Turkey strongly encourages investments from foreign investors. Among other reasons for the attraction that Turkey holds for foreign investors are:
A unique geographical location. Turkey is uniquely placed on the crossroads between Europe and Asia. It is particularly important to indicate its central location in all that is connected with sources of energy, oil from the Eastern Mediterranean and the Caspian region on the one hand, and sources of natural gas in Central Asia on the other.
Special relations with Central Asia. Turkey exploits language connections and geographical proximity to the Turkish republics in Central Asia and the Caucasus and is a principal investor in these countries.
The Customs Union Agreement that Turkey signed with the EU.
A proficient and educated work force, with a high learning ability, with labor costs that are some 25% of the accepted labor costs in Western Europe.
A huge local market. The Turkish market numbers some 66.5 million people that are hungry for new hi-tech products.
A sophisticated telecommunications system. The system in Turkey is comparatively young and is therefore based on modern communications technology.
For the above reasons, some 11,000 foreign companies have invested in Turkey as 0f November 2005.
Restrictions on Foreign Investments
In general, there is no discrimination made in Turkey between foreign and local investors. An investment of up to 100% may be made.
Grants and Benefits
In Turkey, grants to foreign residents are identical, as stated, to the benefits given to local residents.
As a general rule, benefits are divided into three categories:
General benefits
Benefits to small / medium-sized companies.
Benefits in development areas.
General Benefits
Turkey is divided into 3 regions for the purposes of a grant:
- A developed area - Istanbul, Ankara, Izmir and others.
- Top priority region - that includes 50 specific cities.
- A regular region - refers to the other cities.
The general benefits granted include the following:
- Exemption from v.a.t and customs duties.
Tax incentives
The investor must get an investment certificate in order to have these grants.
From 1.4.2006 the previous investment grants law was changed, due to the decrease in Turkey's corporate tax.
Free Trade Areas
Free trade areas are located inside Turkey but are exempt from the usual regulations that apply to customs duties.
The Free Trade Area Law was enacted in Turkey in 1985, and 21 free trade areas have been set up in Turkey from then.
A range of operations may be carried out in a free trade area: manufacturing, storage, general trade as well as financial services, insurance and banking.
In the free trade zones there are no customs and no v.a.t.
Companies are exempt from corporate tax for production income.
Salary income for license obtained before 6.2.2004 is tax exempt till 31.12.2008.
