How Do Foreigners Get an Incentive Certificate in Turkey?

Obtaining an Investment Incentive Certificate in Turkey is of great importance for businesses aiming to grow in the business world.

With the Investment Incentive Certificate to be obtained by applying to the Ministry of Industry and Technology of the Republic of Turkey, foreign investors will also be able to benefit from some exceptions and exemptions.

Turkey stands out as an attractive destination for investors with its geographical location, developed infrastructure, and dynamic economy. In this context, we will discuss in more detail the opportunities offered by the Investment Incentive Certificate in Turkey to businesses and why obtaining this certificate is so vital for businesses.

The Investment Incentive Certificate functions as a document that offers various incentives and tax advantages to investors. These advantages support businesses to make new investments, grow their existing businesses, and gain a sustainable competitive advantage. Obtaining an Investment Incentive Certificate in Turkey not only provides a cost advantage to businesses, but also helps them grow and become a more effective player in the international arena thanks to Turkey’s strategic geographical location.

Objectives of the Incentive Certificate Legal Regulation

Encouraging foreign direct investment in Turkey and providing rights to foreign investors is critical to enhancing the country’s economic growth and competitiveness. In addition, compliance with international standards and facilitating investment acceptance and approval processes are also vital elements to ensure that foreign investors see Turkey as an attractive destination.

Promotion of Foreign Direct Investments:

Turkey implements various incentive measures in order to attract foreign capital to the country and encourage investment. These measures include economic incentives such as tax breaks, customs exemptions, and space allocation. These incentives facilitate the decision of foreign investors to invest in Turkey while also allowing them to take advantage of Turkey’s growth potential.

Providing Rights to Foreign Investors:

Providing and protecting rights for foreign investors ensures that Turkey is in a competitive position in the international investment environment. This ensures that the legal framework is transparent and fair, while securing investors’ investments. In this way, foreign investors can grow their business in Turkey in a long-term and sustainable way.

Compliance with International Standards:

Turkey is taking important steps to harmonize investment and investor qualifications with international standards. This allows foreign investors to better process doing business in Turkey. it makes them understand and feel more confident. It also contributes to making the Turkish business environment more understandable and accessible to international investors.

Facilitating Acceptance and Approval Processes:

Facilitating the acceptance and approval processes of investment projects helps foreign investors to start their business quickly. The faster and more information-oriented operation of these processes accelerates investors’ decisions to do business and further strengthens Turkey as an attractive destination.

Who are Foreign Investors?

Foreign investors are people who engage in activities such as investing outside their country of nationality or controlling a foreign company, merging, or entering into joint ventures. Foreign investment is defined by foreigners playing an active role in the management of the business as part of their investment or owning a large enough stake to influence the investor’s business strategy. Foreign investors tend to prefer countries where they can benefit from tax advantages.

What are Direct and Indirect Investments?

Foreign investments can be divided into two categories as direct and indirect investments:

Foreign Direct Investments: Foreign direct investments refer to the fact that a foreign company makes a physical investment in a foreign country, usually by setting up factories, purchasing buildings, machinery, and other assets. Such investments involve the foreign investor being a direct business owner or partner.

Indirect Foreign Investments: Indirect foreign investments  refer to investments made by purchasing stocks or positions of foreign companies traded in a foreign country. Such investments involve the foreign investor investing in stocks or securities rather than owning the business. Indirect investments can often be more flexible in terms of liquidity and offer investors the opportunity to diversify.

9 Government Incentives for Foreign Investments

Incentives and motivational measures implemented to increase foreign direct investments in Turkey are of great importance. While these incentives facilitate the decision of foreign investors to invest in Turkey, they contribute to the country’s economy. Here are some examples of these incentives:

  1. VAT Exemption: VAT (Value Added Tax) exemption can be applied in the areas to be invested. This incentivizes investors by lowering investment costs.
  2. Customs Duty Exemption: Customs duty exemption can be provided for the import of machinery, equipment and raw materials required for investment projects. This reduces investment costs.
  3. Social Security Premium Support: Businesses that invest can cover a part of their workers’ social security premiums with government support for a certain period of time.
  4. Tax Deduction: Tax rates in the sectors in which investments are made can be reduced. This increases the profitability of businesses.
  5. Income Tax Withholding Reduction: Income tax withholding rates of foreign investors are reduced.
  6. Land Allocation: Land allocation or leasing is provided for investment projects under favorable conditions.
  7. Interest Rate Support: Provides low interest rates or interest support for investment loans.
  8. VAT Refund: If the investment is completed within a certain period of time, it provides a VAT refund.
  9. R&D Incentive: Incentives can be offered to R&D activities within the scope of investment projects.

In addition, 4 different types of incentives have been created with the new incentive practices that entered into force on January 1, 2012:

  1. General Investment Incentives: These are the incentives applied to encourage general investments.
  2. Regional Investment Incentives: It includes special incentives for different regions of Turkey and provides inter-regional balance for economic development.
  3. Large-Scale Investment Incentives: These are special incentives applied to encourage large-scale investments.
  4. Strategic Investment Incentives: It is implemented to encourage strategically important investments in certain sectors.

Advantages of Incentive Certificate for Foreigners in Turkey

Turkey implements various incentive measures in order to attract foreign investors to the country and strengthen its economy. These incentives increase the willingness of foreign investors to invest in Turkey and encourage them to contribute to the country’s economy.

Tax benefits are one of the most attractive incentives for foreign investors. Investment incentive certificate holders can benefit from various discounts and exemptions in taxes such as income tax, corporate tax and VAT. This reduces investors’ costs, increasing their profitability.

In addition, customs duty exemption can be provided for the import of machinery, equipment and raw materials required for investment projects. This, in turn, reduces the cost of investment and increases the competitiveness of businesses.

Social security premium support includes the coverage of a part of the employer’s social security premiums by the state. This reduces labor costs and promotes employment.

Tax breaks offer tax breaks to incentive certificate holders for a set period of time. It is an important advantage to increase the profitability of businesses.

Upon completion of the investment, a VAT refund can be obtained, which increases the investor’s liquidity.

Technology transfer and R&D support are provided to enterprises that receive investment incentive certificates. These supports encourage innovation and increase the competitiveness of businesses.

Turkey’s strategic location, growth potential, and investment incentives offer a significant opportunity for foreign investors. If you want to take advantage of Turkey’s dynamic business environment by investing, obtaining an incentive certificate for foreign investors can be the key to a successful investment. Take a step to seize these opportunities to do business in Turkey and grow your investment.

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