Various incentive systems are implemented in Türkiye with the aim of improving the investment climate and increasing investments. Within this context, insurance-related incentives constitute a significant element for both domestic and foreign investors. A frequently discussed question is whether and to what extent the rights granted to foreign investors differ from those granted to domestic investors. This article aims to evaluate the situation from the perspectives of both foreign and domestic investors and to elaborate on the insurance incentives offered to them.
A. Insurance Incentives Applicable to Investors
Investment incentives are primarily governed by the Decree No. 2012/3305 on Government Subsidies for Investments, its amending decrees, and the Communiqué on the Implementation of the Decree on Government Subsidies for Investments.
In this framework, regulations pertaining to insurance incentives are provided under Articles 12 and 13 of the aforementioned decree, which address the employer’s share of social security premium support and the employee’s share of social security premium support, respectively. According to the incentive system set forth in the decree, the duration and rate of support vary depending on the region and nature of the investment.
Pursuant to Article 4 of the above-mentioned communiqué regarding applications, “Natural persons, ordinary partnerships, capital companies, cooperatives, associations, unions, joint ventures, public institutions and organizations (…) and professional organizations with public institution status, associations and foundations, as well as branches of foreign companies located abroad” may apply for an investment incentive certificate. Consequently, the nationality of the investor, whether foreign or domestic, does not preclude investors from benefiting from insurance-related incentives.
i. Employer’s Share of Social Security Premium Support
Under this support mechanism, the employer’s share of social security premiums calculated based on the minimum wage, for employment generated by the investment is covered by the government. This support is only granted if the investment is supported within the framework of strategic investments or regional incentive schemes. It is granted up to the registered employment specified in the approved final investment incentive certificate.
For investments supported under the regional incentive scheme, the duration of support ranges from 2 to 10 years depending on the region where the investment is carried out. In the case of strategic investments, the support duration is either 7 or 10 years, again depending on the region.
The maximum ratio of support relative to the fixed investment amount has also been determined. For regional incentive applications, the support ranges from 10% to 35%, with the percentage increasing across the five incentive regions. For strategic investments, the ratio shall not exceed 15% in the first five regions. However, no such cap is applied for strategic investments supported under the Technology-Oriented Industry Move Program. Upon request during the application phase for an investment incentive certificate, the support rates mentioned above may be increased by half, provided that the investor does not benefit from tax reductions.
Additionally, the regulation stipulates that the number of workers employed by subcontractors operating at the investment site may also be taken into account. This provision is also applicable to the employee’s share of the social security premium support explained below.
To qualify for state coverage of the premiums, monthly premium and service documents must be submitted to the Social Security Institution (SGK) within the statutory period, and both the employee’s share and the non-covered part of the employer’s share must be paid within the legal deadline.
ii. Employee’s Share of Social Security Premium Support
In this type of support, the government covers the employee’s share of social security premiums calculated on the basis of the minimum wage for employment generated by the investment. Unlike the employer’s share support, this incentive is only applicable to additional employment created through investments carried out in the 6th region under the scope of strategic investments or regional incentive schemes, based on a valid investment incentive certificate. This support is limited to the registered employment level specified in the finalized incentive certificate, as with employer’s share.
For all eligible investments in the 6th region, the support is provided for a period of 10 years starting from the date of issuance of the completion approval (commonly referred to as the completion visa). For strategic investments approved under the Technology-Oriented Industry Move Program, this support may also apply outside the 6th region. In such cases, if the investment is classified as high-tech, the duration of support is 7 years; otherwise, it is 5 years.
To benefit from this incentive, all required documentation must be submitted to the SGK within the specified deadlines, and the part of the premiums not covered by the Ministry of Industry and Technology within the employee’s share must be paid on time.
B. Principle of Equality Among Investors
Barring exceptional circumstances, foreign and domestic investors are subject to equal treatment. This is anchored in the constitutional principle of equality before the law, the prohibition of discrimination under the European Convention on Human Rights in connection with the right to property, and the principle of investment freedom enshrined in the Foreign Direct Investment Law.
This approach is also closely related to ensuring fair competition among enterprises and maintaining a healthy investment climate. Although this equality is not absolute (meaning that specific legal or treaty-based provisions can allow for exceptions under the principles of necessity and proportionality) it remains the prevailing norm in the fundamental aspects of the legal framework.
The same applies to insurance-related incentives. The scope and application of the supports stipulated in the Decree on State Aids for Investments do not differentiate between foreign and domestic investors. Once an investment incentive certificate is granted, eligibility for incentives is mainly determined based on the region and type (e.g., strategic nature) of the investment, regardless of the investor’s nationality.
C. Conclusion
In conclusion, no substantial difference exists between domestic and foreign investors in terms of access to insurance-related incentives in Türkiye. Government subsidies are shaped primarily according to the investment’s type, region, and strategic value, rather than the nationality of the investor. Although this article primarily addresses social security premium incentives, it is also accurate to state that there are no fundamental nationality-based distinctions in other areas of insurance under the current legal framework. This situation is consistent with the principle of equality and aligns with international legal standards.
While special arrangements may be made under certain exceptional conditions and within specific legal boundaries, no regulatory provisions have been identified that would lead to significant disparities in insurance incentives at present. However, before making any comments on whether the conditions for a specific type of incentive have been met, it is necessary to thoroughly examine the general regulations in the legislation and, if applicable, the detailed conditions for project-based incentives, based on the specific characteristics of each case. Lastly, it is also crucial to assess whether there are any international agreements that could be applied to the specific investment in question.
