Turkey’s entry into the Customs Union abolished import duties for the majority of goods from the EU countries, below you will find information about the customs regulation for the machines, equipment, materials etc., which are imported from third countries for realizing investment projects.
Machines and equipment
Almost all the machines and equipment which are imported to Turkey within the framework of the foreign investments are exempted from customs duties. The import may be rated only 5% tax in favor of specialized funds. Machines and equipment imported for realizing investment projects are exempted completely from customs duties in the following economics sectors:
- Investments into “priority regions” (except the investments into infrastructure)
- Materials imported for realizing very large investment projects in the “priority regions”
- Investments into building and hospitals equipment
- Investments into education sphere
- Yachts and ships building
- Ships overhauling including floating dry docks
- Investments into planes and aircraft import
- Natural gas distribution and transporting
- Investments into the projects realized via model “build-exploit-pass”
- Investments in the development of tourist business in the Black Sea region
- Investments in farming and agricultural projects
- Investments in electronic production
Used machines and equipment older than 5 years are forbidden to be imported except aircraft and ships.
Materials and intermediate goods
Materials and intermediate goods import for new production are exempted from customs duties only in the limited volume and for the limited period:
- For commissioning completely new productions and on condition of 10% capital deposit materials and intermediate goods import is allowed without duties for the sum which doesn’t exceed 20% of the total cost of imported or bought machines and equipment, for the period of 3 months.
- For realizing the investment projects in the “priority regions” on condition of 10% capital deposit the materials and intermediate goods import is allowed without duties for the sum which doesn’t exceed 30% of the total cost of imported or bought machines and equipment, for the period up to 4 months.
- For realizing large projects the materials and intermediate goods import is possible for the sum which doesn’t exceed 40% of the total cost of imported or bought machines and equipment, for the period up to 6 months. 10% deposit is the necessary condition.
Duties free spare parts import are allowed only in a case that their cost doesn’t exceed 5% of imported machines and equipment cost (or 10% in case of investments into building and services sphere). Generally, the exemption from the customs duties of spare parts import is regulated by the same conditions as the machines and equipment import.
Tax facilities for capital investing
The capital which is invested into the projects realization that has an encouraging certificate may be completely or partially exempted from the corporate tax payment. The discount for tax payment may amount from 30% to 100% depending on the object’s location, economics sector, and capital stock. 100% exemption from tax means that investor has the right not to pay the corporate tax until he refunds completely the main capital advanced for the project realization (except the expenses for the purchase of land and some other expenses). Priority sectors of economics concerning the facilities for the investment capital are: large-scale investments into building and infrastructure of the districts of active tourist business development; ships building and overhauling; leather manufacture; intensification of farming and agricultural spheres; creating of fish farms; education; health protection; protection of environment; investments into research activity; electronics; chemistry industry; motor car construction and some others. Annually this list of priorities is revised, expanded and specified.
Conditions of soft lending
The conditions of state credit arrangements in local currency for the realization of projects depend on the region and economics sector in which the capital investment is supposed. The amount of the credit is determined as a percent of the total sum of capital invested:
- For the investments into the regions of first priority 60%
- For the investments into the regions of second priority 50%
- For the investments into normal regions 40%
- For the investments into developed regions 30%
- For the investments into ships building, new technologies, environmental protection projects 50%
- For the investments into the crafts support 25%
Exclusive privileges are created for the investors in the so-called organized industrial zones and free economic zones. For such investors, the percent indicated higher is exceeded 10 points. Credits are arranged in TRL, the norm of percent for the regions of first priority and also for the organized industrial zones and free economic zones in the regions of second priority amounts 10%, for the regions of second priority and free economic zones and organized industrial zones located in the normal regions – 15%, for the normal and developed regions – 30%. Taking into account the annual level of inflation in the country and constant decreasing of TRL with respect to world currency such norm of percent makes the arranged credit exclusively privileged for the investor.
Facilities for exporters
Export-oriented investments have exclusive privileges. So if during 5 years after beginning of project realization supported by the encouraging certificate enterprise manages to reach a definite volume of exported goods in the total volume of production, long investments put into the project’s realization and credits are completely exempted from the duties, taxes and % payments for credits. Yearly takings from the goods export should be not less than 300 000 USD for developed regions; 200 000 USD for normal regions; 100 000 USD for priority regions.
VAT compensation for imported or purchased new machines and equipment in Turkey is compensated in case they are included as a part of nominal capital during the registration of investor in the Central administrative board for foreign investments and if the encouraging certificate is showed:
- VAT is compensated in the form of incentive bonus for purchasing capital equipment in Turkey
- VAT compensation is postponed in time for the imported machines and equipment: it will be compensated only after the fulfillment of the project and VAT will be added to the price of the products.
For stimulating investments and their rational distribution government may pay for:
- 25% of the input electric energy
- 50% payments to the social pension fund
- 100% necessary payments to the retirement fund during 5 years period
It concerns only the investments in the large-scale projects in the priority and normal regions.
Pay attention that the above-mentioned system of benefits is applicable only to those projects which have encouraging certificate i.e. those which may contribute to the development of one or another sphere or region of Turkey. Regarding those investment projects which don’t have encouraging certificates, they may also have some stimulating facilities. It may be a partial exemption from the customs duties during machines and equipment import and limited soft lending. The list of the spheres of Turkish economy which can’t claim for the encouraging certificate is rather wide.
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