The Law on Supporting Investments on Project Basis and Amending Certain Laws and Decree Laws (Law No. 6745), which seeks to improve Turkey’s investment climate through a project-based investment incentives package, entered into force following its publication in the Official Gazette on September 7, 2016.
The new law, which contains 82 articles, was drafted to facilitate Turkey's achievement of its long-term macroeconomic targets. Some of those targets include increasing its share in global trade, ensuring the security of supply, encouraging investors to conduct business in Turkey, and improving its rank in production of information, technology, and innovation. The most significant article, numbered 80, embraces a project-based investment incentives package that provides financial support for innovative, technology-oriented, R&D focused, high value-added projects that also help to reduce foreign dependency. Projects seeking support under the new law must be in conformity with the Turkish government’s targets set forth in national development plans and annual programs, and also with those specifically promoted by the Ministry of Economy. Some of the project-based support instruments and exemptions are as follows:
· Corporate tax exemption up to 100 percent and investment support up to 200 percent; or a corporate tax exemption exclusively for the profits derived from the investment for the first 10 years following the commencement of operations
· Income tax withholding support
· Customs duty exemption
· Free land allocation for 49 years in instances where the investment is made on an immovable property belonging to the Turkish Treasury
· Free transfer of these immovable properties for projects completed and that provided the anticipated employment for at least five years
· Social security premium support for employer’s share for up to 10 years
· Compensation of up to 50 percent for energy consumption expenses related to the investment for up to 10 years
· Abolishment of interest on loans utilized to cover fixed investments
· Salary support for qualified employees for up to five years; eligible support is capped at twenty times the gross monthly minimum wage
· State partnership of up to 49 percent provided that an IPO or direct sale to investors will be conducted within 10 years
Support within the scope of this article of the new law will be paid through the Ministry of Economy’s budget. After the approval of the Council of Ministers on the amount and time interval, goods produced in these factories will be subject to guarantee of purchase. In order to make life easier in the investment process, investors will be granted exemptions in certain allocation, license, and registration processes. Moreover, subject to the approval of the Council of Ministers, all infrastructure investments will be reimbursed. Finally, in case of an ownership transfer of the investment, all acquired rights with regard to the investment scheme will be passed to the new investor.