New incentive package introduced by Turkey takes effect

A recently introduced government investment incentive program was published in the Official Gazette following the approval of the Cabinet on Wednesday.

The program divides provinces into six categories based on their current level of economic development and the investment opportunities they offer.  The first category, mainly Western provinces, is the most developed, while the sixth category includes the least developed regions, particularly in the eastern and southeastern parts of the country.

Economy Minister Zafer Caglayan shared the details of the package with reporters at a press conference on Tuesday in Ankara. The minister said the government redefined which sectors should be provided with incentives in different provinces.

This means that the government will increase both the amount and duration of incentives for separate industries. “A company that operates in the first region but makes a new investment in the sixth zone will be exempt from corporate tax equaling to as much as 44 percent of its costs for that particular investment. This is a great incentive that should be made use of,” he argued.

The program envisages offering incentives to increase production capacity and competition in six particular sectors — machine manufacturing, iron and steel production, the automotive sector, food production and agriculture, chemical production and textiles. The government holds these six sectors the most responsible for the country’s growing current account deficit (CAD).

“With this new program the government concentrates on industries with a high potential for utilizing capacity. Not all sectors in all provinces are covered by incentives,” Caglayan explained. Noting that the new program did not include incentives in particular for energy investments, the minister said investors would benefit from incentives in investments made to meet energy demand of new facilities.

Caglayan said the government expects to make Turkey a strategic services and production hub in its region. “We are receiving initial signals of this happening. … Coca-Cola manages Eurasia and Africa operations in 90 different countries from the company’s regional headquarters in Istanbul. Unilever has announced they will move their headquarters to Istanbul as well. They will manage 35 countries from here,” he noted.

21.06.2012
SOURCE: DUNYA.COM