DISCLAIMER
The information provided in this guide is general and does not constitute financial, tax or legal advice. Whilst every effort has been taken to ensure the accuracy of this guide, the editors and authors accept no responsibility for any inaccuracies or omissions contained herein. Financial, tax or legal advice should always be sought before engaging in any transaction or taking any legal action based on the information provided. Should you have any queries regarding the issues raised and/or about other financial topics, please contact the authors of this guide.
All information in this guide is up to date as of 01.10.2019.
DISCLAIMER 3
06
30
34
38
40
Annexes 45
4 | CONTENT CONTENT 5
Infrastructure Support: Investor’s infrastructural needs such as electricity, natural gas, etc. can be covered.
Purchasing Guarantee: Public purchase guarantee can be provided for products to be produced within the scope of the investment.
Facilitation of Authorization/Permit/License
Procedures: An exception may be introduced by virtue of a presidential decree for authorizations, allocation, permits, licenses and registrations among other restrictive provisions. Alternatively, an arrangement may be made in terms of legal and administrative processes to accelerate and facilitate investments.
Cash Support: Eligible expenditures are partially rebated by the institution providing support after the expenditures are paid.
Training Support: Daily expenses and eligible training costs will be covered by İŞKUR.
R&D/Design Discount: R&D and design expenditures are wholly deductible from the corporate tax base.
Corporate Tax Exemption: No corporate tax is payable.
Credit Support: Credit opportunities with reduced rates are provided to investors to improve exportation.
Stamp Duty Exemption: No stamp duty is payable for documents.
Property Tax Exemption: No property tax is payable for land and buildings.
Special Consumption Tax Exemption: Enterprises in free zones are exempt from special consumption tax.
INVESTMENT INCENTIVES SCHEMES 7
INCENTIVES PROVIDED BY
THE MINISTRY OF INDUSTRY
AND TECHNOLOGY
General
Investment Incentives
Customs Duty Exemption
VAT Exemption Medium-High Tech
Incentives
Priority Incentives
8 | INVESTMENT INCENTIVES SCHEMES INVESTMENT INCENTIVES SCHEMES 9
INCENTIVE REGIONS
The breadth and depth of support on the level of regions.
provided with fewer lesser developed
regions.
Region 1 Region 2 Region 3 Region 4 Region 5 Region 6
Ankara, Antalya, Adana, Aydın, Bolu, Balıkesir, Bilecik, Burdur, Afyonkarahisar, Amasya, Adıyaman, Aksaray, Ağrı, Ardahan,
Bursa, Eskişehir, Çanakkale, Denizli, Edirne, Gaziantep, Karabük, Artvin, Bartın, Çorum, Bayburt, Çankırı, Erzurum, Batman, Bingöl, Bitlis,
İstanbul, İzmir, Isparta, Kayseri, Kırklareli, Karaman, Manisa, Mersin, Düzce, Elazığ, Erzincan, Giresun, Gümüşhane, Diyarbakır, Hakkari, Kocaeli, Muğla Konya, Sakarya, Tekirdağ, Yalova Samsun, Trabzon, Uşak, Hatay, Kastamonu, Kırıkkale, Kahramanmaraş, Kilis, Niğde, Iğdır, Kars, Mardin,
Zonguldak Kırşehir, Kütahya, Malatya, Ordu, Osmaniye, Sinop, Tokat, Muş, Siirt, Şanlıurfa,
Nevşehir, Rize, Sivas Tunceli, Yozgat Şırnak, Van
10 | 11
GENERAL INVESTMENT INCENTIVES
Tax exemption for procurement of machinery and equipment, regardless of the investment region
Incentive Eligibility Criteria Supports
General Investment Incentives Minimum fixed investment amount between TRY • VAT Exemption 500,000 – TRY 1 million depending on the invest- • Customs Duty Exemption ment location
Investment Amount 80,000,000
Machinery and Equipment to be Imported 60,000,000
Machinery and Equipment to be Procured Domestically 20,000,000
Incentives Scenario (TRY)
VAT Exemption 14,400,000
Customs Duty Exemption 1,200,000
Total Support 15,600,000
Total Support Rate (%) 19.5%
| 13
GENERAL INVESTMENT INCENTIVES – SIMULATION
Simulation Inputs:
- Fixed investment amount (machinery + equipment) = TRY 80 million
- Machinery and equipment to beimported = TRY 60 million
- Machinery and equipment to be procured domestically = TRY 20 million
Investment Location: Does not matter VAT Exemption: TRY 80,000,000 (total amount of the machinery and equipment) x 0.18 (VAT rate) = TRY 14,400,000 of VAT will not be paid by the investor.
Customs Duty Exemption: TRY 60,000,000 (amount of the machinery and equipment to be imported) x 0,02 (Average customs duty rate) = TRY 1,200,000 of customs duty will not be paid by the investor.
Investment Inputs Scenario (TRY)
REGIONAL INVESTMENT INCENTIVES
Higher incentives for investments to be made in less developed regions
Incentive Eligibility Criteria* Supports
Regional Investment Minimum fixed investment • VAT Exemption
Incentives amount between TRY 500,000 –
TRY 4 million depending on the investment location and industry • Customs Duty Exemption
- Corporate tax reduction of 15-55% of investment expenditures depending on the investment location**
- Social security premium support (employer’s share) between 2-12 years depending on the investment location
- Land Allocation
- Interest rate support in the amount of TRY 1 to 1.8 million depending on the investment location (This support is not applicable to investments to be made in Region 1 and Region 2.)
*Please review the document in Annex-1 for detailed information about the supports and conditions for benefiting from them.
**For the investments to be made in the manufacturing industry by the end of 2019, the corporate tax reduction support will be applied by adding 15 points to the rate currently applied.
14 |
REGIONAL INVESTMENT
INCENTIVES – SIMULATION
Simulation Inputs: Customs Duty Exemption: TRY 60,000,000 (amount
- Fixed investment amount (machinery + of the machinery and equipment to be imported) x
equipment + construction) =TRY 100 million 0.02 (Average customs duty rate) = TRY 1,200,000
of customs duty will not be paid by the investor.
- Machinery and equipment to be
- imported = TRY 60 million Corporate Tax Reduction: TRY 100,000,000 (fixed
investment amount) x 0.3 (support rate for Region 3
- Machinery and equipment to be procured inside OIZ) = TRY 30,000,000 will be the upper limit
domestically = TRY 20 million for the total corporate tax reduction support.
- Construction cost = TRY 20 million Social Security Premium Support (Employer’s
Share): Social security premium support that can be
- Employment = 100 people used for the employment of 100 individuals = 100 x
72 [period of support (months)] x 396 (employer’s
- Investment location = Region 3 / in OIZ share)] = TRY 2,851,200 of employer’s share will not
be paid.
VAT Exemption: TRY 80,000,000 (total amount of Interest Rate Support: The Ministry provides
the machinery and equipment) x 0.18 (VAT rate) interest rate support with the upper limit of
= TRY 14,400,000 of VAT will not be paid by the TRY 1,000,000 for Region 3. (3 points for TRY-
investor. denominated loans, 1 point for loans in foreign
currency)
Investment Inputs Scenario (TRY)
Investment Amount 100,000,000
Starting Date 1/1/2020
Employment 100 people
Investment Components
Machinery and Equipment to be Imported 60,000,000
Machinery and Equipment to be Procured Domestically 20,000,000
Construction Cost 20,000,000
Incentives Scenario (TRY)
VAT Exemption 14,400,000
Customs Duty Exemption 1,200,000
Corporate Tax Reduction 30,000,000
Social Security Premium Support (Employer’s Share) 2,851,200
Interest Rate Support 1,000,000
Total Support 49,451,200
Total Support Rate (%) 49%
15
MEDIUM-HIGH TECH INVESTMENT INCENTIVES
Region 4 incentives at minimum, regardless of the investment region
(Istanbul excluded)
Incentive Eligibility Criteria* Supports
Medium-High Tech •
Investment Incentives
(OECD)
- Minimum fixed investment •
amount between TRY
500,000 – TRY 1 million • depending on the investment
location •
The investment subject being among «medium high-tech • investments»
- VAT Exemption
Customs Duty Exemption
Corporate tax reduction of 30-55% of investment expenditures depending on the investment location**
Social security premium support (employer’s share) between 6-12 years depending on the investment location
Land Allocation
Interest rate support between TRY 1.2 – 1.8 million depending on the investment location
US-97 code Medium-High Tech (OEC D) Investment Areas
24 (except 2423) Production of Chemical Materials and Products (Except production of chemical and herbal products used in pharmaceutics and medicine)
29 Machinery and Equipment Manufacture
3110 Manufacture of Electric Motors, Generators and Transformers
3120 Manufacture of Electricity Distribution and Control Devices
3140.0.03 Lead Acidic Accumulators for Starter Piston Engines
3140.0.05 Nickel-Cadmium, Nickel-Iron and Other Electric Accumulators
3190 Manufacture of Electrical Equipment
34 Manufacture of Motor Land Vehicles
352 Manufacture of Railway and Tramway Locomotives and Wagons
3591 Manufacture of Motorcycles
3592.2 Manufacture of Carriers for the Disabled
*Please review the document in Annex-1 for detailed information about the supports and conditions for benefiting from them.
**For the investments to be made in the manufacturing industry by the end of 2019, the corporate tax reduction support will be applied by adding 15 points to the rate currently applied.
MEDIUM-HIGH TECH
INVESTMENT
| 17
INCENTIVES-SIMULATION
Simulation Inputs: Customs Duty Exemption: TRY 60,000,000 (amount
- Fixed investment amount (machinery + of the machinery and equipment to be imported) x
equipment + construction) = TRY 100 million 0.02 (Average customs duty rate) = TRY 1,200,000
of customs duty will not be paid by the investor.
- Machinery and equipment to be
- imported = TRY 60 million Corporate Tax Reduction: TRY 100,000,000 (fixed
investment amount) x 0.3 (support rate for Region 4)
- Machinery and equipment to be procured = TRY 30,000,000 will be the upper limit for the total
domestically = TRY 20 million corporate tax reduction support.
- Construction cost = TRY 20 million Social Security Premium Support (Employer’s
Share): Social security premium support that can be
- Employment = 100 people used for the employment of 100 individuals = 100 x
72 [period of support (months)] x 396 (employer’s
- Investment location = Does not matter (except share)] = TRY 2,851,200 of employer’s share will not
Istanbul) be paid.
VAT Exemption: TRY 80,000,000 (total amount of Interest Rate Support: The Ministry provides
the machinery and equipment) x 0.18 (VAT rate) interest rate support with the upper limit of
= TRY 14,400,000 of VAT will not be paid by the TRY 1,200,000 for Region 4. (4 points for TRY-
investor. denominated loans, 1 point for loans in foreign
currency)
Investment Inputs Scenario (TRY)
Investment Amount 100,000,000
Starting Date 1/1/2020
Employment 100 people
Investment Components
Machinery and Equipment to be Imported 60,000,000
Machinery and Equipment to be Procured Domestically 20,000,000
Construction Cost 20,000,000
Incentives Scenario (TRY)
VAT Exemption 14,400,000
Customs Duty Exemption 1,200,000
Corporate Tax Reduction 30,000,000
Social Security Premium Support (Employer’s Share) 2,851,200
Interest Rate Support 1,200,000
Total Support 49,651,200
Total Support Rate (%) 49,7%
PRIORITY INVESTMENT INCENTIVES
Incentives provided for Region 5, regardless of the investment region
Incentive Eligibility Criteria* Supports
Priority Investment • Minimum fixed investment • VAT Exemption
Incentives amount between TRY
500,000 – TRY 1 million • Customs Duty Exemption
depending on the investment
location • Corporate tax reduction of 40-55% of investment
expenditures depending on the investment location**
- The investment subject being among «priority investments»• Social security premium support (employer’s share)
between 7-12 years depending on the investment location
- Land Allocation
- Interest rate support between TRY 1.4 – TRY 1.8 million depending on the investment location
*Please review the document in Annex-1 for detailed information about the supports and conditions for benefiting from them.
**For the investments to be made in the manufacturing industry by the end of 2019, the corporate tax reduction support will be applied by adding 15 points to the rate currently applied.
18 |
PRIORITY INVESTMENT
INCENTIVES-SIMULATION
Simulation Inputs: Customs Duty Exemption: TRY 60,000,000 (amount
- Fixed investment amount (machinery + of the machinery and equipment to be imported) x
equipment + construction) = TRY 100 million 0.02 (Average customs duty rate) = TRY 1,200,000
of customs duty will not be paid by the investor.
- Machinery and equipment to be imported = TRY
60 million Corporate Tax Reduction: TRY 100,000,000 (fixed
investment amount) x 0.4 (support rate for Region 5)
- Machinery and equipment to be procured = TRY 40,000,000 will be the upper limit for the total
domestically = TRY 20 million corporate tax reduction support.
- Construction cost = TRY 20 million Social Security Premium Support (Employer’s
Share): Social security premium support that can be
- Employment = 100 people used for the employment of 100 individuals = 100 x
84 [period of support (months)] x 396 (employer’s
- Investment location = Does not matter (except share)] = TRY 3,326,400 of employer’s share will not
Istanbul) be paid.
VAT Exemption: TRY 80,000,000 (total amount of Interest Rate Support: The Ministry provides
the machinery and equipment) x 0.18 (VAT rate) interest rate support with the upper limit of
= TRY 14,400,000 of VAT will not be paid by the TRY 1,400,000 for Region 5. (5 points for TRY-
investor. denominated loans, 2 point for loans in foreign
currency)
Investment Inputs Scenario (TRY)
Investment Amount 100,000,000
Starting Date 1/1/2020
Employment 100 people
Investment Components
Machinery and Equipment to be Imported 60,000,000
Machinery and Equipment to be Procured Domestically 20,000,000
Construction Cost 20,000,000
Incentives Scenario (TRY)
VAT Exemption 14,400,000
Customs Duty Exemption 1,200,000
Corporate Tax Reduction 40,000,000
Social Security Premium Support (Employer’s Share) 3,326,400
Interest Rate Support 1,400,000
Total Support 60,326,400
Total Support Rate (%) 60.3%
19
PRIORITY INVESTMENT INCENTIVES
Priority Investment Areas
Investments in freight and/or passenger transportation by sea or airway Investments in international fairs with a minimum close area of 50,000 m² Investments in electricity production through recycling from waste heat
Railway investments for intercity freight and/or passenger transportation Integrated investments for the production of aluminum flat products by direct cooling slab casting and hot rolling method Investments in liquefied natural gas (LNG) and underground natural gas storage of minimum 50 million
Investments for the production of products in high-technology industrial classification according to OECD’s definition of technological intensity (US-97 Code: 2423, 30, 32, 33 and 353) Investments for carbon fiber production or production of composite materials made of carbon fiber, on the condition that it is accompanied by carbon fiber production Waste recycling investments in the minimum amount of TRY 5 million and/or disposal facility investments in the minimum amount of TRY 5 million
Test centers and wind tunnel investments
(those for the automotive, space or defense industry) Railway investments for inner-city cargo transportation Investments in wellness facilities and care centers with a capacity of
100 or more individuals for the elderly and/or disabled,
in the minimum amount of TRY 5 million
Touristic accommodation investments eligible for regional supports in terms of thermal tourism or in Cultural and Touristic Preservation and Development Regions Mining exploration investments to be made in licensed fields by investors with valid Exploration Licenses or Certificates issued under the Mining Law. Automation-based (containing computer-controlled air-conditioning, irrigation, fertilization and spraying system) greenhouse investments containing domestically produced greenhouse technologies of 25,000 m2 and above, in the minimum amount of TRY 5 million
Manufacture of renewable energy turbine and generators and wind vanes Nuclear energy plant investments Licensed warehousing investments
Investments in the area of defense which will be made based on the project approval to be obtained from the Presidency of Defense Industries Motor parts, powertrains/parts and automotive electronics investments with a minimum amount of TRY 20 million, and motor investments with a minimum amount of TRY 75 million and investments with a minimum amount of TRY 300 million, which will be made in motor land vehicles main industry Investments in the minimum amount of TRY 500 million which will be made in medium-high tech (OECD) products
Mine extraction investments and/or mine processing investments Integrated husbandry investments for milk production with a minimum capacity of 5000 cattle and integrated husbandry investments for meat production with a minimum capacity of 10,000 cattle which are completely new or expansion investments Electricity production investments where the mines in group 4-b of the 2nd article of the Mining Law 3213 are used as input on the basis of a valid mining operation permit and license issued by the Ministry of Energy and Natural Resources
Day care center, pre-school education, primary, secondary and high school investments
Educational investments for the use, repair and maintenance of aircraft in the minimum amount of TRY 20 million Investments in research and reference laboratories, consumer safety and infectious diseases reference laboratory, pharmaceutical and medical equipment analysis and control laboratory and laboratory complexes containing test animals production test and research center units Investments in energy efficiency projects which will be carried out in existing manufacturing industry facilities with annual minimum energy consumption of 500 tons of oil equivalent (TOE), which are designed to provide at least twenty per cent energy saving depending on the current status and which have a return on investment period of 5 years and less with the energy saving to be provided
Investments for the production of products or components developed at the end of R&D projects supported by the Ministry of Industry and Technology, TUBITAK and KOSGEB.
20 | 21
REGION 6 INCENTIVES
The most attractive support elements among regional incentives
Incentive Eligibility Criteria* Supports
Region 6 Incentives Minimum fixed investment • VAT Exemption amount of TRY 500,000
- Customs Duty Exemption
- Corporate Tax Reduction corresponding to 55% of investment expenditures**
- Social security premium support for 12 years
(employer’s share)
- Land Allocation
- Interest rate support of TRY 1,8 million
- Social security premium support for 10 years (employee’s share)
- Income tax withholding support for 10 years
*Please review the document in Annex-1 for detailed information about the supports and conditions for benefiting from them.
**For the investments to be made in the manufacturing industry by the end of 2019, the corporate tax reduction support will be applied by adding 15 points to the rate currently applied.
REGION 6
| 23
INCENTIVES-SIMULATION
Simulation Inputs: Corporate Tax Reduction: TRY 100,000,000 (fixed
- Fixed investment amount (machinery + investment amount) x 0.55 (support rate for Region 6
equipment + construction) = TRY 100 million inside OIZ) = TRY 55,000,000 will be the upper limit
for the total corporate tax reduction support.
- Machinery and equipment to be imported = TRY
60 million Social Security Premium Support (Employer’s
Share): Social security premium support that can be
- Machinery and equipment to be procured used for the employment of 100 individuals = 100 x
domestically = TRY 20 million 144 [period of support (months)] x 396 (employer’s
share)] = TRY 5,702,400 of employer’s share will not
- Construction cost = TRY 20 million be paid.
- Employment = 100 people Interest Rate Support: The Ministry provides
interest rate support with the upper limit of
- Investment location = Region 6 / in OIZTRY 1,800,000 for Region 6. (7 points for TRY-
denominated loans, 2 points for loans in foreign
VAT Exemption: TRY 80,000,000 (total amount of currency)
the machinery and equipment) x 0.18 (VAT rate)
= TRY 14,400,000 of VAT will not be paid by the Social Security Premium Support (Employee’s
investor. Share): Social security premium support that can be
used for the employment of 100 individuals = 100 x
Customs Duty Exemption: TRY 60,000,000 (amount 120 [period of support (months)] x 358 (employer’s
of the machinery and equipment to be imported) x share)] = TRY 4,296,000 of employee’s share will not 0.02 (Average customs duty rate) = TRY 1,200,000 of be paid.
customs duty will not be paid by the investor.
Income Tax Withholding Support: Income tax
withholding reduction that can be used for the
employment of 100 individuals = 100 x 120 [period
of support (months)] x 134 (income tax)] = TRY
1,608,000 of income tax will not be paid.
Investment Inputs Scenario (TRY)
Investment Amount 100,000,000
Starting Date 1/1/2020
Employment 100 people
Investment Components
Machinery and Equipment to be Imported 60,000,000
Machinery and Equipment to be Procured Domestically 20,000,000
Construction Cost 20,000,000
Incentives Scenario (TRY)
VAT Exemption 14,400,000
Customs Duty Exemption 1,200,000
Corporate Tax Reduction 55,000,000
Social Security Premium Support (Employer’s Share) 5,702,400
Interest Rate Support 1,800,000
Social Security Premium Support (Employer’s Share) 4,296,000
Interest Rate Support 1,608,000
Total Support 84,006,400
Total Support Rate (%) 84%
STRATEGIC INVESTMENT INCENTIVES
High incentives in areas with high importation
Incentive Eligibility Criteria* Supports
Strategic Investment • The product’s domestic pro- • VAT Exemption
Incentives duction capacity being less
- than its import volume
Investment amount of TRY 50 million
40% of domestic value addition in production
The product having import value of USD 50 million in the past year •
- •
- Customs Duty Exemption
Corporate tax reduction corresponding to 50% of investment expenditures**
Social security premium support for 7 years (employer’s share)
Land Allocation
Interest rate support of TRY 50 million or 5% of the investment
*Please review the document in Annex-1 for detailed information about the supports and conditions for benefiting from them.
**For the investments to be made in the manufacturing industry by the end of 2019, the corporate tax reduction support will be applied by adding 15 points to the rate currently applied.
24 |
STRATEGIC
INVESTMENTS-SIMULATION
Simulation Inputs: Customs Duty Exemption: TRY 60,000,000 (amount
- Fixed investment amount (machinery + of the machinery and equipment to be imported) x
equipment + construction) = TRY 100 million 0.02 (Average customs duty rate) = TRY 1,200,000
of customs duty will not be paid by the investor.
- Machinery and equipment to be
imported = TRY 60 million Corporate Tax Reduction: TRY 100,000,000 (fixed
investment amount) x 0.5 (support rate for strategic
- Machinery and equipment to be procured investments) = TRY 50,000,000 will be the upper
domestically = TRY 20 million limit for the total corporate tax reduction support.
- Construction cost = TRY 20 million Social Security Premium Support (Employer’s
Share): Social security premium support that can be
- Employment = 100 people used for the employment of 100 individuals = 100 x
84 [period of support (months)] x 396 (employer’s
- Investment location = Does not matter (except share)] = TRY 3,326,400 of employer’s share will not
Istanbul) be paid.
VAT Exemption: TRY 80,000,000 (total amount of Interest Rate Support: The Ministry provides
the machinery and equipment) x 0.18 (VAT rate) interest rate support in the amount of TRY
= TRY 14,400,000 of VAT will not be paid by the 50,000,000 or up to 5% of the investment amount
investor. for strategic investments. (5 points for TRY-
denominated loans, 2 points for loans in foreign
currency) TRY 100,000,000 (investment amount)
x 0.05 (upper limit) = TRY 5,000,000 of interest
support which can be used.
Investment Inputs Scenario (TRY)
Investment Amount 100,000,000
Starting Date 1/1/2020
Employment 100 people
Investment Components
Machinery and Equipment to be Imported 60,000,000
Machinery and Equipment to be Procured Domestically 20,000,000
Construction Cost 20,000,000
Incentives Scenario (TRY)
VAT Exemption 14,400,000
Customs Duty Exemption 1,200,000
Corporate Tax Reduction 50,000,000
Social Security Premium Support (Employer’s Share) 3,326,400
Interest Rate Support 5,000,000
Total Support 73,926,400
Total Support Rate (%) 74%
25
PROJECT-BASED INCENTIVES
«Tailor made» incentives for areas with critical importance for Turkey
Incentive Eligibility Criteria* Supports
Project-Based • Minimum fixed investment • Cash Support
Incentives amount of TRY 500 million
- VAT Exemption
- Production of strategic products that are technolo-• Customs Duty Exemption
gy-intensive, have high-add-
ed value, import-dependent, • Corporate tax reduction up to 200% of investment not locally produced/locally expenditures** produced at low quantities
- Social security premium support for up to 10 years
(employer’s share)
- Income tax withholding support for 10 years
- Qualified personnel support for up to 5 years
- Energy support for up to 50% of energy expenditures for up to10 years
- Interest rate support for up to 10 years
- Capital contribution up to 49% of the investment amount
- Land allocation for 49 years
- Infrastructure support
- Purchasing guarantee
- Facilitation of authorization-permit-license procedures
- VAT refund for building-construction expenditures
*Please review the document in Annex-1 for detailed information about the supports and conditions for benefiting from them.
**For the investments to be made in the manufacturing industry by the end of 2019, the corporate tax reduction support will be applied by adding 15 points to the rate currently applied.
26 |
PROJECT-BASED INCENTIVES
Some of the investments that have been granted with project-based incentives so far:
Scope of Investment Support Measures
Polypropylene production with an investment amount of TRY 5.3 billion VAT Exemption Customs Duty Exemption VAT Refund Corporate Tax
Reduction (Support Rate 85%) Social Security
Premium Support
(Employer’s Share) (10 years) Income Tax
Withholding
Support (10 years) Qualified Personnel
Support
(TRY 1.2 million) Interest Rate Support (TRY 350 million) Energy Support (TRY 40 million)
Solar panel production with an investment amount of TRY 3.8 billion VAT Exemption Customs Duty Exemption VAT Refund Corporate Tax
Reduction (Support Rate 70%) Social Security
Premium Support
(Employer’s Share) (10 years) Income Tax
Withholding
Support (10 years) Qualified Personnel
Support
(TRY 72 million) Interest Rate Support (TRY 350 million) Energy Support (TRY 500 million)
Production of aluminum flat products with an investment amount of TRY 3.7 billion VAT Exemption Customs Duty Exemption VAT Refund Corporate Tax
Reduction (Support Rate 83%) Social Security
Premium Support
(Employer’s Share) (10 years) Income Tax
Withholding
Support (10 years) Qualified Personnel
Support
(TRY 150 million) Interest Rate Support (TRY 780 million) Energy Support (TRY 580 million) Infrastructure Support
Carbon fiber production with an investment amount of TRY 2.2 billion VAT Exemption Customs Duty Exemption VAT Refund Corporate Tax
Reduction (Support Rate 25%) Social Security
Premium Support
(Employer’s Share) (10 years) Income Tax
Withholding
Support (10 years) Qualified Personnel
Support
(TRY 25 million) Interest Rate Support (TRY 330 million) Energy Support (TRY 657 million) Land Allocation
28 | 29
EMPLOYMENT
SUPPORTS
Tax exemptions and cash supports for employment and personnel training
Incentive Eligibility Criteria Supports
Additional Employment • Incentive
- The individuals to be hired • should not have social security registration for more than 10 days in the last 3 months
They must be unemployed individuals registered to the Turkish
Employment Agency (İŞKUR) All premiums payable per personnel employed are supported for 12 months for up to TRY 2,558.4 per month, while this varies depending on the sector.
On-the-job Training • Program
- 50% of the trainees must be • employed at the end of the program
The total number of trainees can be at maximum 30% of total
employment • Companies can train employees on the job, without incurring any costs.
İŞKUR makes a daily payment of up to TRY 77 for 6 months to the employees.
Work accident, occupational disease and general health insurance premiums of the trainees are paid by İŞKUR
Technical and Vocational • Training Program
- 50% of the trainees must be • employed at the end of the program
The training venue and the materials to be used in training should
be supplied by the company • Expenses of the trainer (salary + SGK Premium + Tax Withholding) are covered by İŞKUR.
İŞKUR makes a daily payment of up to TRY 77 to the employees during the course period.
Work accident, occupational disease and general health insurance premiums of the trainees are paid by İŞKUR.
Incentives for the •
Employment of Women, Youths and Individuals with Professional Competence Certificate The individuals who have been • unemployed for the last 6 months can be hired within the scope of the program. All social security premium employer’s shares payable per personnel employed are supported for up to 54 months for up to TRY 3,933.54 per month, while this varies depending on the gender and age.
For more information:
iskur.gov.tr
EMPLOYMENT INCENTIVES 31
OTHER SUPPORTS
websites for detailed information
32 | EMPLOYMENT INCENTIVES EMPLOYMENT INCENTIVES 33
R&D/DESIGN CENTERS TUBITAK
AND TECHNOPARKS SUPPORTS
At least 15 R&D personnel must be employed in order to be eligible for TUBITAK supports the research, technology development, and innovation R&D center incentives*. At least 10 design personnel must be employed in activities of companies with its grants. All support programs of TUBITAK are as design centers. R&D centers and design centers may benefit from the same follows: incentives.
- Initiative/Beginning 2. Introduction to R&D 3. R&D Beginning/R&D 4. International R&D
1503 – Project Markets Support
Program 1505 – University Industry Collaboration Support Program 1501 – Industry R&D Projects
Support Program Horizon 2020
1512 – Techno-initiative Capital
Support Program Industrial Thesis Program (SANTEZ) 1507 – SME R&D Beginning
Support Program Eureka
1513 – Technology Transfer
Offices Support Program 1511 – Priority Areas Technology
Development and Innovation
Projects Support Program 1509 – International Industry
R&D Projects Support Program
1514 – Venture Capital Support
Program 1515 – Frontier R&D Laboratory
Program
1602 – Patent Support Program
1601 – S.P. for Capacity Increase in Innovation Entrepreneurship Areas
R&D/Design Center Incentives Incentives for Technology Development Zones (Technoparks)
R&D and Design Discount (100%) Corporate Tax Exemption
Income Tax Withholding Support (up to 95%) Income Tax Withholding Support (100%)
– VAT Exemption
Companies may also prefer technoparks for their R&D activities. There are 84 TUBITAK’s R&D and Innovation Support Programs technoparks providing a wide range incentive opportunities for investors in Turkey.
R&D Incentives
Social Security Premium Support (Employer’s Share) (50%)
1515 – Support program has been commissioned to make Turkey a global attraction center in certain scientific and technological areas.
Incentive Eligibility Criteria Supports
TUBITAK 1515 • The ratio of the company’s • The support amount corresponds to 75% of the R&D – Frontier R&D average R&D expenditures budget and may not exceed TRY 10 million.
Laboratory Support in the last three years to net
Program. sales must be at least 1%.
- The company’s average net sales in the last three years must be at least TRY 2 billion.
For detailed information about support programs:
*The minimum number of personnel requirement is applied as 30 in the following sectors: Manufacture of motor vehicles, tubitak.gov.tr
manufacture of aircraft and spacecraft, manufacture of military warfare vehicles, and manufacture of motorcycles
36 | R&D AND DESIGN INCENTIVES R&D AND DESIGN INCENTIVES 37
EXPORT INCENTIVES FREE ZONE INCENTIVES
Incentive Supports There are 19 free zones outside of the customs border of Turkey for the
activities of export-oriented companies.
Design Supports • The promotion, advertisement, marketing, employment, and advisory expenditures to be incurred by design companies and cooperation institutions, expenses pertaining to the departments they will set up abroad, and expenditures to be incurred by companies to develop products with high added-value for foreign markets are supported at the rate of 50%.
Incentives for Service Exports For health tourism, informatics, education, film/series, management consultancy, logistics, publishing and real estate sectors, support is provided at the rate of:
- 50% for brand registration expenditures
- 60% for expenditures relating to report and foreign company acquisitions
- 50% for document/certification expenditures
- 50% for consultancy expenses
- 50% for commission payments made to agencies
- 50% for fair participation expenditures
- Up to 80% for advertisement, promotion and marketing expenditures
- Up to 80% for foreign department rents
- Up to 50% for translation expenditures.
Supports to be provided vary depending on the sectors. However, different supports are offered in addition to the supports above for certain sectors.
Support of Market Entry Certificates Expenditures pertaining to country-specific or sector-specific market entry certificates such as ISO, CE and GOST-R are supported at the rate of 50%.
Global Supply Chain Support • Machinery/equipment purchases, foreign office expenditures, software purchases, training and advisory costs, certification and test expenditures which will be incurred by companies that would like to become a supplier for a global company for this purpose are supported at the rate of 50% for 2 years and for up to USD 1 million.
Incentive Supports
Free Zone Incentives • VAT Exemption
- Customs Duty Exemption
- Special Consumption Tax Exemption
- Corporate tax exemption for companies operating in the manufacturing industry
- Exemption from the income tax on employees’ salaries (on the condition that 85% of the production is exported)
- Stamp Duty Exemption
- Property Tax Exemption
- Permission to bring second hand/used machinery
For more information about export supports: kolaydestek.gov.tr
42 | EXPORT INCENTIVES EXPORT INCENTIVES 43
ANNEX – 1
Regional Investment Incentives Support Measures
Incentive Measures Region
I II III IV V VI
VAT Exemption AVAILABLE
Customs Duty Exemption AVAILABLE
Corporate Tax Reduction Tax Reduction Rate (%) 50 55 60 70 80 90
Reduced Tax Rate (%) 11 9.9 8.8 6.6 4.4 2.2
Investment
Contribution Rate
(%) Outside OIZ* 15 20 25 30 40 50
In OIZ* 20 25 30 40 50 55
Social Security
Premium Support
(Employer’s Share) Support Period Outside OIZ* 2 years 3 years 5 years 6 years 7 years 10 years
In OIZ* 3 years 5 years 6 years 7 years 10 years 12 years
Support Upper Limit (%) Outside OIZ* 10 15 20 25 35 No limit
In OIZ* 15 20 25 35 No limit No limit
Land Allocation AVAILABLE
Interest Rate Support TRY Denominated Loans (points) NA NA 3 points 4 points 5 points 7 points
FX Loans (points) 1 point 1 point 2 points 2 points
Social Security Premium Support (Employee’s Share) NA NA NA NA NA 10 years
Income Tax Withholding Support NA NA NA NA NA 10 years
*OIZ: Organized Industrial Zone
**For the investments to be made in the manufacturing industry by the end of 2019, the corporate tax reduction support will be applied by adding 15 points to the rate currently applied. The tax reduction rate is also applied as 100% for these investments.
Strategic Investment Incentives Support Measures
Incentive Measures Region
I II III IV V VI
VAT Exemption AVAILABLE
Customs Duty Exemption AVAILABLE
Corporate Tax Reduction Tax Reduction Rate (%) 90
Reduced Tax Rate (%) 2.2
Investment Contribution Rate (%) 50
Social Security
Premium Support
(Employer’s Share) Support Period 7 years
(10 years for Region 6)
Support Upper Limit (%) 15 (No limit for Region 6)
Land Allocation AVAILABLE
Interest Rate Support Loans Indexed to Turkish Lira (points) 5
Loans Indexed to Foreign Currency (points) 2
Maximum Support Rate (*) TRY 50 million or 5% of the investment amount
Social Security Premium Support (Employee’s Share) 10 years (For investments to be made in Region 6)
Income Tax Withholding Support 10 years (For investments to be made in Region 6)
VAT Refund AVAILABLE (For construction costs of investments with an investment amount of TRY 500 million and above)
**In the investments to be made in the manufacturing industry by the end of 2019, the tax reduction support will be applied by adding 15 points to the rate currently applied. The tax reduction rate is also applied as 100% for these investments.
ANNEX – 2
How Does the Corporate Tax Reduction Support Work?
Investment Expenditures that can be Subject to Corporate
Tax Reduction = TRY 50,000,000
Investment Location = Region 4
Tax Reduction Rate for Region 4 = 70%
Reduced Tax Rate = 6.6%
Investment Contribution Rate for Region 4 = 30%
50,000,000 x 0.3 = TRY 15,000,000* (upper limit of the corporate tax reduction support)
Assuming that the investor will generate profits in the amount of TRY 10,000,000 per year
Corporate Tax = 10,000,000 x 0.22 = TRY 2,200,000
2,200,000 x 0.7 (tax reduction rate) = TRY 1,540,000 of corporate tax can be subject to tax reduction; the remaining TRY 660,000 will be paid.
Unpaid taxes: 1,540,000 + 1,540,000 + 1,540,000 + … + …
+ … + = TRY 15,000,000
The tax reduction support will end once the total amount of taxes not paid reaches the upper limit.
*The value will be increased based on reevaluation every year. ANNEX – 3
Breakdown of Minimum Wage
Minimum Monthly Wage (gross and net) TRY
Net Minimum Wage 2,020.90
Gross Minimum Wage 2,558.40
- Social security premium payment (14%) (Employee’s share) 358.18
- Payment for unemployment insurance fund (1%) 25.58
- Income tax (15%)* 134.31
- Minimum living allowance** 191.88
- Stamp tax (0.759%) 19.42
Total Deduction 537.49
Employer Cost
- Gross minimum wage 2,558.40
- Employer’s share of social security premium (15.5%)*** 396.55
- Employer’s payment for unemployment insurance fund (2%) 51.17
Total Employer Cost 3,006.12
* Calculation of income tax is [(2,558.40 – 358.18 – 25.58) x 0.15] – 191.88 = 134.31
** For single individuals without children and may vary according to marital status and number of children.
*** For premiums that are paid in due time, as an incentive, a five-point reduction is applied (down from 20.5% to 15.5%).
Source: Ministry of Family, Labor and Social Services Valid for January 1, 2019 – December 31, 2019
46 | ANNEXES Guide To State Incentives For Investments In Turkey ANNEXES | 47