Actually, Turkish government offers a robust and investor-friendly environment, providing a wide array of incentives and support mechanisms to both local and foreign investors. With its strategic location bridging Europe and Asia, a dynamic economy, and a commitment to fostering business growth, Turkey has become an attractive destination for those seeking opportunities.
Investors in Turkey can benefit from a range of government supports, including:
Foreign Investment Promotion Law (FIP Law) in Turkey aims to promote and facilitate foreign direct investment (FDI) in the country. While specific regulations and provisions may evolve over time, here are some of the common benefits and provisions that the FIP Law typically provides for investors in Turkey:
The FIP Law typically ensures that foreign investors are treated on an equal footing with domestic investors. This includes equal protection of rights, guarantees against expropriation, and access to dispute resolution mechanisms.
Foreign investors are often granted "national treatment," which means they can enjoy the same rights and privileges as Turkish investors when establishing and operating a business in Turkey.
Foreign investors typically have the right to repatriate profits and dividends earned in Turkey in foreign currency, subject to applicable laws and regulations.
The Turkish government may offer various incentives to attract foreign investment. These incentives may include tax breaks, customs duty exemptions, reduced land allocation fees, and other financial incentives based on the location and sector of investment.
Foreign investors are typically protected from expropriation or nationalization without proper compensation, in accordance with international norms.
The FIP Law often provides mechanisms for the resolution of investment disputes, including access to international arbitration or other legal recourse avenues.
Turkey may establish special investment zones or technology development zones that offer additional incentives and support for foreign investors, such as reduced corporate tax rates, social security premium support, and land allocation benefits.
The FIP Law often streamlines administrative procedures for foreign investors, making it easier to establish and operate businesses in Turkey.
Foreign investors usually have the right to transfer funds related to their investments, including profits, royalties, and capital, freely and without delay.
The Incentive Scheme (IIS) provided by the Turkish government is a comprehensive program aimed at attracting both domestic and foreign investors to promote economic growth and development across various sectors. This scheme offers a range of incentives and benefits to investors, including tax breaks, financial support, and other advantages. Here are some key features and benefits of the Incentive Scheme in Turkey:
The IIS is designed to cater to the specific needs and priorities of investors. It offers different incentive packages depending on the region, sector, and scale of the investment.
One of the primary attractions of the IIS is the significant tax incentives it provides. These incentives can include reduced corporate income tax rates, VAT (Value Added Tax) exemptions, and customs duty exemptions on imported machinery and equipment.
Some regions and sectors may offer access to investment support funds which can provide financial assistance for various purposes, such as land acquisition, infrastructure development, and R&D activities.
Investors who create employment opportunities in Turkey can benefit from additional incentives, including reduced social security premium contributions for employees and employer incentives for hiring local labor.
The Turkish government encourages investments in research and development (R&D) and innovation by providing incentives such as tax deductions and financial support for R&D projects.
Turkey has established numerous free zones where investors can enjoy additional incentives, including tax exemptions, customs duty benefits, and simplified administrative procedures.
The IIS prioritizes certain strategic sectors such as technology, renewable energy, and advanced manufacturing. Investors in these sectors often receive enhanced incentives and support.
To promote balanced regional development, the IIS provides more generous incentives for investments in less-developed regions of Turkey, known as "Priority Development Regions."
Investments that adhere to environmental regulations and promote sustainability may receive extra incentives and support.
The IIS aims to simplify bureaucratic processes and offer fast-track procedures to expedite the establishment and operation of businesses.
Turkey generally offers a stable and investor-friendly legal framework that includes protections against expropriation and a commitment to international arbitration in case of disputes.
Free Trade Zones (FTZs) in Turkey are designated areas where businesses can operate with a range of benefits and advantages that make them highly attractive to domestic and foreign investors. These zones play a significant role in promoting economic growth, international trade, and foreign direct investment (FDI) in the country. Here are some key advantages and features of Free Trade Zones in Turkey:
One of the primary advantages of FTZs is the customs and tax benefits they offer. Companies operating within these zones are exempt from customs duties, value-added tax (VAT), and other import/export-related taxes and fees. This significantly reduces the cost of doing business and makes Turkish FTZs highly competitive on the global stage.
FTZs in Turkey allow companies to carry out transactions in foreign currencies, simplifying international trade and financial operations. This flexibility is especially beneficial for businesses engaged in import and export activities.
FTZs offer simplified customs procedures, including quick and efficient customs clearance. This reduces administrative burdens and delays associated with international trade.
Turkey's strategic geographical location at the crossroads of Europe, Asia, and the Middle East makes its FTZs ideal hubs for logistics, distribution, and export-oriented manufacturing. Businesses in these zones can easily access diverse markets.
Many Turkish FTZs provide additional investment incentives, such as reduced corporate income tax rates, social security premium support, and land allocation benefits. These incentives are designed to attract foreign investors and promote economic growth.
FTZs often feature well-developed infrastructure, including modern transportation networks, utilities, and communication services. This ensures that businesses can operate efficiently and cost-effectively.
Some FTZs in Turkey are dedicated to specific industries or sectors, such as technology, automotive, and electronics. This specialization fosters industry clusters and encourages collaboration and innovation.
Certain FTZs offer incentives and support for research and development activities, making them attractive for technology-driven companies looking to innovate and develop new products.
FTZs provide an environment conducive to export-oriented manufacturing. Businesses can take advantage of the ease of importing raw materials and exporting finished goods.
Turkey's FTZs offer a flexible and investor-friendly business environment with streamlined administrative procedures, enabling companies to establish and operate their businesses quickly.
FTZ authorities often provide a range of services to support investors, including assistance with permits, licenses, and other regulatory requirements.
Turkish government offers tailored incentives for specific industries to attract investments and promote growth in key sectors of the economy. These incentives are designed to address the unique needs and challenges of different industries. Here are some examples of tailored incentives provided by the Turkish government to investors in specific sectors:
To foster technology-driven industries, the Turkish government offers incentives such as tax reductions on income generated from software development and R&D activities. There are also grants and subsidies available for research and development projects.
Turkey provides incentives to promote the automotive sector, including reduced corporate income tax rates for automotive companies and customs duty exemptions on machinery and equipment used in automotive manufacturing.
In the energy sector, there are incentives aimed at increasing the use of renewable energy sources. These may include feed-in tariffs, tax incentives, and support for investments in renewable energy projects.
The government offers various incentives to boost tourism, such as reduced value-added tax (VAT) rates for certain tourism-related services and support for the construction of hotels and tourism facilities.
For industries with a strong export focus, such as textiles and apparel, the government may provide export incentives, including export credits, grants, and support for marketing and branding activities.
To encourage investments in healthcare and pharmaceuticals, there are incentives such as tax exemptions on certain medical equipment and support for pharmaceutical R&D projects.
The government offers incentives to enhance agricultural production and food processing, including subsidies for agricultural investments, irrigation projects, and support for organic farming.
In this industry, incentives may include reduced customs duties on textile machinery and equipment, as well as support for the modernization and capacity expansion of textile and apparel manufacturing facilities.
To promote the defense and aerospace sectors, the government provides incentives such as tax reductions, grants for research and development projects, and support for investments in advanced manufacturing capabilities.
Turkey offers incentives to attract investments in the mining sector, including tax benefits for exploration and mining activities, as well as support for mineral processing facilities.
Incentives for the film and entertainment industry may include tax rebates, grants for film production, and support for the development of film studios and facilities.
Turkish government offers regional development incentives to promote balanced economic growth across different regions of the country. These incentives are designed to attract investments and stimulate economic activity in less-developed areas. The specific incentives may vary based on the region's level of development and economic priorities. Here are some common features of regional development incentives provided by Turkish government to investors:
Investors operating in priority development regions or specific zones within those regions may benefit from reduced corporate income tax rates. The government often offers a significant reduction in corporate income tax for a specified period.
To encourage job creation in less-developed areas, the government may provide employers with incentives such as reduced social security premium contributions for employees.
In certain regions, investors may receive interest rate subsidies on loans obtained for investment projects. This helps lower the cost of borrowing and makes investments more attractive.
Investors in priority development regions may have access to land allocation at reduced rates or even free of charge, depending on the size and nature of the investment.
Some development regions offer customs duty exemptions on imported machinery, equipment, and materials used in investment projects. This can significantly reduce initial investment costs.
The government may prioritize infrastructure development in less-developed regions, including transportation networks, utilities, and telecommunications, to enhance the business environment.
To encourage innovation and technology-driven investments, the government may provide grants and subsidies for research and development activities in these regions.
Investors who hire a certain percentage of local labor in development regions may receive additional incentives and support.
Regional development incentives may target specific industries or sectors that align with the region's strengths and economic priorities. For example, agricultural regions may receive incentives for agribusiness investments.
Some regions have established investment support funds that offer financial assistance for various aspects of investment projects, including infrastructure development and technology investments.
In less-developed areas, there may be incentives and support programs aimed at promoting entrepreneurship and the growth of small and medium-sized enterprises (SMEs).
To streamline administrative processes, the government often establishes one-stop investment centers in these regions to assist investors with permits, licenses, and other regulatory requirements.
Through the above, Turkish government provides a conducive environment for investors to establish and grow their businesses while benefiting from the strategic location, modern infrastructure, and sectoral specialization that make them powerful tools for driving economic development and facilitating international trade and investment.
References
Incentives Guide. (n.d.). Invest in Türkiye. Retrieved September 19, 2023, from https://www.invest.gov.tr/en/investmentguide/pages/incentives-guide.aspx
