New investment incentives in Turkey (2)

Today I’d like to continue where I left off on the support measures available through these incentives.

Value added tax (VAT) exemption: VAT will not be paid for imported and/or domestically manufactured machinery and equipment within the scope of the investment certificate.

Customs duty exemption: Customs duty will not be paid for machinery and equipment imported from abroad within the scope of the investment certificate.

Tax benefit: Income or corporate tax shall be imposed with reduced rates until the total value reaches the amount of the contribution to the investment according to an envisaged rate of contribution.

Social security premium support (employer’s share): This measure stipulates that for additional employment created by an investment, the employee’s share of the social security premium on portions of labor wages corresponding to the amount of the legal minimum wage will be covered by the ministry. This measure is applicable only for investments to be made in Region 6 within the scope of an investment certificate.

Income tax withholding allowance: This measure stipulates that income tax regarding the additional employment generated by an investment within the scope of the investment certificate will not be obliged to be withheld. This incentive is applicable only for investments to be made in Region 6 within the scope of an investment certificate.

Social security premium support (employee’s share): This measure stipulates that for the additional employment created by the investment, the employee’s share of the social security premium on portions of labor wages corresponding to the amount of the legal minimum wage will be covered by the ministry.

Interest payment support: This is a financial support instrument provided for loans with a term of at least one year, obtained within the framework of the investment certificate. It stipulates that a certain portion of the interest/profit share regarding the loan equivalent to, at most, 70 percent of the fixed investment amount registered in the certificate will be covered by the ministry.

Land allocation: This incentive is still unclear to me, but it refers to the allocation of land to investments with investment incentive certificates in accordance with the rules and principles determined by the Ministry of Finance.

VAT refund: VAT collected on construction expenses with a fixed investment amount of TL 500 million will be recovered.

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

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