On 4 June 2009 the Turkish Government announced a new incentive
plan for investments in Turkey. This plan has been jointly prepared
by the Turkish Treasury, Ministry of Finance and Ministry of
Industry and Commerce. The Turkish Cabinet's decision
regulating the general principles and procedures for the incentive
plan was published on 16 July 2009.
We set out below a general summary of the incentives that will
be applied. Please contact us if you need more details on the
1. What types of investment can benefit from the incentive
The plan sets out certain incentives which apply to
"large-scale" investments in certain sectors, and other
incentives which apply on a regional/sector-specific basis.
(a) "Large-scale" investments
Investments as set out in the table below are
"large-scale" investments under the incentive plan:
(b) Regional/sector-specific investments
The plan divides Turkey up into four geographical regions which
will benefit from different sector-specific incentives:
2. What are the investment incentives?
The following investment incentives apply:
(a) Discounted corporation tax or personal income
tax: The incentive plan sets out the following discounts
on corporation tax (which is normally 20 per cent) or personal
income tax for companies/people who hold an investment incentive
certificate from the Treasury, based on the type of investment
However, if the investment is made before 31December 2010, the
following corporation tax or personal income tax discount amounts
The discounts in corporation tax or personal income tax will
apply only until the profits of the investor company/person reach a
certain defined threshold (which is determined by calculating the
amount equal to the "investment contribution percentage"
of the total investment amount and then dividing this by the
reduced corporation tax percentage to be applied).
(b) Treasury will pay social security contributions for
The Turkish Treasury will pay the social security contributions
that employers must make for their employees for the following
time-periods based on the type of investment:
(c) Treasury loan interest support Research and
development investments; environmental investments; and
regional/sector-specific investments in Regions 3 and 4 can benefit
from this support. If the Treasury gives such an investment an
investment incentive certificate, the Treasury may then decide to
pay some of the interest that accrues on 70 per cent of the value
of the relevant investment. The interest support depends on the
type of investment and type of loan, but the maximum amount of
interest support cannot exceed TL300,000 for research and
development investments and environmental investments; and
TL500,000 for regional/sector-specific investments in Regions 3 and
(d) Land provided by the Treasury for investment in
The Turkish Government has stated under the plan that it will
"assign lands for their investments".
(e) Relocation tax support to textile
work in the textile sectors (including textile
"confection", "ready-to-wear", leather and
employ a minimum of 50 employees; and
agree to resettle from Region 1 or 2 to Region 4 before 31
will benefit from the following investment incentives:
75 per cent discounted corporation tax or personal income tax
for five years;
the Government may grant land for investment;
the Turkish Treasury will pay the social security contributions
that employers must make for their employees for five years;
the Turkish Treasury will pay the transport costs for companies
moving to Region 4 if they move before the end of 2009.
3. Incentives which apply to all other types of
investment (excluding the above)
The following incentives will continue to apply to all other
types of investment in Turkey:
customs tax exemptions (investors will be able to benefit from
certain exemptions from tax on the import/export of goods);
VAT exceptions (investors will in certain circumstances be able
to benefit from certain VAT exceptions).
Guner Law Office was established in 1996 and has since
grown into one of the major corporate, M&A, banking,
litigation, energy and TMT practices in Turkey. Guner Law Office is
headed by Ece Guner and works with international law firm Denton
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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