Türkiye provides subsidies to investors who satisfy the necessary legal conditions to divert money toward high-value projects, boost employment, and improve the country’s position in the global marketplace. In this framework, the country enacted (i) “Decision on Investment Subsidies” no. 2021/3305, published in the Official Gazette of 19.06.2016, and (ii) Implementing Communiqué no. 2021/1, published in the Official Gazette of 20.06.2012. According to the statistics released by the Ministry of Industry and Technology (“Ministry”), 1261 investment incentive certificates and 237 completion visas were awarded, and 38 incentive certificates were evoked in August.[1] Moreover, a total of 98,933 investment incentive certificates were issued nationwide from January 2001 to the end of August 2001, suggesting that investors frequently benefit from incentives and subsidies.
1. Investment Incentives in Legislation
Incentives effective after the publication of “Decision on Investment Subsidies” (“Decision”) no. 2021/3305 in the Official Gazette of 19.06.2016 consist of four different categories as follows: 1) General Incentives, 2) Regional Incentives, 3) Priority Investment Incentives, and 4) Strategic Investment Incentives. Each incentive category requires to meet different criteria, with different subsidies to be provided to investors.
To put the subsidies into action, the Decision divides the provinces into six regions based on their socio-economic levels. With this distinction, the subsidies to be provided to investors vary between regions, which is a significant regulation to guarantee the balanced growth of diverse regions throughout the nation.
2. Use of Incentives, and Associated Subsidies
Implementing Communiqué no. 2021/1 (“Communiqué”), published in the Official Gazette of 20.06.2012, obligates investors to obtain incentive certificates to benefit from the subsidies stipulated in the legislation. Accordingly, investors should have an incentive certificate that specifies the characteristics of their investment and entitles them to subsidies when certain criteria are met.
To obtain an investment incentive certificate, investors should apply to the Ministry. In this context, beginning on 2 July 2018, all applications for investment incentive certificates and notifications from foreign investors to the Ministry about the establishment of firms and branches in Türkiye must be made using the e-TUYS application. As a result, when the authorization phase is over, investors have the option to submit their application online.
Real persons and legal entities are entitled to apply for an incentive certificate for their investments in Türkiye.
The types of investments to be made through incentive certificates are equally important in this regard. In this framework, the Communiqué distinguishes five different types of investments as follows: (i) brand new, (ii) extension, (iii) modernization, (iv) product diversification, and (v) integration. The intended investment in the first four investment categories must be realized in the same company or location, and since the applicable requirements differ, the investment type should be established prior to the application.
The legislation refers to the following subsidies to be granted as an investment incentive: VAT exemption, customs duty exemption, tax exemption, subsidy for the employer’s share in insurance premium, subsidy for the employee’s share in insurance premium, interest or dividend subsidies, allocation of an investment place, and VAT refund. Since each subsidy provided as part of an incentive offers a different benefit, the investor must first determine the scope of investment and then file an application.
3. Conclusion
Real persons and legal entities must precisely and thoroughly establish the nature of their investment and the subsidies from which they might benefit before filing an application for investment incentives. Thus, we recommend identifying the type of the investment, the region where the investment will be located, and the subsidies that will be requested before applying for an incentive certificate. Since the subsidies provided as part of each incentive will differ, investors must decide which subsidies may benefit them beforehand and, if required, seek guidance from professionals experienced in this area.
Sources:
- “Decision on Investment Subsidies” no. 2021/3305, published in the Official Gazette of 19.06.2016
- Implementing Communiqué no. 2021/1, published in the Official Gazette of 20.06.2012
- Ministry of Industry and Technology, https://www.sanayi.gov.tr/istatistikler/yatirim-istatistikleri/mi1304021615
- Ministry of Industry and Technology, https://www.sanayi.gov.tr/destek-ve-tesvikler/yatirim-tesvik-sistemleri
[1] https://www.sanayi.gov.tr/istatistikler/yatirim-istatistikleri/mi1304021615
