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Legal Updates in Turkish Tax Law Q1/2012
Focus item for this edition: New Incentive Package
New Incentive Package
The Ministry of Economics has recently announced the enactment of a new economic incentive package. Currently, the Turkish government supports the following three incentive packages:
1. General Incentive: VAT exemption, customs tax exemption
2. Regional Incentive: VAT exemption, customs tax exemption, tax reduction, social security premium support, allocation of premises for investment, interest payment support
3. Incentive for Large Scale Investments: VAT exemption, customs tax exemption, tax reduction, social security premium support, allocation of premises for investment
With the new incentive package, a fourth and new incentive, namely the “Incentive for Strategic Investments” will be available to investors. The advantages provided under the same are as follows:
4. Incentive for Strategic Investments: VAT Exemption, customs tax exemption, tax reduction, social security premium support, allocation of premises for investment, VAT return
Furthermore, the new incentive package will provide relief regarding withholdings available on income tax, prolonged support in organised industrial zones and further expense deduction. Pursuant to the new incentive package, priority investments, such as investments related to mining, transportation of people and goods by railway or sea, education institutions (i.e. primary, middle and high schools), pharmaceuticals and the defence sector will enjoy a further tax reduction, social security premium support and interest payment support. A new regime for regional investments has also been determined under the new incentive package, such that each city in Turkey has been placed in a certain zone on the basis of the level of development and any investment in the least developed cities will enjoy maximum incentives.
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