Turkey is an attractive country for foreign investors due to the incentive system offered by the Turkish authorities in order to encourage the development of businesses in this country. The new system of incentives came into force in 2012, in the middle of the economic crises, as a support for foreign entrepreneurs interested in opening a company in Turkey.
The local investors are encouraged too to open companies and develop their businesses and there is no discrimination between the local and the foreign investors.
The Turkish authorities implemented a few incentives schemes according to the type of investment: strategic, large-scale, regional and general. The main incentives granted to the entrepreneurs are:
- VAT exemption
- tax minimization
- VAT refund
- income tax withholding allowance.
In order to benefit from the incentives, the entrepreneurs must invest a certain amount related to the region in which they plan to develop a business and meet certain conditions. The minimum amount is TRY 500,000 in regions 3, 4, 5 and 6 and increases to TRY 1 million for regions 1 and 2.
For those investors who meet the requirements, there are a few important incentives, such as exemptions from custom duties and VAT. Other incentives are offered to the investors who chose certain regions of Turkey in order to develop their businesses.
Every region has its own incentives established according to the economic needs of regions. The entrepreneurs who are interested in large and strategic investments in Turkey can also benefit from incentives.
The foreign entrepreneurs who want to be VAT exempted can import or supply the intern market from Turkey with machinery and equipment. If you need a customs duty exemption, you need to import the same articles and for a tax reduction, you will benefit from a reduced amount of income or corporate tax. The reduced rates are applied until the total amount reaches the contribution to the investment in Turkey.
The Turkish authorities offer a few incentives to the foreign investors who employ people for their business. The government covers the employee’s share of the social security amount for the legal minimum wage but only for investors in region 6. For the same region, the income tax is not liable to withholding taxes.
Whenever you need more information about the incentives provided by the Turkish authorities for your business in Turkey, you may ask our Turkish lawyers.