Turkish Tax News
Diyadin YAKUT
09 March 2016Diyadin YAKUT

Main Investment Incentive Schemes

As pointed out in the previous article briefly dealing with the general principles and working mechanism of the Governmental Resolution on Investment Incentives, both the number and scope of individual benefits that a would-be investor is entitled to receive largely depend on which investment incentive scheme applies to the specific situation.

In this regard, four principal categories of investment incentives are contemplated by the Resolution which are enumerated in the following way;

  • General Investment Incentive Scheme
  • Regional Investment Incentive Scheme
  • Large Scale Investment Incentive Scheme
  • Strategic Investment Incentive Scheme.

The Resolution, on the other hand, groups Turkey’s 81 geographical provinces into six investment zones (numbered from 1 to 6 ),very much in line with concerned provinces’ economic and social development indexes published on a regular basis by the State Statistics Institute, which are entitled to significantly different types of investment benefits. Accordingly, the incentives grow in volume, scope and content as the number (from 1 to 6) of a given zone goes up irrespective of investment incentive scheme within which the concerned investment activity is carried out. Moreover,  9 types of investment benefits are envisaged by the above-mentioned Resolution to be granted to investors basically based on which investment zone they invest and within which investment incentive scheme they plan to operate. The Resolution prescribes further that any investment project covered by the new investment incentive system and carried out in one of the ‘organized industrial zones’ (OIZ) simultaneously will be upgraded to a higher investment zone, in other words it will be entitled to a more generous combination of incentive benefits.

The investment benefits that are available to be granted to those investors getting a properly issued investment incentive certificate( which is the sine qua non of the  system) after  fulfilling the required  conditions and procedures specified for the different investment incentive schemes in the Resolution are shown in the summary-table below:

Table-1. Investment Incentive Schemes


Investment BenefitsGeneral Investment Incentive SchemeRegional Investment Incentive SchemeLarge Scale Investment Incentive SchemeStrategic Investment Incentive Scheme
2Customs Duty Exemption YESYESYESYES
3Reduced Tax Rate YESYESYES
4Social Security Contribution Support (Employer’s Share) YES*YESYESYES
5Income Tax Withholding Support YES**YES**YES**YES
6Social Security Contribution Support (Employee’s Share)  YES***YES***YES
7Interest Support YES**** YES
8Land Allocation  YESYESYES
9VAT Refund    YES

* confined to ship-building investments
**confined to investments in 6th Investment Zone
*** confined to investments in 6th Investment Zone
**** confined to investments in 3,4,5 and 6th Investment Zones

As depicted quite briefly in the table above, each investment incentive scheme has a different combination of benefits drawn from among nine incentive benefits with an approximation between Regional Investment Incentive Scheme and Strategic Investment Incentive Scheme. Two of those four investment schemes are explained as in the following.

General Investment Incentive Scheme
This scheme covers the investments that do not fall into any other three schemes and are not included in the Annex-4 attached to the Resolution which contains and defines the investments not-to-be supported due to their non-compliance to the conditions and procedures specified in Annex-4 per se. To put it another way, investments that meet specified minimum-level and other conditions are, independent of investment zone in which they are carried out, entitled to benefits included in General Investment Incentive Scheme. These minimum levels required for an investment project are outlined in the Article 5 of Resolution as TRY 1 million for 1st and 2nd Investment Zones and TRY 500,000 for the rest of the investment zones.

Regional Investment Incentive Scheme
Unlike seven geographic regions in Turkey, Regional Investment Incentive Scheme implies the so-called 6 Investment Zones which were designed by grouping 81 provinces in Turkey in line with their economic and social development indexes aggregated by State Statistics Institute each year. Thus, sectors to be supported with investment benefits are chosen and listed in Annex 2B attached to the Resolution according to potentials of specific provinces measured by their socio-economic developmental indexes cited before.  (See Table-2)

Table-2.Regional Investment Incentive Scheme
Tax ReductionRate of Contrib
ution to Investm
ent (%)**
Out of OIZ*152025304050
Within OIZ202530405055
Social Security              Contribution Support
(Employer’s Share)
Support PeriodOut of OIZ2 years3 years5 years6 years7 years10 years
Within OIZ3 years5 years6 years7 years10 years12 years
Interest  SupportTL Denominated LoansN/AN/A3 Points4 Points5 Points7 Points
Foreign Exchange1 Point1 Point2 Points2 Points
Denominated Loans
Social Security Contribution Support
(Employee’s Share)
N/AN/AN/AN/AN/A10 years
Income Tax Withholding Support N/AN/AN/AN/AN/A10 years

*OIZ: Organized Industrial Zones
**’Rate of Contribution to Investment’ is a ratio to total investment with which the maximum amount of tax forgone by the government is calculated

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