Changes to incentives for investment in Turkey

These new investment incentives are mainly aimed at developing cities with a lower comparative income level. The new incentives provide many conveniences for investors in Turkey, and if they are carefully examined it is clear that companies can gain advantages through tax breaks and incentives.

The new incentive system has four different areas aimed at economic growth: general investment incentives, regional investment incentives, large-scale investment incentives and strategic investment incentives.

For general investment incentives, the most important measure is value-added tax (VAT) exemption. In accordance with this, companies are not required to pay VAT for imported machinery and equipment. This incentive can thus be used very efficiently if companies plan out their means of production.

Another important incentive is the customs duty exemption. Under the new program, customs duty is not included on machinery and equipment supplied from abroad, while imported equipment and machinery will not be subjected to duty.

The biggest change in the new incentive program is in regional investment incentives. Under the new system, the supported sectors in each province are determined by that province's economic potential. This is vital to the Turkish economic system because the different regions in Turkey all have very different advantages and benefits. Therefore, the incentives are meant to be designed for each region.

For large-scale investments, there is an advanced incentive system. Twelve investment categories such as refined petroleum products, chemical products and port services are supported by the measures under the large-scale investment incentives.

As Turkey becomes more integrated into the global economic system, producing final products will become more necessary in the near future. This incentive program is aimed at supporting production of intermediate and final products and at encouraging high-tech investments as well. To encourage investors, strategic investment incentives have been announced within the package.

All these tax benefits make an investment almost tax free for the next decade. This alone makes the incentive program worthy of a detailed study. The program can provide many opportunities for investors. This can also be especially useful for companies that have suffered from the recent economic crisis. As mentioned above, careful eyes will be able to spot fantastic opportunities and turn them into profit.

NOTE: Berk Çektir is a licensed attorney at law and available to answer questions on the legal aspects of living and doing business in Turkey. Please kindly send inquiries to b.cektir@todayszaman.com. If a sender's letter is published, names may be disclosed unless otherwise is expressly stated by the sender.

DISCLAIMER: The information provided here is intended to give basic legal information. You should get legal assistance from a licensed attorney at law while conducting legal transactions and not rely solely on the information in this column.