Stimulating business in Turkey

State measures

Classification of incentives for investors in Turkey

The purpose of the General Programme of investment promotion in Turkey is to promote, support and orient investments in accordance with its international obligations, tasks, development plans and annual programs, to eliminate regional discrepancies within the country, creating new opportunities on the labour market of Turkey, taking advantage of progressive and natural technologies with higher added value and to support international competitiveness.

Turkey adopted a set of measures designed to stimulate investment. In general, these measures can be classified as follows:

  • investment measures
  • export-oriented measures
  • other tax or nontax instruments promoting investment in Turkey

State assistance to investors in Turkey

Reduced rates on income tax for enterprises, formed by foreign investors in Turkey

Public assistance includes the application of reduced rates of income tax on income received from investment in specific sectors and regions (since February 28, 2009), the application of reduced rates of income tax in the case of certain types of companies move in special regions (February 28, 2009), exemption from customs duties, VAT exemption and  loans of the state budget. In order to obtain the state aid, a certificate of investment incentives must be provided to start investing. To get the state aid, the investment must be subject to the following conditions:

  • The minimum cost of 200 000 TL and the maximum value of 2 000 000 TL to small and medium-sized enterprises.
  • The minimum cost of 1 000 000 TL for other enterprises.
  • The minimum cost of 200 000 TL for the financial leasing companies.

The application of reduced rates of income tax on income received from investment in special sectors and certain regions.

The decrease in 90% tax rates on profits (since February 28, 2009) is possible for income derived from investments, confirmed by the investment promotion certificate issued by the Treasury Management in certain regions and cities (as defined by the Council of Ministers) in all sectors, except for the following:

  • Finance and insurance
  • Investment in the form of joint ventures
  • Contracting construction works
  • Investment contract-concession scheme "build-operate" (Law No. 4283)
  • Investment contract-concession scheme "build-operate-transfer" (Law No. 3996)
  • Investments on the basis of agreements on mountain outlet

The application of reduced rates of income tax on income derived from industrial enterprises in certain sectors in Turkey displaced in specialized regions till December 31, 2010.

In force since February 28, 2009, the drop to 75% profit tax rates is possible for profits derived from the production enterprises in such industries as textiles, readymade garments and leather clothes, which should be moved to December 31, 2010, defined by the Council of Ministers (usually located in the regions with the priority for development) for a period of 5 years following the date of the beginning of investment in designated regions , provided that employment opportunities will provide jobs at these plants for at least 50 people.

Exemption from customs duties on imports to Turkey

The exemption from customs and other fees on imported goods is possible in many cases. 100% exemption from customs duties is normally granted if the investment incentive certificate is provided.

In the context of investment in research and development, imports of machinery, equipment and raw materials, semi-finished products and consumables may be exempted from customs duties and taxes at risk from the capital as well as the import of used equipment, second-hand machinery, and equipment under certain conditions.

Exemption from value added tax (VAT) on imported and locally purchased machinery and equipment

Machinery and equipment, imported or locally procured based on investment promotion certificate are exempt from VAT. It should be noted that sales of services, consumables, spare parts and material are not exempted from VAT, even if they relate to machines and equipment.

Support for repayment of interest on loans

The Treasury also provides support for interest on loans obtained for the purpose of realization of investments on the basis of the investment promotion certificate. Support per cent is available for investment projects of SMES, research and development projects, environmental protection projects and projects in the regions with the priority for development.

The support Treasury interest is 5% on borrowings in TL and 2% for loans in foreign currency. Treasury provides support for interest on loans with the maturity of more than one year. Support per cent is available for a maximum period of 4 years.

Exemption from contributions to support consumption

External loans in foreign currency that are used based on investment promotion certificate are exempt from contribution to the TFG, equal to 3%.

Regional investment incentives

Investment incentives are applied to the cities in Turkey, located in the priority regions, cities, where income per capita  is below $ 1 500 (Adıyaman, Afionkarahisar, Aary, Aksaray, Amasya, Ardahan, Bartın, Bayburt, Batman, Bingöl, Bitlis, Diyarbakır, Çankırı, Düzce, erzincan, Erzurum, Giresun, Gümüşhane, Hakkari, Iidyr, Kars, Kırşehir, Malatya, Mardin, Muş, Ordu, Osmaniye, Siirt, Sinop, Sivas, Şanlıurfa, Šyrnak, Usak, Tokat, Van, Yozgat), cities with negative socio-economic development indicators (Artvin, çorum, Èlazyy, Kahramanmaras, Karaman, kastamonu, Kutahya, Kilis, Nevşehir, Niide, Rize, Trabzon, Tunceli) and the province of Imbros and Bozcaada in Canakkale region.

Abolition of income tax from wages

This measure was expected to be taken until December 31, 2009, on certain conditions in parts of the abolition of income tax from the wages of employees working at investors in the city with per capita income below us $ 1 500 or cities with negative socio-economic development.

Financial support for the Turkish Treasury was planned to be taken up to 100% on December 31, 2009, the percentage of employers in social insurance payments for workers employed in special industrial zones, and 80% of employers in the social insurance payments for workers hired outside of these zones in the cities listed above.

Support in energy costs

20% of the cost of electricity is funded by Treasury in companies working in the sectors concerned, provided that the minimum number of workers established by law No. 5084 matches. 0.5 units added to 20% for each additional employee, after the adoption of the required minimum of employees. However, the maximum amount of funding may not exceed 50% for special industrial zones and 40% for the other territories (scheduled to take until December 31, 2009)

Grants for RESEARCH and DEVELOPMENT in Turkey

In accordance with the law on profit tax, the organizations that carry out work on RESEARCH and DEVELOPMENT, confirmed by the Council for science and technological research, universities and institutions on the subject of research related to RESEARCH and DEVELOPMENT and having the following characteristics can count on subsidies equal to 100% of the cost of research and development in addition to lower cost on research and development.

  • Search for new technical information for the development of science and technology and/or in order to eliminate inconsistencies in certain scientific and technological spheres
  • Search for ways to development, new ways of production processes and operations
  • Development and introduction of new products, materials, and equipment, processes and systems by using new methods, as well as the production of new technology and prototypes as a result of learning design and technical drawings
  • Search for new technologies that could have an impact on reducing production costs, and to increase the level of qualitative transformations of performance
  • Development of new and alternative software products

Grants for RESEARCH and DEVELOPMENT in Turkey, which might not be available in connection with the insufficient income companies can be used in future years.

A tax credit offered to companies operating in the areas of technological development

In accordance with the law on the Areas of technological development, technological development zone (TDZ) can be formed by private sector organizations in Turkey, together with universities and research institutes for the sole purpose of carrying out research and development (including software), with the aim of promoting technological development in Turkey.

ZTR shall be governed by the management company. This company should be established in the form of a joint stock company. At least one of the shareholders of the management company must be a University, Research Institute or Institute of research and development. Legal entities, local or foreign capital can participate in the management of the company and as founders and shareholders.

The law on technological development Zones of Turkey provides the following tax deductions:

  • Exemption from prior tax management company: income received by the management company ZTR from ZTR in accordance with Act No. 4961 are exempt from income tax until December 31, 2013
  • Preliminary tax exemption for certain individuals and entities working for the ZTR: individuals and legal persons engaged in research and development and software development on the territory of the ZTR are also exempt from tax on income and profits derived from such activities until December 31, 2013
  • The release of preliminary tax for personnel engaged in research and development on the territory of the ZTR. The wages of workers employed in research and development and for the implementation of FREE software development, shall be exempt from all taxes until December 31, 2013
  • Exemption from VAT: Supply software for systems maintenance, data processing, Internet applications, mobile applications, military applications, command control, etc., as a result of business activity in ZTR, are exempt from VAT till December 31, 2013

Stimulate small and medium-sized enterprises in Turkey

Management support and development of small and medium-sized enterprises in Turkey (KOSGEB) provides a variety of incentives to new businesses and entrepreneurs operating in the manufacturing industry, with the number of employees from 1 to 150 persons:

  • Consulting and training to small and medium enterprises in Turkey
  • Support of intellectual property in industry (for obtaining patents, industrial design, and identity etc.)
  • Information technology support (for computer software, e-business start support) of small and medium enterprises in Turkey
  • Support the development of quality in enterprises of small and middle-scale business in Turkey
  • Support for market research and export promotion of small and medium enterprises in Turkey
  • International cooperation to support the development of small and medium-sized enterprises in Turkey
  • Support at the regional level
  • Support the development of entrepreneurship in Turkey

Export-oriented measures to attract investment in Turkey

Tax deductions for businesses operating in the Turkish free trade zones

Turkish free trade zone (FTZ) is a Council of Ministers defined areas within the political boundaries of Turkey, but outside the customs borders, where all kinds of production, commercial activity and specific services, encouraged by certain tax exemptions and measures in the light of the following tasks:

  • the increase in the number of export-oriented investment and production
  • multiplication of the influx of foreign capital and technology in Turkey
  • increased use of foreign financing and trading opportunities

The Turkish Council of Ministers is empowered to determine and establish the location and boundaries of free zones in Turkey.

Private and legal entities have the right activities in the free trade zones of Turkey regardless of whether they are resident or not. In all cases, to obtain the right of conducting activity in the FTZ, you must obtain a "license to operate" in the management of the free trade zone, managed by the Office of international trade.

The license is usually issued for a period of 10-30 years (up to 99 years for specific projects), taking into account the requirements of the applicant, the activity, the amount of investment and other factors applicable to the particular FTA.

A free trade zone in Turkey

No. p/p

The name and Location of a free-trade zone of Turkey

The governing body

The year of the beginning of the activity


Mersin free trade zone




Antalya-free trade zone




FTA Aegean




FTA Ataturk Airport in Istanbul




Trabzon-free trade zone




Istanbul FTA skin industries




FTA In Eastern Anatolia




Mardin free trade zone




FTA Istanbul Stock Exchange and international security




Skin FTA Izmir-Menemen




Rize free trade zone




Samsun free trade zone




Thracian FTA Istanbul




Kayseri free trade zone




The European FTA

Avrupa Serbest Bolgesi Kurucu ve Isletici A.S.



Gaziantep free trade zone




Adana-Yumurtalik Pipeline




Bursa free trade zone




Denizli free trade zone




Kocaeli free trade zone




Tubitak Marmara Research Center



Important changes have been made in the Turkish legislation on free trade areas, which entered into force on February 6, 2004

Changes in the legislation of Turkey's free trade zones

The most important change was the abolition of tax exemptions on profits in the Turkish FTA on February 6, 2004. Nevertheless, the organizations already engaged in the Turkish FTA based on valid license previously received on February 6, 2004, have the right to be exempted from the profit tax and income within the period specified in their licenses.

Exemption from income tax on wages and salaries of staff employed in the free trade zone of Turkey, and exemption from taxes and charges, which operated until December 31, 2008, 2009, 2011 are null and void.

However, the income tax exemption will still be applicable as from January 1, 2009, only for the companies manufacturing units within the Turkish FTA, subject to appropriate conditions. The main condition requires that the manufacturing company has exported at least 85% of the total FOB products produced within the FTA. This deduction would seem to be applicable until the end of the year, in which Turkey will become a full member of the European Union.

Exemption from the tax on income referred to in the preceding paragraph will not be applied to income tax levied on dividends for distribution. In addition, dividends to the distribution companies established and operating in Turkish FTA are exempt from income tax on dividends at the rate of 15%.

For organizations that have received a licence for production activities in Turkey on February 6, 2004 or later only the earnings from the sale of goods produced within the Turkish free trade zones are subject to exemption from the tax on profit before the end of the year in which Turkey will become a full member of the European Union.

Income from Exchange rate differences derived from receivables from customers, as well as revenues derived from the additional fines paid by customers on account of late payment, shall be exempt from taxes on profits and earnings, provided that they relate to activities within the FTA under the licenses.

Transfer of profits or proceeds from the disposal of a free-trade zone

Transfer of profits and proceeds from the disposal can be freely accessed from the Turkish free trade zones in other parts of Turkey and abroad.

Trade with Turkey

Goods supplied in FTA of Turkey, shall be made in accordance with the regime for foreign trade, and are considered to be exported from Turkey. Similarly, products made in Turkey from FTA are governed by the Foreign Trade Regime of Turkey and are considered imported under this regime. In fact, the foreign trade regime is not applied to the transactions between the FTA and other countries and to the transactions between the free trade zones of Turkey. Goods and services can move freely from FTA outside Turkey.

A mandatory fee ("special tax") from trading operations

The compulsory contribution to the participants in the free trade zone in Turkey in a special account of the Central Bank of Turkey at the rate of 0.5% will be charged with:

  • The cost ''cost-insurance-freight" for the goods imported into Turkey from FTA countries (FTAs are not producers of goods and received a license to operate from February 6, 2004, are not subject to payment of the fee at the time of May 1, 2007)
  • The total cost of the goods excluding transportation exported from Turkish FTA in Turkey (non-FTA producers of goods and received a license to operate from February 6, 2004, are not subject to payment of the fee at the time of May 1, 2007)

Tax benefits under the regime processing of goods within the customs territory

Sale of raw materials, spare parts and packaging materials used in the production of products intended for export under the certificate processing of goods within the customs territory or the processing of goods within the customs territory shall be exempt from the tax burden.

Agreements, instruments, declarations (including customs declarations), used in the light of the transactions within the permission to process the goods within the customs territory shall be exempt from stamp duty and other charges.

State subsidies in support of export activities (non-tax measures)

  • Support for RESEARCH and DEVELOPMENT
  • Support for the environmental protection agency
  • Support for participation in international specialized exhibitions organized in Turkey and abroad
  • Support for marketing research
  • Support to open the workshops abroad and promotion of this kind of activity
  • Provision of training
  • Support of export subsidies on agricultural products
  • Development support/promote of Turkish brands abroad "Turkish quality from Turkey»
  • Support export financing through loans of Turkish export-import bank

Other tax and non-tax measures

Other tax and non-tax measures to stimulate investments in business development and enterprises in Turkey.

Sports, culture, education and medicine have special privileges from the state in Turkey to promote such activities.

Temporary exemption from profit tax for private educational institutions and rehabilitation centers in Turkey

Provided temporary exemption from income tax for a period of 5 years on income received by private educational institutions (pre-school, primary and secondary schools) and rehabilitation centers, managed, tax-exempt organizations established for the public good. The period of the temporary exemption from taxes begins with the first year of operation.

Sponsorship of sports in Turkey

Sponsorship costs are excluded from the taxable base of income tax, depending on whether the sporting activities on an amateur or professional basis: 100%-for amateur sports and 50 percent for the professional.

Investment in support of culture

Legislation on investments in support of culture (Law No. 5225) provides employment, support for energy distribution and placement of objects of immovable property with a view to promoting investment in support of culture and protection of cultural heritage.

The Ministry of culture and tourism is authorized to post real estate for investors for a fixed period.

There is also a discount on income tax and employer's share of premiums for social insurance for the payment of the salary of staff, hired by investors supporting the construction/renovation/real estate activities intended for cultural activities, as well as for documenting, archiving and protection of superior cultural values.

Additionally, there is the energy support (20 percent of electricity and natural gas consumption financed by the Treasury within 5 years) for these types of investments.

Deductible expenses and donations to cultural values and natural resources

Fees and donations, incurred as a result of activities relating to the protection, promotion and preservation of cultural values and cultural heritage of Turkey in accordance with the law on the protection of cultural objects and natural resources law (Law No. 2863) should be excluded from the taxable base of income tax.

In addition, there is a VAT exemption for projects for the reconstruction and restoration of buildings surveyed in the framework of the law for the protection of cultural property and natural resources.

Tax incentives for ships registered in the international registry marine of Turkey

Tax incentives for ships registered in the international register of the following Turkish ship:

  • Exemption from profit tax and income from operations and transport ships.
  • The contract concluded for the sale, mortgage registration, freight, as well as the debt agreement on such ships are exempt from stamp duty, contributions and transactional banking payments and insurance.
  • Earnings and compensation paid to staff working on ships and yachts registered in International ship registry of Turkey shall be exempt from tax on the income and all kinds of contributions.

Lending business in Turkey

In Turkey, there is a Government support for interest payments on loans for investment in research and development and development of priority regions for investment in the environment, as well as for investments in SMEs through investment promotion Certificate, provided that the loan term exceeds 1 year. Support percent is 5 percent for loans in TL and 2 percent for loans in foreign currency.

The above support percent is also available for loans for a period of 6-12 months for investments in RESEARCH and DEVELOPMENT to ensure work equipment during the first year of operation.

Support percent is limited to certain amounts in accordance with the location and types of investment on a project basis. Maximum percent support is the following:

  • 300 000 TL for investment in research and development and environmental protection
  • 200 000 TL  for investment by SMES
  • 1 000 000 TL for investment in priority regions for development
  • 100 000 TL for loans to invest in RESEARCH and DEVELOPMENT

For investment in the field of financial leasing and investment second-hand machinery and equipment support for the borrowing costs.

Contribution to the Fund to support consumption on foreign borrowing

external loans in foreign currency, received by residents of Turkey for a period less than 1 year (average), there is a mandatory fee in the amount of 3% of the loan amount at the date of its receipt.

However, external loans in foreign currency, received by banks and financial institutions are not subject to compulsory collection of the TFG, even if they are used in less than 1 year.

Provides for an exemption from contribution to the PPP, with the proviso that foreign loans in foreign currency received the investment certificate-based promotion (see also Chapter 4.2.1).

Additionally, currently applies a zero interest rate for compulsory collection in FPP for those loans, which made Turkey in TL or foreign currency for the purpose of financing export and foreign loans taken by the residents of Turkey for the purposes of export finance (including loans granted to finance the production of foreign currency within the certificate export support enabling certificate handling goods within the customs territory or a certificate of exemption from taxes and fees).

Financial leasing in Turkey

In respect of treaties concluded with July 1, 2003, the tax treatment of financial leasing transactions in Turkey has been modified in accordance with international financial reporting standards (IFRS).
All payments of the lessee shall be deducted from the taxable base of income tax.    The leasing company must share interest income and total income. Taxable interest income only.

The lessee shall divide the interest and total revenue. From the taxable base on income tax deductible interest only.

The new regime applies to all lease agreements (i.e., operational and financial leasing) without regard to the status of the parties. In this context, the leasing transaction between lessor, not registered as financial leasing company within the framework of the relevant legislation, and the lessee will be treated for tax purposes under the rules of taxation of financial lease, provided that the lease agreement has, at least, one of the following items:

  • The lessor transfers ownership to the lessee at the end of the lease term
  • Lease agreement provides for the possibility of extending the term of the lease
  • The lease period covers more than 80% of the useful life of the leased property
  • The current amount of minimum lease payments at the beginning of the lease term is greater than or equal to 90% of the real value of the leased property
  • In addition, real estate leasing agreements can be classified as the finance lease if the lessee acquires the property or it goes to the lessee after the end of the lease term.
  • The following special types of leasing transactions may not treat the leasing agreement for tax purposes:
  • Leasing agreements for research or the use of natural resources such as oil, gas, timber, metals and mining rights
  • Licensing agreements for such items as motion pictures, video games, manuscripts, patents and copyrights

Export credits in Turkey

Turkish export-import bank is a Government-owned bank, acting as the primary tool to encourage exports to the Turkish export management strategies. As the official export credit agency of the country, Turkish export-import bank was authorized to support international trade and Turkish contractors and investors, leading its operations abroad.

The main tasks of the export-import Bank of Turkey include: promotion of Turkey's exports through diversification of exported goods and services by increasing the number of Turkish exporters in international trade, finding new markets for traditional and non-traditional exports, and providing support to exporters and foreign contractors, with the aim of improving their competitiveness and ensuring a safe and secure environment in international markets. In the context of measures to promote exports, the export-import Bank of Turkey offers special financing opportunities, expressed in a variety of credit, insurance programs.

Turkish export-import bank is providing support for exporters, export-oriented manufacturers, foreign investors, and organizations involved in the production of foreign currency through short-, medium and long-term cash and non-cash loan programs. Moreover, export receivables are subject to deductions in order to increase exports and easier access to new and target markets by promoting sales on deferred payment terms.

The main sources of export-import Bank of Turkey are formed through direct funding of the Treasury through increased size of capital and the transfer of funds from extra-budgetary funds.