The general investment incentives in Turkey are customs duty exemption and VAT (value added tax) exemptions. In addition to these there are many different types of incentives provided to foreign companies which makes Turkey an optimal place for foreign start-ups and investments.
There are regional, strategic and project-based investment incentives. Every type of incentive has different deals and contents. In almost all incentive types there are customs duty and VAT exceptions. There are also incentives containing cash support, social security support, land allocation and many other privileges.
In addition to above mentioned incentives there are employment, R&D and design, regional management center and export incentives.
What is a State Incentive?
State incentives are government-implemented incentive policies aimed to encourage foreign investors into the domestic market or to promote expansion of existing businesses. Investment incentives encompass creating an environment that enables foreign businesses to operate profitably and decreases risks.
The incentive and support can vary in the light of the amount of investment, the region, type and industry.
What are Employment Incentives?
Employment incentives are tax exemptions for employment and personnel training. The main employment incentives are social security premium support and training support.
Social security premium support is for employee’s share. The employee’s share of the social security premium calculated on the basis of the legal minimum wage for employment will be covered by the government.
As for training support, daily expenses and eligible training costs will be covered by İŞKUR. İŞKUR is a governmental entity under the Ministry of Labor and Social Security which has different properties including providing different types of employment incentives.
What are R&D and Design Incentives?
R&D and design incentives are provided in different areas of development, there are many tax exemptions as well as social security premium support, cash support and technology development zone incentives.
The main tax exemptions and supports are VAT exemption, income tax withholding support, stamp duty exemption, customs duty exemption, corporate tax exemption and social security premium support. At the same time R&D and design expenditures are wholly deductible from the corporate tax base.
Some of the R&D design investment can also be eligible for cash support. Eligible expenditures are partially rebated by an institution providing support after the expenditures are paid. TÜBİTAK is one of these institutions. The Scientific and Technological Research Council of Turkey (TÜBİTAK) is the leading agency for management, funding and conduct of research in Turkey. TÜBİTAK funds research projects carried out in universities and other public and private organizations, conducts research on strategic areas, develops support programs for public and private sectors.
What are Regional Management Center Incentives?
Regional management center incentives are tax advantages for international companies that move their regional management centers to Turkey. Income tax withholding support and stamp duty exemptions are the main incentives in this regard. The regional incentives vary for each region. Turkey is divided into 6 regions and undeveloped regions are provided with more support such as land allocation, interest rate support, social security premium support etc.
What are Export Incentives?
Export incentives are free zone incentives, export support instruments by the Ministry of Trade, and Eximbank supports. Mainly we see design supports, incentives for service exports, support of market entry certificates and global supply chain support.
Free Zones offer tax benefits especially for export-oriented investments. VAT exemption, customs duty exemption, income tax withholding support, corporate tax exemption, special consumption tax exemption, property tax exemption and stamp duty exemption is provided for investments. Currently there are 19 free zones outside of the customs border of Turkey for the activities of export-oriented companies.
Ministry of Trade provides tax exemptions such as VAT, sustoms uuty, special consumption tax and stamp duty exemptions and cash support in order to increase Turkey’s exports.
Eximbank support is credit support. Credit opportunities with reduced rates are provided to investors to improve exportation.