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NEW INCENTIVE SYSTEM

THE INVESTMENT INCENTIVE PROGRAM OF TURKEY IN KONYA

The new investment incentives scheme is specifically designed to encourage investments with the potential to reduce dependency on the importation of intermediate goods vital to the country’s strategic sectors.

Amongst the primary objectives of the new investment incentives scheme are;

  • to reduce the current account deficit;

  • boost investment support to lesser developed regions;

  • increase the level of support instruments;

  • promote clustering activities,

  • to support investments that will create the transfer of technology.

In order to further accelerate investment decisions, the new investment incentives system grants more advantageous supports for investments to be initiated by the end of 2014. Spending at least 10 percent of the investment amount will suffice for the investment to be considered as started.

Investments are supported through 4 different incentive schemes. 7 different support instruments will be applied in Konya. Local and foreign investors have equal access to all incentive schemes.

In addition to General, Regional and Large Scale Investment Incentive Schemes, the Strategic Investment Incentive Scheme is put into effect as a new and unique feature.


THE INVESTMENT INCENTIVE PROGRAM AND DEVELOPMENT AGENCIES

The Ministry of Economy, Directorate of Incentive Implementation and Foreign Investment is responsible for the implementation and coordination of investment incentive program at the national level.

Regional Development Agencies (RDAs) are entitled to issue General Incentive Certificates provided that investment costs per project do not exceed TRY 10 million. In addition, if given by Ministry of Economy, Development Agencies could make document closing process.

RDAs are also commissioned to monitor and report the progress of incentivized investments.

Konya Investment Support Office of Mevlana Development Agency gives information for the investors about investment incentive system and prepares documents in regional level.


SUPPORT MEASURES AND SCHEMES OF THE INVESTMENT INCENTIVES PROGRAM

Supports

General Scheme

Regional Scheme

Large Scale Scheme

Strategic Scheme

VAT Exemption

Customs Duty Exemption

Tax Deduction

 

SSP* Support (Employer’s share)

 

Interest Rate Support

 

 

Land Allocation

 

VAT Refund**

 

 

 

* SSP: Social Security Premium

** For strategic investments with a minimum fixed investment amount of TRY 500 Million.

SUPPORT INSTRUMENTS

Value Added Tax (VAT) Exemption: Investment machinery and equipment imported and/or locally provided within the scope of the incentive certificate will be VAT exempt.

Customs Duty Exemption: Investment machinery and equipment imported within the scope of the incentive certificate will be customs duty exempt.

Tax Deduction: The investor’s income will be taxed at reduced rates until the total value reaches the amount calculated on the basis of government’s contribution rate determined for that specific investment.

Social Security Premium (SSP) Support (Employer’s Share): The Ministry of Economy will assume the costs associated with the social security premium, to be paid by the Employer for the new staff, in the amount corresponding to the legal minimum wage.

Interest Rate Support: This support will be available for investment loans which were borrowed to finance the investment with a term of at least one year and which shall not exceed 70% of the fixed investment amount registered on the certificate. The Ministry of Economy will pay a portion of the interest/profit share of the loan up to certain maximum limits.

Land Allocation: Government land will be allocated for the investments with incentive certificate under large scale, strategic and regional incentive schemes in accordance with the rules and principles defined by the Ministry of Finance, depending on availability of such land at the locations referred by the investor.

VAT Refund: VAT collected on the building and construction expenses made for the strategic investments will be rebated provided that the fixed investment amount is over TRY 500 million for the Strategic Investments.

A-GENERAL INVESTMENT INCENTIVE SCHEME

Regardless of the region where investment takes place, all projects meeting both the specific capacity conditions and the minimum fixed investment amount are supported within the framework of the General Investment Incentives Scheme. Some types of investments are excluded from the investment incentives system and would not benefit from this scheme.

The minimum fixed investment amount is TRY 1 million in Konya.

Major investment incentive instruments are:

  • Value Added Tax (VAT) Exemption

  • Customs Duty Exemption

B-REGIONAL INVESTMENT INCENTIVE SCHEME

Within the scope of the new Investment Incentives Program, all provinces in Turkey have been grouped into 6 regions. According to this system, Konya is in the 2nd region.

The sectors to be supported in each region are determined in accordance with regional potential and the scale of the local economy. The minimum fixed investment amount is defined separately for each sector and region.


REGIONAL INCENTIVES MAP

These are favourable sectors for Konya

Code

Sector Descriptions (Manufacturing)

Minimum amount (TRY)

1

Integrated animal husbandry investments

1 Million

2

Aquaculture (incl. fish larvae and eggs)

1 Million

3

Food and beverages

2 Million

8

Suitcase, hand bag, saddlery, footwear etc.

1 Million

9

Wood and cork products (except furniture), mats

3 Million

10

Paper and paper products

10 Million

11

Chemicals

3 Million

24

Concrete products for construction

3 Million

27

Main metal industry, except iron and steel

3 Million

28

Metal ware

3 Million

30

Machinery and equipments

3 Million

32

Office, accounting and data processing devices

3 Million

33

Electrical machinery and equipments

3 Million

34

Communication equipments and devices

3 Million

35

Medical devices, precision and optical instruments

1 Million

36

Motorized land vehicles

50 Million

Motorized vehicles sub-industry thereof

3 Million

38

Motorcycle and bicycle

3 Million

40

Furniture

3 Million

 

Code

Sector Descriptions

(Services)

Minimum amount(TRY) / capacity

41

Hotels

3* and higher

42

Student Dormitories

100 students

43

Cold storage house services

1.000 m2

44

Licenced Warehousing

2 Million

45

Educational services

2 Million

46

Hospital

1 Million

Nursing home

100 people

48

Waste recovery and disposal facilities

1 Million

49

Production of coal gas (synthesis gas)

50 Million

50

Greenhousing

40 decares


TERMS AND RATES OF SUPPORTS IN REGIONAL INVESTMENT INCENTIVES

INCENTIVES

KONYA

NEXT REGION

PRIORTY

VAT Exemption

Customs Duty Exemption

Tax Deduction Rate of Contribution to Investment (%)

Out of OIZ*

15

20

30

Within OIZ

20

25

35

SSP Support (Employer’s Share) (Years)

Out of OIZ

X

3

6

Within OIZ

3

5

7

Land Allocation

* OIZ: Organized Industrial Zone


PRIORITY INVESTMENTS

Specific priority investments to be supported by means of Region 5 instruments even made in Konya.

  • Tourism accommodation investments to be made in the Culture and Tourism Conservation and Development Regions, thermal tourism investments

  • Mine extraction and/or processing investments

  • Railroad and maritime freight or passenger transportation investments

  • Specific pharmaceutical, defense, and aerospace industry investments with a minimum fixed investment amount of TRY 20 million

  • Test facilities, wind tunnel, and similar investments made for the automotive, aerospace or defense industries

  • Preschool, primary, secondary, and high school investments made by the private sector

  • International trade fair investments with a minimum indoor area of 50,000 square meters

  • Investments made in order to produce products developed by an R&D project that is supported by the Ministry of Science, Industry and Technology, TUBITAK and KOSGEB

  • Investments in the motor vehicles main industry amounting to TRY 300 million, engine investments worth a minimum amount of TRY 75 million, and investments for motor engine parts, transmission components/parts and automotive electronics worth a minimum amount of TRY 20 million

  • Investments for power generation where metals stated in the 4-b group of the Article 2 of the current Mining Law No. 3213 in scope of a valid mining license and permit issued by the Ministry of Energy and Natural Resources are used as inputs

  • Energy efficiency investments that would reduce energy consumption in unit production by a minimum of 20 percent for at least 5 years in existing manufacturing facilities with an annual consumption of least 500 tons of oil equivalent (toe) energy
  • Investments for electricity generation through waste heat recovery in a facility (excluding natural gas-fired electricity generation plants)
  • Liquefied natural gas (LNG) investments and underground gas storage investments with a minimum amount of TRY 50 million
  • Investments for the production of carbon fiber or composite materials made from carbon fiber provided that it takes place along with carbon fiber production.

Note: If the fixed investment amount in priority investments is TRY 1 billion or more, tax reduction will be applied by adding 10 points on top of the “rate of contribution to investment” available in Region 5.


NEXT BETTER REGION’S SUPPORTS

Following investments benefit from next better region’s supports in terms of Tax Deduction and SSP Support (Employer’s Share) (For Konya 3rd region)

  • Investments in Organized Industrial Zones (OIZ)

  • Joint Investments by multiple companies operating in the same sector

C-LARGE SCALE INVESTMENT INCENTIVE SCHEME

Large scale Investment Incentive Scheme supports 12 different investment categories which will potentially foster Turkey’s technology and R&D capacity and competitiveness.

This scheme supports 12 investment categories:

NO

Investment Subject

Minimum Investment (TRY Million)

1

Production of Refined Petroleum Products

1000

2

Production of Chemical Products

200

3

Harbors and Harbor Services

4-a

Automotive OEM Investments

4-b

Automotive Supply Industries Investments

50

5

Production of Railway and Tram Locomotives and/or Railway and Tram Cars

6

Transit Pipe Line Transportation Services

7

Electronics Industry

8

Production of Medical, High Precision and Optical Equipment

9

Production of Pharmaceuticals

10

Production of Aircraft and Spacecraft and/or Related Parts

11

Production of machinery (including electrical)

12

Mining (including metal production)


TERMS AND RATES OF SUPPORTS IN LARGE SCALE INVESTMENT INCENTIVES

INCENTIVES

KONYA

Out of OIZ

Within OIZ

VAT Exemption

Customs Duty Exemption

Tax Deduction Rate of Contribution to Investment (%)

25

30

SSP Support (Employer’s Share) (Years)

X

3

Land Allocation

X


D-STRATEGIC INVESTMENT INCENTIVE SCHEME

Investments meeting the criteria below are supported within the framework of this scheme:

  • The domestic production capacity for the product to be manufactured with the investment shall be less than the import of the product

  • to have a minimum investment amount of TRY 50 million

  • to create a minimum added-value of 40% (this condition is not applicable to refinery and petrochemicals investments)

  • The total import value of the product to be manufactured with investment shall be minimum USD 50 million as of the past one year (excluding the products that are not locally produced)

TERMS AND RATES OF SUPPORTS IN STRATEGIC INVESTMENT INCENTIVE SCHEME

INCENTIVES

KONYA

VAT Exemption

Customs Duty Exemption

Tax Deduction

Rate of Contribution to Investment (%)

50

SSP (Employer’s Share)

7 Years

Land Allocation

Interest Rate Support

Local Loans

5 Points

FX loans

2 Points

VAT Refund (only for building expenditures of the investments over TRY 500 million)


Our e-mail address tesvik@mevka.org.tr is open for your question regarding the Turkish Incentive System.


For further information about incentive system in TURKEY:


www.incentives.gov.tr