the minimum fixed investment amount, will be supported under the general investment incentives program. The investment areas which are excluded from the incentives program cannot benefit from this program.

The amount of minimum fixed investment is TL 1 million in Regions 1 and 2 and TL 500,000 in Regions 3, 4, 5 and 6.

The major incentive instruments are: exemption from customs duties; customs tax exemption for imported machinery and equipment for projects with an incentive certificate; VAT exemption; and VAT exemption for locally purchased or imported machinery and equipment for projects with an incentive certificate.

Regional investment incentives

When formulating this incentives program, government specialists focused on the needs of the regions as well the special needs of each industry in each region. Industries that will be supported in each specific incentive region are determined in line with the needs and outstanding potentials of each incentive regions.

The amount of minimum fixed investment is defined separately for each industry and each region, the lowest amount being TL 1 million in Regions 1 and 2 and TL 500,000 in Regions 3, 4, 5 and 6.

Specific priority is given for investment in the following industries: Tourism investments in cultural and touristic preservation and development regions determined by the Council of Ministers' decree; mining investments; railroad and maritime transportation investments; specific pharmaceutical investments with minimum investment amount of TL 20 million; defense industry investments with minimum investment amount of TL 20 million; test facilities, wind tunnel and similar investments made for automotive; primary, middle and high school investments by private entities; international trade fair investments based on a minimum of 50,000 square meters indoor area; and investments made to produce products developed by an R&D project supported by the Ministry of Science, Industry and Technology.

Large scale investment incentives

12 investment categories are supported by the measures of the large-scale investment incentive program. (Please do not hesitate to ask questions regarding the details). The following categories of investments within the regional and large-scale investment incentives programs will be considered to be one level above regional rates and terms: investments in organized industrial zones and joint investments to be made by at least five companies operating in the same industry with the purpose of integrating these companies horizontally or vertically to this joint investment.

Strategic investment incentive program

Investments that meet the below criteria are supported within the frame of the strategic investment incentive program: to be made for production of intermediate and final goods with high import dependence and of these goods more than 50 percent are supplied by imports; to have a minimum investment amount of TL 50 million; to create minimum added value of 40 percent to the industry and to have an import of at least $50 million for goods to be produced in the last one year period (This condition is not applicable to goods with no domestic production).

On Wednesday I will continue with the support measures that are available.

NOTE: Berk Çektir is a Turkish lawyer and available to answer questions on the legal aspects of living and doing business in Turkey. Please kindly send inquiries to b.cektir@todayszaman.com. If a sender's letter is published, names may be disclosed unless otherwise is expressly stated by the sender.

DISCLAIMER: The information provided here is intended to give basic legal information. You should get legal assistance from a licensed attorney at law while conducting legal transactions and not rely solely on the information in this column.