Turkish Tax News
Diyadin YAKUT
21 March 2016Diyadin YAKUT

Generous Benefits Offered to Large Scale and Strategic Investments

As pointed out in the first article of the Governmental Resolution on States Aids to Investments the overriding objective of designing a national investment incentive framework of this nature via classifying different types of investment schemes and zones and assigning varying combination of benefits to each schemes according to predetermined and elaborate conditions is;

  • To orient savings to investments with high added value
  • To boost production and employment
  • To encourage regional, large scale and strategic investments with gerater content of R&D
  • To enhance international competitiveness
  • To attract more foreign direct investments
  • And to cope with regional developmental discrepancies.

Although, investment incentive system as a whole is treated by the government, together with other more conventional fiscal policy tools, as a main pillar of economic and social development strategy and a springboard to long-awaited objectives; the Large Scale and Strategic Investments are revered, the most particularly for their high potential to deliver on the main objectives set out above.

Large Scale Investment Incentive Scheme
These investments that fulfill the minimum-investment level requirements (ranging between 50 and 1,000 million Turkish liras) specified for different sectors in Annex-3 of the Resolution are treated within the scope of this investment incentive scheme as long as they have advanced technology and research and development (R&D) content and high potential to improve country’s international competitiveness.

As it is vividly shown in the table below, a combination of seven incentives out of nine benefits regulated by the Resolution is granted to investors that meet the criteria of this particular scheme. The scope and duration of individual benefits rise in parallel with the relevant investment zone within which the encouraged economic activity is carried out.

Large Scale Investment Incentive Scheme

Strategic Investment Incentive Scheme
Investment projects encompassing production of such goods that lower Turkey’s import dependence and possibly remedy persistent current account deficit headache are classified as strategic investments provided that they meet the criteria written in Article 8 of the Resolution.

The criteria to be met are in the following:
a-) The minimum investment amount shall be over 50 million liras.

b-) The amount of domestic production of the concerned product shall be less than the importation.

c-) The added value expected to emerge as a result of the investment shall be at least 40%.

d-) The imported amount of the identical product planned to be produced within the scope of a strategic investment shall be over 50 million USD for the last 12 months before the application for any benefits.

e-) If domestic production of the concerned product does not exist at all, then the criterion in (d) is not required.

Due to its exceptional importance to the soundness of Turkish economy, the whole bunch of benefits, including even VAT refund, are granted at maximum level and widest scope to strategic investments. As displayed in the table below, economic activities designated by the relevant regulation as strategic investments are entitled to benefit all nine investment incentives within government’s wider objective of tackling structural bottlenecks and eventually transforming the economy into a sustainable, competitive and welfare-generating one.

Strategic Investment Incentive Scheme

The generous investment benefits granted to would-be investors whose novel economic activities are deemed by the concerning regulation as large scale or strategic investments and thus become entitled to receive the benefits assigned to these two particular investment incentive schemes after satisfying other technical conditions is a clear manifestation of the government’s persistent will to push for its long-term economic targets via nonconventional economic means as supportive policy instruments beside other more conventional ones employed to this end.

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