Published On: Mon, Nov 28th, 2016

Turkish government will provide incentives for project based high added-value investments


In accordance with a newly issued cabinet decree, the government will provide incentives to project-based and high-added-value investments such as value-added tax exemptions and a reduction in employers’ share of the payment of employee insurance premiums.

The government will support innovative, research and development (R&D)-intensive and high-added-value investments in 14 areas. According to the cabinet decree, these investments must be able to satisfy Turkey’s critical needs, ensure supply security, reduce foreign dependency and carry out technological transformations. To this end, the Economy Ministry will either invite companies to make certain investments or issue announcements to encourage them. The practice will go for projects that are worth $100 million or more. Eligible projects will be presented to the Cabinet.

In addition to being exempt from customs duty and value-added tax, these projects will be provided incentives, such as value-added tax return, tax deduction or exemption, income tax withholding support, qualified staff support, interest or grant support, capital contribution, energy support, public procurement guarantees, investment placements, infrastructure support, legal permits, assignments, licenses and exemption from other restrictive provisions. The government will also reduce employers’ share in the payment of employees’ insurance premiums on the condition that they are engaged in this kind of investment.

Regarding the interest support practice, banks will be responsible for notifying the ministry of the accuracy of interest rates on maturity dates and for the use of the loans for investments. The interest support practice will be signed within the framework of a protocol in force between the General Directorate of Incentive Implementation and Foreign Investments and intermediary institutions and of the additional protocol to be signed. Regarding energy support – back debts, overdue interest, fines and invoice values that are drawn up by energy supplying companies and that are prepaid in the invoicing period – will be taken into consideration while calculating the energy cost of enterprises. Investors will be responsible for projects that are not completed within the prescribed period.


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