Foreign Investment in Turkey

Turkey provides various incentives and grants to investors for the purpose of facilitating larger investments and capital contributions by local and foreign investors. The investment incentive scheme is continuously being amended to encourage investments in manufacturing and services, energy, exports, etc. Our firm offers consultancy services for companies, whose target is to invest in Turkey by setting up a company. There are many reasons to invest in Turkey some of which are listed below;

1. Young, dynamic population
2. Competitive, well trained labour force
3. Transit bridge between east and west
4. Fast growing economy
5. Easy to a open business
6. New investment regulations encouraging foreign investors
7. Customs Union in European Union
8. Tax and Social Security incentives

VAT Exemption:

VAT is exempt for imported and/or domestically delivered machinery and equipment within the scope of the investment incentive certificate.

Customs Duty Exemption:

Customs duty is exempt for imported machinery and equipment within the scope of the investment incentive certificate.

Tax Reduction:

The income or corporate tax is calculated on the basis of reduced rates until the total amount of reduced tax reaches the amount of contribution to the investment.

Social Security Premium Support (Employee’s Share):

For additional employment created by the investment, the employee’s share of the social security premium calculated on the basis of the legal minimum wage will be covered by the government.

Social Security Premium Support (Employer’s Share):

For additional employment created by the investment, the employer’s share of the social security premium calculated on the basis of the legal minimum wage will be covered by the government.

Income Tax Withholding Allowance:

The income tax in regards to additional employment created by the investment, within the scope of the investment incentive certificate, will not be liable to withholding taxes.

Interest Payment Support:

Interest payment support is a financial support instrument provided for investment loans with a term of at least one year obtained within the scope of an investment incentive certificate. A portion of the interest/profit share regarding the loan equivalent, at most 70 percent of the fixed investment amount registered in the investment incentive certificate, will be covered by the government.

Land Allocation:

Land may be allocated for investments, with an investment incentive certificate, in accordance with the rules and principles determined by the Ministry of Finance.

VAT Refund:

VAT collected on construction expenses, made within the scope of strategic investments with a minimum fixed investment amount of 500 million TL, will be rebated.

Reseach & Development Support

The R&D Law provides special incentives for R&D investment projects in Turkey if a minimum of 50 personnel are employed in an R&D center. The incentives within the new law that will remain in effect until 2024 and include:

• 100 percent deduction of R&D expenditure from the tax base if the number of researchers exceeds 500, then in addition to the 100 percent deduction, half of the R&D expenditure increase incurred in the operational year compared to the previous year will also be deducted
• Income withholding tax exemption for employees (this item will be effective until December 31, 2023)
• 50 percent of social security premium exemption for employers for a period of 5 years
• Stamp duty exemption for applicable documents
• Techno-initiative capital for new scientists up to 100,000 TL
• Deduction from the tax base of certain funds granted by public bodies and international organizations