Turkey offers a lot of opportunities for foreign investors with the country’s low operating costs, local manufacturers, unpenetrated markets and high consumer spending. There are also other benefits such as the right to paying no double taxation, if you are a foreign investor in Turkey you only pay taxes in Turkey, not in your home country, transferring your earnings in Turkey to abroad freely, and the right to acquire Turkish citizenship, if you made $500 K fixed capital investment in Turkey, then you have a right to obtain your Turkish citizenship.
Since January 1, 2012, a new investment incentives system is in effect aiming to boost development in Turkey. The main goals of the incentive system are to increase increase production and employment, to steer investments to large scale, to minimize regional development discrepancies and to reduce dependency on import of intermediate goods. In order to benefit from the incentives granted to foreign investors, you need to obtain the Investment Incentive Certificate (IIC). Since 2018, Ministry of Trade is responsible for the execution of the investment incentives system.
Investment incentives system comprised of five different schemes:
1-) General Investment Incentives Scheme
2-) Regional Investment Incentives Scheme
3-) Priority Investment Incentive Scheme
4-) Large-Scale Investment Incentives Scheme
5-) Strategic Investment Incentives Scheme
Offers of Turkish investment incentives system are as follows:
VAT (Value Added Tax) Exemption
VAT (value added tax) is exempt for imported or domestically supplied machinery and equipment within the scope of investment incentive certificate.
Customs Duty Exemption
Customs duty is exempt for imported machinery and equipment within the scope of the investment incentive certificate.
Tax Reduction
Investments made within the scope of investment incentive certificate are subject to the reduction of corporate income tax. Income tax is deduced up to the point where reduced tax amount reaches the amount of contribution to the investment.
Social Security Premium Support (Employer’s Share and Employee’s Share)
The investment incentive certificate also provides foreigners social security premium support for both the employer’s and employee’s share. Employer’s share of the social security premium corresponding to legal minimum wage is covered by the government for additional employment created by the employer. Accordingly, for additional employment created by the employer, employee’s share of social security premium corresponding to legal minimum wage is also covered by the government.
Interest Rate Support
Interest support is financial support provided for loans with a term of at least one year obtained within the scope of investment incentive certificate. This support can also be reimbursed for a maximum of five years if justified by the government.
Land Allocation
Investors with an investment incentive certificate can also allocate land for operating investments. Depending on the availability of the land, the allocation is made by the Ministry of Finance.
VAT Refund
VAT (value added tax) collected by building and construction for strategic investments with a fixed investment amount of TRY 500 million may refund. Completion of the entire investment is not needed for the refund.
Income Tax Withholding Allowance
Income tax for additional employment created by the investment will not be subject to withholding taxes under investment incentive certificate.
For more and detailed information about incentives provided for foreign investors in Turkey, you can check Grants and Incentives page.