INVESTMENT INCENTIVES AND PROVIDED SUPPORTS
INVESTMENT INCENTIVES AND PROVIDED SUPPORTS
Republic of Turkiye offers a comprehensive investment incentive program that minimizes initial costs and accelerates investment returns for both greenfield investments and expansion projects.
These incentives can also be tailored for projects in priority sectors, which are classified as key areas for technology transfer and economic development. In addition to providing support programs for R&D and innovation projects, as well as additional employment, the Republic of Türkiye also supports exporters through various grants, incentives, and loans.
WHAT IS THE INVESTMENT INCENTIVE SYSTEM?
The Investment Incentive System, managed by the General Directorate of Incentive Implementation and Foreign Capital under the Ministry of Industry and Technology, is designed to promote the participation of domestic and foreign capital in the market.
TYPES OF INVESTMENT INCENTIVES
Investment incentives fall into four main categories:
1. General Investment Incentive System : Applicable to all investment projects and includes VAT exemption and customs duty exemption.
2. Regional Investment Incentive System : Implemented to reduce economic disparities between regions. The incentives vary depending on the investment region.
3. Priority Investment Areas: Covers specific sectors supported with 5th region incentives.
4. Strategic Investments: Special incentives for high-value investments that reduce the current account deficit. These include sectors such as defense and high technology.
SUPPORT ELEMENTS
|
Support Type |
General Incentive |
Regional Incentive |
Priority Investment |
Strategic Investment |
|
VAT Exemption |
✔ |
✔ |
✔ |
✔ |
|
Customs Duty Exemption |
✔ |
✔ |
✔ |
✔ |
|
VAT Refund |
❌ |
❌ |
❌ |
✔ |
|
Tax Reduction |
❌ |
✔ |
✔ |
✔ |
|
Employer’s Social Security Premium Support |
❌ |
✔ |
✔ |
✔ |
|
Employee’s Social Security Premium Support |
❌ |
✔ |
✔ |
✔ |
|
Interest/Profit Share Support |
❌ |
✔ |
✔ |
✔ |
|
Investment Land Allocation |
❌ |
✔ |
✔ |
✔ |
OBJECTİVES OF THE INVESTMENT INCENTIVE SYSTEM
This system aims to:
- Reduce the current account deficit by increasing the production of goods with high import dependency
- Support high and medium-high technology investments to drive technological transformation
- Provide additional support to the least developed regions
- Minimize regional economic disparities
- Promote regional economic growth
- Encourage cluster-based investment activities
INVESTMENT INCENTIVE REGIONS AND MINIMUM INVESTMENT AMOUNTS
Investment incentives in Turkiye are structured into six different economic regions, with support levels varying according to the region’s development level.
EXAMPLE CALCULATION OF INVESTMENT INCENTIVES
Let’s consider a foreign-invested company planning an investment of 20,000,000 TRY in a designated investment region. This investment is financed with 15,000,000 TRY from equity and 5,000,000 TRY from bank loans.
VAT Exemption: Available
Customs Duty Exemption: Available
Tax Reduction: 6,000,000 TRY (Tax Reduction Rate: 70%, Investment Contribution Rate: 30%)
Employer’s Social Security Premium Support: 5,000,000 TRY (6 years, 25% investment contribution rate)
Interest Support: 508,333 TRY
As a result, out of a 20,000,000 TRY investment, 11,508,333 TRY is refunded to the investor in the form of tax exemptions, social security premium support, and interest support.