Turkey has signed an agreement with 80 countries to prevent double taxation. In this context, foreigners who will invest in Turkey gain tax advantages in import and export transactions. The opportunities and advantages provided to foreign investors in exchange for investing in our country are not limited to these. 

Some of the government support and incentives that are renewed and expanded every day are listed below. In addition to being a country that attracts foreign investors due to its geographical and strategic location and being livable, Turkey also provides serious facilities to foreign investors in terms of state support. Here are the opportunities and advantages provided to foreign investors as follows.

Government Incentives Offered to Foreign Investors in Turkey

Turkey offers a large number of incentives to increase the number of foreign investors located within its borders. 

VAT Exemption

VAT is not paid on purchases of machinery, equipment and equipment to be supplied from within the scope of the investment incentive certificate from Turkey or abroad.

Exemption from Customs Duty

Foreign investors will not pay customs duties on machinery, equipment, and equipment purchased from abroad within the scope of the investment incentive certificate.

Tax Deduction

Income and corporate income tax are obtained by calculating the discount rates until the total amount of discounted tax reaches the rate of contribution to the investment. The investment contribution rate refers to the ratio of the total fixed investment amount included in the tax deduction.

Social Insurance Premium Employer Share Support

The employer’s share of social insurance calculated on the basis of the legal minimum wage amount in accordance with the employment provided with foreign capital is covered by the state.

Social Insurance Premium Employee Share Support

The share of workers in social insurance calculated on the basis of the legal minimum wage in Region 6 in foreign capital employment and investments provided under the investment incentive certificate is covered by the state. In this context, there is no upper limit on the social insurance premium support realized and it has a validity of 10 years.

Support for Deduction of Income Tax Withholding

The income tax determined for employment provided within the scope of foreign capital investment and provided with additional employment is not subject to withholding. There is no upper limit to the income tax withholding deduction, and this support is valid only for investments in Region 6 for 10 years.

Interest Rate Support

The financing support provided for at least 1-term investment loans is called interest rate support and government support is provided to pay the first 5-year portion of a certain portion of the profit/interest rate payable on the loan when using a loan of up to 70% compared to the fixed investment amount recorded in the investment incentive document.

Provision of Land

Within the scope of investments to be made with foreign capital, the land is allocated depending on the availability of land within the scope of the regulation of the Ministry of Finance.

VAT Refund Support

If the minimum investment amount is TL 500 million, VAT charged during building-construction expenses made within the scope of strategic investments is refunded.

R&D Promotion

Valid until 2024 R & D support, R & D centers in at least 15, at least 10 design centers in the employment of staff and in the case of R & D in Turkey are provided special incentives for investment projects in the design. In this context; All R & D expenditures are decoupled from the tax base. Stamp duty exemption is carried out on the issued documents. There is a customs exemption for imported products within the scope of R&D projects.

Technology-Oriented Industrial Action Program

We have noted that the incentive legislation, which entered into force in 2012, is constantly being improved in favor of investors, and in 2016, Project-Based Incentives and large-scale investments have been given tremendous opportunities. Not content with this, as of October 2019, a new mechanism that blends incentives and grant opportunities has come into play: the Technology-Oriented Industrial Action Support Program.

“Hamle” this so-called Elements or incentive program in designated areas within the scope of Strategic Decision Support 2016/9495 2012/3305 decree numbered within the scope of the project-based incentives and R & D investors in the field of SME support programs KOSGEB, TÜBITAK, or in case of possessing the qualification provides opportunities grant. This is a kind of hybrid incentive program. The program accepts periodic applications by call procedure for investments over 10 million TL. The sectors to be supported are indicated in the call announcement, and so far, a single call for specific areas has been announced under the headings of the machinery sector and innovative technology.

As a result, we can safely say that the incentive system is strong and effective in radically changing the feasibility of investment. It is useful to introduce these opportunities to international investors more effectively. The Investment Support and Promotion Agency, established for this purpose, has been operating since 2006. I would like to evaluate that there are also private and semi-public organizations working in cooperation with international networks on issues such as investment, trade, finance, tax consultancy. the share of Turkey in international investments, which produced 0.8% of the world’s product in 2019, is 0.5%. The economic conditions in which the world and Turkey are located, as well as the growing trend of competition in the international investment market, make incentives more necessary than ever.