Turkish Government Launches Project-Based Incentive Program to Boost Investments
As an addition to the current investment incentive schemes, in November 2016 the Turkish government launched a project-based incentive program designed to promote investments deemed to help meet critical national needs. Projects that ensure sufficient supply levels of strategic goods and services, boost technological capacity, research and development (R&D) efforts, competitiveness and added value in production, with a minimum of US$100 million investment value, are eligible for certain incentives. Because the program is not sector-specific, as long as a project fulfills the above-listed objectives and criteria, the incentives may apply.
Incentives include (i) customs tax exemption, (ii) VAT exemption, (iii) VAT refund, (iv) tax discounts or exemptions on corporate taxes, (v) employee social security premium support, (vi) income tax withholding incentives for employee salaries, (vii) salary contributions for qualified personnel, (viii) interest rate support by the treasury, (ix) direct capital contributions based on the capital expenditures, (x) electricity supply incentives, (xi) government off-take guarantees, (xii) investment area allocation, (xiii) infrastructure support, and (xiv) simplification of administrative processes. A project may be eligible for any one or several of the incentives listed above.
Other noteworthy changes introduced by this investment program include the Ministry of Economy invitation to invest in a project benefiting from the above listed incentives. The level and scope of the incentives are not determined based on the location of the project, enabling developed regions of Turkey to also benefit from the incentives.
Investors looking to benefit from the incentives should note that the transfer of shares and/or the investment itself as a whole will be subject to the approval of the Ministry of Economy (and of the Prime Ministry, in case of transfer of the investment).
The Ministry of Economy has issued a statement noting that project-based incentives will be utilized to create leaders in key business sectors, to promote the development of a pro-active economy and to ensure a sustainable investment and manufacturing environment.