Turkey attracts investors from many different nationalities all around the world. The biggest reason for this is the positive discriminatory features that it has. These features are a highly skilled workforce, its geopolitical position, its ability to accommodate people of many different nationalities, and its developing economy. Turkey also provides many investment incentive support to foreign investors.
Investment Incentives in Turkey
Turkey is a country that offers many conveniences to investors in terms of investment. Investment incentives are categorized under four subheadings. These are general investment incentive executions that include taxes exemption in the purchase of machinery and equipment regardless of the investment region; regional investment incentive executions that offer high incentives for investment in less developed regions; project-based investment incentive applications that have incentives in areas of critical importance for Turkey, and strategic investment incentive executions that include high incentives in areas with high import rates.
General Investment Incentives Scheme
- VAT exemption
- Custom duty exemption
Regional Investment Incentives Scheme
- VAT exemption
- Custom duty exemption
- Tax deduction
- Insurance premium employer share support
- Allocation of investment places
- Interest support
Strategic Investment Incentives Scheme
- VAT exemption
- Custom duty exemption
- Tax deduction
- Insurance premium employer share support
- Allocation of investment places
- Interest support
- VAT refund
Project-Based Investment Incentives
- VAT exemption
- Custom duty exemption
- Tax deduction
- Grand support
- Insurance premium employer share support
- Allocation of investment places
- Income tax withholding support
- Qualified personnel support
- Energy support
- Interest rate support
- Fund contribution
- Infrastructure support
- Purchase guarantee
- VAT refund
- Ease in permit and license processes
Check out: Incentives Provided for Foreign Investors in Turkey
Reasons to Invest in Turkey
Turkey has become a country that has managed to attract more and more attention from investors every day. The reasons for this can be listed as the geopolitical position of the country, its social presence, its exchange rate value, and its young population. Because it has its own unique culture, difficulties may be encountered by investors at first. However, Turkey is still able to offer international standards to investors in the matter of investment.
Turkey is a country with many different options in terms of investment incentives. It is possible to make numerous investments in many different sectors and many different cities. Turkey is different from the incentive opportunities offered by other countries in terms of the opportunities listed below:
- A reformist economy
- The density of the young population
- Proficient and competitive hands
- An inexhaustible and liberal economic habitat
- Active and mature infrastructure
- Strategic location
- Europe’s largest power plant and terminal areas
- Low rate of taxes and investment incentives
- Membership in the European Customs Union
- Enormous internal markets
Which Sectors to Invest in Turkey
1. Agriculture
Turkey is known as one of the world’s leading countries in the field of agriculture with its favorable geographical conditions and climate, agricultural lands, and water resources. Turkey is the world’s 10th largest agricultural producer. It is also the world leader in the production of dried figs, hazelnuts, quince, and dried apricots. Additionally, Turkey also offers significant investment opportunities in sub-sectors of the agricultural industry such as greenhouse production, animal and vegetable proteins, seed, and aquaculture.
According to the data of the Turkish Ministry of Agriculture and Forestry, the increase in Turkey’s agricultural product exports between 2002 and 2020 was 408%. In addition, the average annual growth rate in the agricultural sector in Turkey between 2003 and 2020 is 2.5%. Between 2002 and 2018, Turkey’s livestock and aquaculture exports increased 7.3 times. With these and many similar features, Turkey is a very convenient country for agricultural investments.
2. Energy
In recent years, Turkey has been one of the fastest-growing energy markets in parallel with economic growth. There are many targets for the energy sector in Turkey for 2023. These include goals such as establishing an energy Exchange, increasing the share of renewable energy to 30%, and making full use of water energy. According to OECD data, Turkey’s annual growth rate of the energy sector has been 5.5% since 2002; which is recorded as ‘the fastest growth’ in the OECD. In this regard, Turkey is also a suitable country for investments in terms of the energy sector.
3. Telecommunication
One of the sectors most convenient for investment in Turkey is the telecommunication industry. Day by day, there are major developments in the fields of mobile and fixed broadband subscriptions. Investors have many initiatives in the field of telecommunication. In this industry, Turkey also has objectives such as developing the satellite sector and supporting data centers. According to the sector report for 2020, the size of the industry adjusted for the effects of inflation in 2020 is at the level of 15.27 billion Turkish liras. In this respect, telecommunication is a sector that is convenient to invest in.
4. Textile
The textile sector has a long and deep-rooted history. With the accompanying developments in technology, the demand for textiles has increased considerably. This means both employment, export, and investment incentives for Turkey. The textile sector, which is intertwined with the industry and agriculture sectors due to the materials used, is an area that has managed to attract the attention of many investors. In terms of regional investments, the rate of support received increases when investments are made in priority regions. For example, as of 2020, the amount of investment made in the 6th region, which includes Adıyaman, Ağrı, Ardahan, Batman, Bingöl, Bitlis, Diyarbakır, Hakkari, Iğdır, Kars, Mardin, Muş, Siirt, Şanlıurfa, Şırnak and Van, in the ready-made clothing sectors has exceeded 2.7 billion Turkish liras.
5. Automotive
The automotive sector is one of the most valuable sectors receiving investment in Turkey. Turkey has been transitioning from assembly density to design and large production capacity in recent years. According to the data of the Turkish Automobile Joint Venture Group, there is a significant increase in the automotive sector. In 2018, vehicle production exceeded 1.5 million, increasing almost 5 times. The total amount of investments made by global brands in the Turkish automotive industry since 2000 is 15 billion USD. In addition, Turkey ranks 5th in the European automotive production list. 30 of the top 50 global suppliers have production facilities in Turkey. With these aspects, automotive continues to be a sector that attracts the attention of investors.
6. Real Estate
Turkey is a country that attracts the attention of real estate investors due to its geographical location. The total house sales in Turkey between the years 2015-2020 is 8.3 million. Class A Office supply in İstanbul in 2020 is 5.6 million square meters. 13.6 million square meters is the active gross leasable area size in shopping centers across Turkey in 2020. In addition to these, Turkey is also active in terms of logistics real estate. The total logistic real estate stock in İstanbul and Kocaeli provinces in 2020 is 10.2 million square meters. The development of transportation channels leads to the revival of the real estate market. From this perspective, Istanbul is stated as the city where the most real estate investments are made.