Investment Incentives in Turkey | From A to Z

Many investment incentives in Turkey are being addressed constantly, in order to significantly increase the appetite of foreign investors to the Turkish economy. Turkey aims to become, over the next few years, at the forefront of the most attractive countries for foreign investment projects.

The Turkish government is seeking to attract more foreign investors to its markets, through various forms of incentives. Firstly, by issuing series of laws and comfortable measures for many types of taxes in Turkey. Secondly, similar measures related to social security matters. Thirdly, by interest rates and a number of other economic elements.

Major Investment Incentives Provided to Investors by the Turkish Government

1. Exemption from some customs duties

The foreign investor in Turkey, dealing with machinery and equipment, enjoys complete exemption from value-added tax fees for local and international sales. Moreover, obtains the same exemption from customs duties, if such equipment is purchased from abroad.

2. Reducing investor taxes in Turkey

The higher the investment rate in Turkey, the lower the taxes for the foreign investor, depending on the total fixed investment amount.

3. Supporting social insurance in Turkey

According to the investment incentives program in Turkey, special measurements were provided to investors in 6 regions. Subsequently, each region includes several Turkish states throughout the country.

In other words, in these 6 regions, investment incentives include bearing the workers’ share of the installments of the Social Insurance Institution by the government in Turkey. Certainly, after calculating the legal minimum wage for the worker, paid by the foreign investor.

The state’s policy of subsidizing social insurance premiums applies to the minimum wage in Turkey, and the subsidy period extends up to 10 years.

4. Exempting Investors from income tax in Turkey

According to the same system, the six regions also enjoy exemption from income tax, without a higher limit for income tax deduction.

5. Interest rate

To support the interest rate, Turkey allows a repayment period of up to 5 years. The investor may receive financing support that includes one or more loans. Subsequently, through that, he can cover the costs of his project by up to 70%.

The state also assists the investor by introducing the lands allocated for investment, within convenient areas, in accordance with the regulations of the Ministry of Finance.

6. VAT Facilities in Turkey

The Turkish state grants a special facility to return the VAT amount, resulting from construction fees, for any investment exceeding the minimum amount of 500 million Turkish Liras.

7. The Successful Turkish Economy

Most importantly, what would encourage foreign investors to invest in Turkey, is the stability and sustainability of the Turkish economy internationally.

In recent years, the Turkish economy’s GDP has increased nearly three times over what it was 19 years ago.

The progression of the economic growth index in Turkey is also quite stable. Thus, Turkey jumped to the forefront among the top ten economies in the European Union.

8. Infrastructure in Turkey

Turkey’s infrastructure has a positive impact on investors. Above all, it provides comfort and conveniency in terms of transportation facilities of all kinds.

The investor can choose to transport goods by different means. For example, through the marine and railway facilities. Moreover, Turkey has continuous working hours through those facilities, at a low cost.

In Turkey, the investor’s goods can be shipped to most of the European Union countries, east and west, in addition to hundreds of other global destinations.

Likewise, the primary energy transport sector from Turkey to Europe plays an important role. Indeed, Turkey maintains more than 70% of the primary energy reserves in the world.

Turkey is a link and distribution point for several important destinations around the world, in terms of energy consumption. Indeed, the European Union is on top of those beneficiaries.

9- Real estate residency permit in Turkey

Most foreign investors rush to own one property at least in Turkey. Consequently, it authorizes the owner to obtain a real estate residence permit in Turkey, which has several benefits, including:

The preference for obtaining and renewing real estate residency, compared to its tourist counterpart.
Its renewal period extends for two years.
The family of the real estate investor as well can obtain family residency in Turkey by default.

10. Supporting Scientific Research in Turkey

According to the Research and Development Law, investment projects that involve scientific research and development enjoy major preferential advantages, including:

Deduction of 100% of research and development expenditures from the tax base, if the number of researchers exceeds 500.
Consequently, the investor gets another discount. It includes half of the increase in research and development expenditures recorded during the operational year, compared to its equivalent for the previous year.
Every employee is exempted from income tax.
Every employee is exempted from 50 percent of social insurance premiums.
Required documents are exempted from stamping fees, as per Turkish law, for specific benefits.
Turkey provides the investor with financial support of up to 100,000 Turkish liras, as part of the technology initiative for new scientists.
In addition, some funds granted by governmental bodies and international organizations are deducted from the tax base.

Special Incentive Programs Supporting Investment in Turkey

As mentioned above, Turkey grants the investor encouraging incentive programs, relevant to a number of sectors and regions. These programs are divided into:

Public investment incentives program.
Regional investment incentives program.
Extensive investment incentive program.
Incentive programs for strategic investment

In the same context, 6 regions in the Turkish states are approved and classified according to Turkish law. Whereas, the minimum fixed value of the investment is 1,000,000 TL in regions No. 1 and 2, and 500.000 TL in regions No. 3, 4, 5 and 6.

Subsequently, Turkey offers various incentives to Arab and foreign investors wishing to invest in these six regions. For example, in both, the public investment incentives and the regional investment incentive programs, all investors are exempted from customs fees and value-added taxes.

In a related context, the government supports 12 investment fields in the technology, research and development sector. Consequently, the investor benefits from tax cuts and social insurance support. Similarly, the investor has to commit to a comprehensive partnership in joint investments between several companies of the same sector. Moreover, can include companies from a specific region of the six regions, and benefit from lower taxes in another region.

Likewise, he can invest in a different region, and get an additional 5% investment contribution.

In the incentives program for strategic investment, certain limitations should be observed; For example, if the capacity of the product prepared for manufacturing is less than the imported product, and the investment value is more than 50 million Turkish liras, accordingly, the government support is provided.

Source: New Turk Post.

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