Capital contributions by local and foreign investors are strongly encouraged through a wide range of investment incentives in Turkey. This comprehensive incentive structure is continuously updated to attract investments in manufacturing, services, energy, exports, and other strategic sectors. Our firm offers expert consultancy for companies aiming to invest in Turkey by setting up a local entity and benefiting from applicable investment incentives in Turkey.
There are many compelling reasons why investors are turning to Turkey:
- Young, dynamic population
- Competitive, well-trained labour force
- Strategic location as a transit bridge between East and West
- Rapidly growing economy
- Ease of doing business
- New foreign investment regulations
- Customs Union with the European Union
- Diverse investment incentives in Turkey across industries
Investment Incentives in Turkey
The government of Turkey provides an extensive set of investment incentives aimed at reducing the cost burden and supporting sustainable growth. These investment incentives in Turkey apply to both domestic and foreign investors, depending on the investment type, location, and sector.
VAT Exemption
VAT is exempt for imported and/or domestically delivered machinery and equipment within the scope of the investment incentive certificate.
Customs Duty Exemption
Import duties are waived for machinery and equipment directly related to the investment, helping reduce upfront capital costs under the investment incentives in Turkey framework.
Tax Reduction
Investors benefit from reduced corporate or income tax rates until the calculated benefit equals the state’s contribution to the investment.
Social Security Premium Support (Employee’s Share)
One of the most impactful investment incentives in Turkey is the state’s coverage of the employee’s share of social security premiums for new hires.
Social Security Premium Support (Employer’s Share)
For additional employment created by the investment, the employer’s share of the social security premium calculated on the basis of the legal minimum wage will be covered by the government.
Income Tax Withholding Allowance
The income tax in regards to additional employment created by the investment, within the scope of the investment incentive certificate, will not be liable to withholding taxes.
Interest Payment Support
Interest payment support is a financial support instrument provided for investment loans with a term of at least one year obtained within the scope of an investment incentive certificate. A portion of the interest/profit share regarding the loan equivalent, at most 70 percent of the fixed investment amount registered in the investment incentive certificate, will be covered by the government.
Land Allocation
Land may be allocated for investments, with an investment incentive certificate, in accordance with the rules and principles determined by the Ministry of Finance.
VAT Refund
VAT collected on construction expenses, made within the scope of strategic investments with a minimum fixed investment amount of 500 million TL, will be rebated.
Reseach & Development Support
In addition to general investment incentives in Turkey, R&D activities benefit from their own incentives under the R&D Law. If a minimum of 50 personnel are employed in an R&D center, the following apply:
- 100 percent deduction of R&D expenditure from the tax base if the number of researchers exceeds 500, then in addition to the 100 percent deduction, half of the R&D expenditure increase incurred in the operational year compared to the previous year will also be deducted
- Income withholding tax exemption for employees (this item will be effective until December 31, 2023)
- 50 percent of social security premium exemption for employers for a period of 5 years
- Stamp duty exemption for applicable documents
- Techno-initiative capital for new scientists up to 100,000 TL
- Deduction from the tax base of certain funds granted by public bodies and international organizations
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Conclusion
Turkey offers a wide range of investment incentives that make it an attractive destination for both local and foreign investors. Taking advantage of these supports requires careful planning and up-to-date knowledge.
Contact us today to learn how your business can benefit from investment incentives in Turkey.
