Turkey’s investment incentive system changed completely on 30 May 2025. The decision that had governed it for thirteen years was repealed and replaced, and the general incentive scheme was abolished. An investment must now fall within one of the defined programmes to qualify for a certificate at all, and meeting the criteria is no longer sufficient on its own — applications compete for limited quotas.
A second measure introduced in the same period directly affects what the incentives are worth: a domestic minimum corporate tax. Corporate tax cannot fall below 10% of the profit before deductions and exemptions. That caps the practical benefit of several of the reliefs below and makes the arithmetic something to run before applying, not afterwards.
The New Investment Incentive System
The new system rests on two pillars. The former division into general, regional, priority and strategic incentives no longer exists.
| Structure | Scope |
|---|---|
| National development initiative | Three programmes covering technology, local development and strategic investment. Research and development, high technology and sustainable investments are prioritised. The strategic programme requires a minimum fixed investment of TRY 50 million |
| Sectoral incentive system | Priority investments and target investments, supporting production in strategic sectors |
| Regional supports | The six-region structure was retained and the supports simplified. Provinces in the earthquake zone continue to receive the supports available in the sixth region |
Under the previous system, an investment that fell outside the defined categories could still obtain at least customs duty and value added tax exemptions through the general scheme. That route is closed. A certificate now requires the investment to fall within the sectoral incentive system or one of the national development programmes.
The system has also become call-based and competitive. Satisfying the criteria is no longer enough to obtain a certificate; projects compete for limited quotas, which makes the quality of the application itself a determining factor rather than a formality.
Minimum fixed investment amounts
Where no specific figure is set, the minimum fixed investment is TRY 12 million in the first and second regions and TRY 6 million in the others. Under the previous system these were TRY 1 million and TRY 500,000 respectively. The monetary thresholds are indexed to the revaluation rate and increase annually; the current limits apply to applications made from the start of the year. Existing certificates are unaffected and continue under their original limits.
Support instruments
- Customs duty exemption
- Value added tax exemption
- Value added tax refund
- Reduced corporate tax
- Employer’s social security premium support
- Employee’s social security premium support
- Interest or profit share support
- Allocation of investment land
- Qualified personnel support
- Machinery support
Machinery support is new and had no equivalent under the previous decision: on request, part of the price of machinery and equipment with a unit price at or above TRY 2 million is paid to the investor from the budget. Employer’s social security premium support runs for twelve years in the sixth region and eight years elsewhere for investments within the national development programmes.
Certificates issued under the previous decisions continue to be applied under their own legislation. Machinery and equipment within the scope of an old certificate cannot, however, be transferred to a certificate issued under the new decision. Companies with an investment already under way that are considering moving to the new system need to factor that restriction in.
The Domestic Minimum Corporate Tax: A Ceiling on Every Incentive
This is the heading an incentives page needs and most do not have. Corporate tax computed cannot be less than 10% of corporate income before deductions and exemptions. In practice that means reduced corporate tax, the technology development zone exemption, the free zone exemption and the other reliefs cannot bring the tax to zero.
The practical benefit of an incentive can therefore be lower than the headline reduction suggests. Exceptions exist — the minimum tax does not apply for the first three accounting periods of a newly established company, for instance — but the calculation belongs before the application rather than after it. For groups whose consolidated revenue exceeds the relevant threshold, the global minimum top-up tax applies as a further limit on the value of local incentives.
Research, Development and Design Incentives
These supports sit outside the investment incentive system and were not affected by the 2025 change.
| Support | Scope |
|---|---|
| Research, development and design deduction | Eligible expenditure is deducted from corporate income a second time, in addition to its normal deduction |
| Income tax withholding incentive | Part of the tax computed on personnel salaries is cancelled; the proportion depends on the employee’s qualifications and is highest for staff with a doctorate or a master’s degree in the basic sciences |
| Employer’s social security premium support | Half of the employer’s share is met from the ministry budget |
| Stamp duty exemption | Documents relating to research, development and design activities |
| Customs duty exemption | Goods imported within the scope of research, development and design projects |
Where the deduction or exemption claimed on the annual return exceeds a set threshold, part of that amount must be transferred to a temporary account under equity and used as venture capital. To the extent the transfer is not made, the deduction or exemption is not available.
The condition applies both to the research and development deduction and to the technology development zone exemption, it operates at the filing stage rather than at year end, and overlooking it results directly in losing part of the relief. The threshold and the proportion are set in legislation and should be confirmed for the period concerned.
Technology Development Zones
Profits from software, design and research and development activities carried on in a technology development zone are exempt from corporate tax. Salaries of research, development, design and support personnel working in the zone are exempt from income tax, with a ratio limit applying to the number of support staff. Deliveries of software, games and similar products produced in the zone are exempt from value added tax.
The exemption runs to a date set in legislation and has been extended periodically. A ratio limit also applies to remote working: the effect of time spent outside the zone on the exemption has to be assessed separately. As with the research and development deduction, the venture capital transfer condition applies here too.
Free Zones
Profits earned by manufacturers in free zones from the sale of the products they manufacture were exempt from corporate tax. From 1 January 2025 the exemption applies only to export revenue; profit from sales into the domestic market falls outside it.
The change directly increased the effective tax burden of free zone manufacturers selling a significant share of their output within Turkey, and it alters the case for remaining in the zone. Operating licences are issued by the Ministry of Trade — the reference to a Ministry of Economy still found in many guides has been out of date since 2018.
An exemption also applies to the salaries of personnel employed in the zone, conditional on a stated proportion of the products manufactured being exported. Movements of goods between Turkey and the free zones are treated as imports or exports.
Other Corporate Tax Advantages
| Advantage | Scope |
|---|---|
| Rate reduction on export income | The corporate tax rate is applied 5 points lower to income derived from exports |
| Rate reduction on manufacturing income | A 1 point reduction on income from manufacturing activity, for companies holding an industrial registry certificate and actually manufacturing |
| Deduction for exported services | 80% of income from software, engineering, design, data storage and similar services rendered to non-residents may be deducted, provided the whole amount is transferred to Turkey by the corporate tax return filing deadline |
| Foreign construction and repair exemption | Income from construction, repair, assembly and technical services carried out abroad and brought into the accounts in Turkey is exempt; correspondingly, losses from those activities cannot be set against domestic income |
| Credit for foreign tax | Tax paid abroad is credited, capped at the Turkish tax on the same income; the unused portion carries forward to the end of the third following accounting period. The tax must be evidenced by documents obtained from the competent authorities of that country and certified by a Turkish consulate |
Common Mistakes
- Planning against the repealed system. The previous decision was repealed on 30 May 2025 and the general incentive scheme abolished.
- Using the old minimum investment figures. TRY 12 million in the first and second regions and TRY 6 million elsewhere, and the thresholds rise annually.
- Ignoring the domestic minimum corporate tax. The practical benefit of an incentive can be lower than the headline reduction.
- Treating domestic free zone sales as exempt. From 2025 the exemption applies only to export revenue.
- Overlooking the venture capital transfer condition. Where the threshold is exceeded and no transfer is made, part of the relief is lost.
- Trying to move machinery from an old certificate to a new one. Transfer is not permitted.
- Deducting foreign construction losses against domestic income. Losses relating to exempt income cannot be deducted.
Frequently Asked Questions
Has the investment incentive system in Turkey changed?
Is the general incentive scheme still available?
What is the minimum fixed investment amount?
What happens to existing investment incentive certificates?
Does the domestic minimum corporate tax affect incentives?
Has the free zone corporate tax exemption changed?
What is the venture capital transfer condition in technology development zones?
Can tax paid abroad be credited in Turkey?
As the Ozbek CPA team, we advise on investment incentives and corporate tax advantages in Turkey — identifying the right programme under the new system, preparing the certificate application, modelling reduced corporate tax together with the domestic minimum tax, monitoring the conditions attached to the research and development and technology zone exemptions, the venture capital transfer obligation, and crediting tax paid abroad. Contact us.
