Regional Investment Incentives Scheme

In this investment scheme, Turkey is divided as 6 regions. The most advantageous region is this investment scheme is region 6 in which Bingöl is included.

The sectors to be supported in each region are determined in accordance with regional potential and the scale of the local economy, while the intensity of support varies depending on the level of development in the region. The minimum fixed investment amount is defined separately for each sector and region with the lowest amount being TRY 1 million for Region 1 and 2, and TRY 500,000 for the remaining regions. The terms and rates of support provided within the Regional Investment Incentives Scheme are shown in the following table.

Regional Investment Incentives Scheme Instruments

Incentive Instruments

Region

I

II

III

IV

V

VI

VAT Exemption

YES

Customs Duty Exemption

YES

Tax Reduction

Tax Reduction Rate (%)

50

55

60

70

80

90

Reduced Tax Rate (%)

10

9

8

6

4

2

Rate of Contribution to Investment (%)

Out of OIZ*

15

20

25

30

40

50

Within OIZ*

20

25

30

40

50

55

Social Security

Premium Support (Employer’s Share)

Support Period

Out of OIZ*

2 years

3 years

5 years

6 years

7 years

10 years

Within OIZ*

3 years

5 years

6 years

7 years

10 years

12 years

Upper Limit for Support (%)

Out of OIZ*

10

15

20

25

35

No limit

Within OIZ*

15

20

25

35

No limit

No limit

Land Allocation

YES

Interest Rate Support

TRY Denominated Loans (points)

N/A

N/A

3 points

4 points

5 points

7 points

FX Loans (points)

1 point

1 point

2 points

2 points

Social Security

Premium Support (Employee’s Share)

N/A

N/A

N/A

N/A

N/A

10 years

Income Tax Withholding Allowance

N/A

N/A

N/A

N/A

N/A

10 years

*OIZ: Organized Industrial Zones   

 

Contribution Rate to Investment Applicable During Investment / Operating Periods

Under Regional Investment Incentives Scheme

Regions

Investment Period

Operating Period

I

 0 %

100 %

II

10 %

 90 %

III

20 %

 80 %

IV

30 %

 70 %

V

50 %

 50 %

VI

80 %

 20 %

 

The new investment incentives system defines certain investment areas as “priority” and offers them the regional support extended to Region 5 by the Regional Investment Incentives Scheme, regardless of the region of the investment. If the fixed investment amount in priority investments is TRY 1 billion or more, tax reduction will be applied by adding 10 points on top of the “rate of contribution to investment” available in Region 5. If priority investments are made in Region 6, the regional incentives available for this particular region shall apply.

Fields of investment with specific priorities to be supported with Region 5 instruments regardless of the investment’s region are:

  • Tourism accommodation investments in Cultural and Tourism Preservation and Development Regions and investments that could benefit from regional incentives with regard to thermal tourism
  • Mine extraction and/or processing investments
  • Mining exploration investments to be made in the licensed areas by investors with a valid Exploration License or Certificate issued pursuant to the Mining Law
  • Railroad and maritime freight or passenger transportation investments
  • Investments in the defense industry to be made with respect to the project approval received from the Undersecretariat for Defense Industry
  • Test centers, wind tunnels, and similar investments made for the automotive, aerospace or defense industries
  • Investments made by the private sector for kindergartens and day-care centers, as well as preschools, primary, elementary, and high schools
  • International trade fair investments with a minimum indoor area of 50,000 square meters (excluding accommodation and shopping center units)
  • Investments for the manufacturing of products or parts developed by an R&D project that is supported by the Ministry of Science, Industry and Technology, TUBITAK or KOSGEB
  • Investments in the motor vehicles main industry worth a minimum amount of TRY 300 million, engine investments worth a minimum amount of TRY 75 million, and investments for motor engine parts, transmission components/parts and automotive electronics worth a minimum amount of TRY 20 million
  • Investments for power generation where metals stated in the 4-b group of Article 2 of the current Mining Law No. 3213 within the scope of a valid mining license and permit issued by the Ministry of Energy and Natural Resources are used as inputs
  • Investments for energy efficiency projects which are to be carried out at existing manufacturing industry facilities with minimum 500 TEP (ton equivalent petroleum) annual energy consumption, which would provide minimum 20% energy savings compared to the current situation, and with 5 years or less return on investment as a result of energy savings
  • Investments for electricity generation through waste heat recovery in a facility (excluding natural gas-fired electricity generation plants)
  • Liquefied natural gas (LNG) investments and underground gas storage investments with a minimum amount of TRY 50 million
  • Investments for the production of carbon fiber or composite materials made ​​from carbon fiber provided that it takes place along with carbon fiber production
  • Investments for the production of items in high-tech industry segment stipulated in the Organization for Economic Cooperation and Development’s (OECD) definition for technology intensity
  • Priority investments with a minimum fixed investment amount of more than TRY 3 billion are considered to be strategic investments. Yet, the amount of interest support for these investments cannot exceed TRY 700,000.
  • Investments for the production of turbines and generators used in renewable energy generation, as well as investments for the production of blades used in wind energy generation
  • Integrated investments to produce aluminum flat products by hot rolling and direct chill casting techniques 

Furthermore, together with the amendment to the incentives legislation on October 5, 2016, investments for the production of items in medium high-tech industry segment stipulated in the Organization for Economic Cooperation and Development’s (OECD) definition for technology intensity will be able to benefit from the instruments of Region 4 regardless of the location of the investment. The investment subjects in question are as follows:

  • Painting substances not classified elsewhere (NCE); inorganic products used as luminophore
  • Sulphites and sulphates
  • Phosphinates, phosphonates, phosphates and polyphosphates, nitrates
  • Manufacture of other organic main chemical substances
  • Manufacture of chemical fertilizers and nitrous compounds
  • Manufacture of synthetic rubber and plastic raw materials
  • Manufacture of glue and gelatin
  • Modeling pastes; dentist’s wax, plaster-based preparations used in dentistry, fillers and compounds for fire extinguishers; prepared culture media used for the cultivation of microorganisms; not classified elsewhere (NCE) mixed reagents for laboratory or diagnostics use
  • Doped chemical elements for use in electronics such as disks, scales etc.
  • The preparations used in cleaning of metal surfaces; vulcanization accelerator substances; not classified elsewhere (NCE) plasticizer and stabilizer compounds for rubber and plastics; not classified elsewhere (NCE) reaction initiators, accelerators, catalysts; not classified elsewhere (NCE) alkalibenzene and alkalinaphtalene mixtures
  • Manufacture of internal combustion engines and turbines (excluding aircraft, motorized vehicle and motorcycle engines)
  • Manufacture of pumps and compressors
  • Manufacture of bearings, gears, gear sets and drive mechanisms
  • Manufacture of industrial furnaces, kiln and furnace ignitors
  • Manufacture of hoisting and handling equipment
  • Manufacture of other general purpose machinery
  • Manufacture of agricultural and forestry machinery
  • Manufacture of machine tools
  • Manufacture of metallurgy machinery
  • Manufacture of mining, quarry and construction machinery
  • Manufacture of food, beverage and tobacco processing machinery
  • Manufacture of machinery used in textile, garments and leather processing
  • Manufacture of weaponry and ammunition (excluding hunting rifles and ammunition, components and accessories for hunting rifles)
  • Manufacture of other specialty machinery
  • Manufacture of not classified elsewhere (NCE) household appliances
  • Manufacture of electrical motors, generators and transformers
  • Manufacture of power distribution and control devices
  • Lead-acid accumulators for starter-piston engines
  • Nickel-cadmium, nickel-iron and other electrical accumulators
  • Manufacture of not classified elsewhere (NCE) electrical equipment
  • Manufacture of motorized land vehicles
  • Manufacture of railroad and trolley engines and cars
  • Manufacture of motorcycles
  • Manufacture of vehicles for the disabled