Taxation and Investment in Turkey
As part of Turkey’s 2023 vision, and as an important part of the country’s strategy for production and export-oriented growth strategy, Turkey has introduced the Investment Incentives System in the year 2012 for the purposes of boosting production and employment, encourage large scale and strategic investments, increase and facilitate the foreign direct investment, and to promote investments for the development of regional areas and environment protection.
This system categorizes investments to different types, and accordingly grants investments that fall under these categories different benefits and exemption, the types of investments that fall under this program is the General investments, Regional investments, Priority investments, Large-scale investments, and Strategic investment.
The responsible government entity which investors must consult and apply through in order to benefit from the Investment Incentives Scheme is the Ministry of Economy, Directorate of Incentive Implementation and Foreign Investment.
The following are the incentives components within this system which will apply to these types of investments;
- Value Added Tax (VAT) Exemptions: Investment machinery and equipment imported and/or locally provided will be exempted from the Value Added Tax.
- Customs Duty Exemption: As part of the investment incentives scheme, imported machinery and equipment imported exempt from customs duty.
- Tax Deduction: The government will provide reductions on corporate taxes in percentages ranging from 50% to 90% depending on the investment’s amount and location.
- Social Security Support; The Ministry of Economy will provide support for a period of up to 10 years for the employer and the employees' share of the social security premium.
- Employees income tax exemptions: Income tax for additional employment added to investments in certain locations will be exempt from withholding income tax.
- Interest rate support: The Ministry of Economy will pay a portion of the interest/profit share of the loans that were borrowed to finance certain investment types.
- Land Allocations: The Government will allocate lands for investments depending on the availability of lands situated in preferred areas by the investors.
- Value Added Tax (VAT) Refunds: Value Added Tax collected on the building & construction expenses made for the strategic investments will be rebated provided that the fixed investment amount is over 500 million TL.
Ministry of Trade in Turkey – Investment Incentives