In Turkey, companies investing in renewable energy projects and Public–Private Partnership (PPP) projects may benefit from partial corporate income tax exemptions on profits earned during specific periods.
These incentives are designed to encourage private-sector participation in large-scale public investments and to support strategic projects in key sectors.
Conditions for the Exemption
- PPP Agreement with a Public Authority
The project must be carried out under a Public–Private Partnership agreement concluded with a relevant public institution. - Eligible Project Scope
The project must involve the construction, renovation, financing, or operation of facilities in the following sectors:- Energy (particularly renewable energy),
- Transportation,
- Infrastructure,
- Healthcare.
- Relevant Income Period
The exemption applies to income generated during the investment phase or the operational period as specified in the project contract. - Special Tax Treatment of Certain Revenues
Revenues such as state guarantees, availability payments, or lease/service fees are subject to project-specific tax regulations.
Application and Explanation
These tax exemptions aim to channel private capital into public services and infrastructure projects.
Projects such as renewable energy power plants, city hospitals, highways, bridges, tunnels, and airports commonly fall within this scope.
Depending on the contractual structure, investor companies may:
- Apply a tax exemption to a portion of their operating profits, or
- Exclude financing-related income earned during the investment phase from corporate taxation.
The scope, duration, and exemption rate are determined individually for each project, based on the provisions of the relevant PPP agreement.
Therefore, tax treatment may vary significantly from one PPP or renewable energy project to another.
A private company signs a 25-year agreement with the Ministry of Energy to develop and operate a solar power plant.
During the construction phase, financing-related income is exempt from corporate income tax.
During the operational phase, profits are taxed after applying a partial exemption (for example, 50%) as stipulated in the contract.
Legal Framework
These exemptions are regulated under various special laws, including the Renewable Energy Law and Public–Private Partnership legislation, and are applied in line with the general exemption system of the Turkish Corporate Tax Law.
The primary objective is to support sustainable energy investments and ensure the successful implementation of strategic public infrastructure projects in Turkey.
For professional support on renewable energy investments, PPP project structuring, contract-based tax exemptions, and incentive planning in Turkey, contact ÖzbekCPA.
