States have treated Foreign Direct Investment (“FDI”) seriously due to globalization all over the world. Therefore, FDI issues has been regulated by most of states which aim to call foreign investors’ attention over their countries. Turkey is the one of these states, started to make different development plans about FDI. Turkey has started to work on these plans with the aim of making Turkey a country which is steadily growing, fairly distributing its income and achieving global competitive power. The long road of reaching these goals requires steady economic growth.
The states which would like to attract the attention of foreign investors need to provide an environment friendly to fund in Turkey. One of the tools of the investment environment could be incentives to be provided for the investors. Turkey has put into effect a new investment incentive system by providing many different instruments to promote different types of investment.
The recent investment incentive system contains five sort of invesment schemes;
- Strategic Investment Incentive Scheme
- General Investment Incentive Scheme (Please see our related article…)
- Regional Investment Incentive Scheme (Please see our related article…)
- Priority Investments Incentive Scheme (Please see our related article…)
- Large Scale Investment Incentive Scheme (Please see our related article…)
These are the five different support shemes that have been regulated in the new investment incentive regime. The system includes incentives that called “support measures”. These incentive tools generally contain; income tax withholding support, vat refund, free land allocation, social security premium support (employer’s share), social security premium support (employee’s share), tax deduction, customs duty exemptions and interest support (Please see our related articles…). The information contained in this article is an explanation for the investors who need to have an idea about five kind of investment shemes in Turkey. Strategic Investment Incentive Scheme is explained in details in this article.
The first goal of this scheme is supporting production of intermediate and final products with high import dependence with a view to reduce current account deficit. The second purpose of this scheme is encouraging high-tech and high value added investments with a potential of strengthening Turkey’s international competitiveness.
Investments matching the criteria below are supported within the frame of the Strategic Investment Incentive Scheme:
- be made for production of intermediate and final goods with high import dependence of which more than 50% of these goods are supplied by imports,
- having a minimum investment amount of 50 million TL,
- creating minimum 40% value added (Indeed, this condition is not applicable to refined petroleum production investments and petrochemicals production investments),
- having an import amount of at least $50 million for goods to be produced in the last one year period. In addition to that, this condition is not applicable to goods with no domestic production.
Besides all these, priority investments over the minimum fixed investment amount of 3 billion TL are considered as strategic investment. However, interest support for those investments shall not exceed 700 thousands TL.
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