THE GOVERNMENT INCENTIVES AND ASSISTANCE FOR INVESTMENTS IN TURKEY 29 April 2021

In case certain criteria of the investments made in Turkey are met, some government assistances are provided in order to encourage these investments. The scope of government assistances and incentives is basically determined within the framework of the "Decision No. 2012/3305 on Government Assistances in Investments" and "Communiqué on the Implementation of the Decision No. 2012/1 on Government Assistances in Investments". The purpose of these assistances is to reduce the current account deficit and imports, to support investments that will provide technological transformation, to support investments in less developed regions, and to reduce regional development disparities.

Within the scope of the specified legislation, the types of investments applied in the investments to be made in Turkey and the benefits they provide are as follows;

General Incentive System

Investment subjects that will not be encouraged regardless of the region and investments that are not included in the scope of other incentive practices and that meet the pre-determined minimum investment amount are included in the general incentive system.

Accordingly, as of 2020, the minimum fixed investment amount in the general incentive system;

1.000.000,00- Turkish lira in the I. and II. regions,
500.000,00- Turkish lira in the III., IV., V. and VI. regions.

Within the scope of the general incentive system; VAT exemption, customs exemption and income tax withholding support are applied.

Regional Incentive System

The regional incentive system aims to reduce the development gap between provinces. The assistances provided within the scope of certain regions aim to increase the production and export potential of these provinces. Assistance intensities are differentiated according to the development levels of the provinces in the regions. The criterion that determines the difference aforementioned has been determined by considering the potential and economic size of the provinces in question.

Turkey is divided into 6 regions according to the regional incentive system. Accordingly, although it differs for each region; VAT exemption, customs tax exemption, corporate tax deduction, investment location allocation, employer's national insurance contribution support and loan interest support are applied.

Priority Investments

Within the scope of the legislation, certain investment subjects have been determined as priority investment, and investments made in these areas benefit from the 5th Region Investment Supports. Accordingly, investments made in subjects listed in the legislation such as the production of high-tech products, energy efficiency, elderly disabled care centers are considered as priority investment subjects and are supported within the scope of the 5th Region.

Strategic Investments

According to the incentive legislation, the following investments are considered as strategic investments:

Investments over 50.000.000,00- Turkish Liras
Investments where total in-country production capacity is less than imports
Investments with a minimum value of 40%
Investments with a total import amount of more than 50.000.000,00- USD in the last year

In addition, investments deemed appropriate by the Ministry to be supported as strategic investments within the scope of the Technology Oriented Industry Move Program are considered as strategic investments without seeking the above criteria.

Supports such as VAT Exemption, customs tax exemption, tax deductions, employer's national insurance contribution support, investment location allocation, VAT refund, insurance premium and income tax withholding support are provided if the mentioned criteria are met.

Publications

This website and the information herein has been designed in accordance with the Professional Rules of the Union of the Turkish Bars Association and in particular the regulations prohibiting advertisement by attorneys at law. All material included in the Kasaroğlu Web Site is for informational purposes only and Kasaroğlu Law Office expressly disclaims all liability to any person in respect of anything and in respect of consequences of anything done in reliance upon the whole or any part of the contents of the Kasaroğlu Web site. Transmission of this information is not intended to create and receipt does not constitute an attorney-client relationship between Kasaroğlu and the user or browser. No client or other reader should act or not refrain from acting on the basis of any matter contained in the Kasaroğlu site without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue. Kasaroğlu is not responsible for any third party contents which can be accessed through the web site.

The solution partner of Kasaroglu Law Office which provides extensive services in the field of Merging & Acquisation is “Kasaroğlu Uluslararası Danışmanlık Hizmetleri A.Ş." with its significant expertise and experience in this area.