There are three different special investment zones in Turkey:
1. Technology Development Zones - Technoparks
Technology Development Zones (TDZ) are areas designed to support R&D activities and attract investments in high-technology fields.
Advantages of TDZs
a) Profits derived from software development, R&D, and design activities are exempt from income and corporate taxes until December 31, 2023.
b) Sales of application software produced exclusively in TDZs are exempt from VAT until December 31, 2023. Examples include software for system management, data management, business applications, different business domains, the internet, mobile phones and military command and control systems.
c) Remuneration for R&D, design and support personnel employed in the zone is exempt from all taxes until December 31, 2023. The number of support personnel covered by the exemption may not exceed 10 percent of the total number of those involved in R&D, though.
d) Investments for the production of technological products developed based on the outcome of R&D projects conducted in the TDZ may be made in the TDZ if deemed suitable by the operator company and allowed by the Ministry of Science, Industry and Technology (MoSIT).
e) 50 percent of the employer’s share of the social security premium will be paid by the government until December 31, 2023.
f) Custom duty exemption for imported products and stamp duty exemption for applicable documents within the scope of R&D, design, and software development projects.
2. Organized Industrial Zones
Organized Industrial Zones (OIZ) are designed to allow companies to operate within an investor-friendly environment with ready-to-use infrastructure and social facilities. The existing infrastructure provided in OIZs includes roads, water, natural gas, electricity, communications, waste treatment and other services.
Advantages of OIZs
In addition to the investment incentives scheme in Turkey (general investment incentives, regional investment incentives, large-scale investment incentives, strategic investment incentives, employment incentives, R&D support, etc.), investors operating in the OIZs can benefit from the following advantages:
a) No VAT for land acquisitions.
b) Exemption from real estate duty for five years starting from the date of completion of the plant construction.
c) Low water, natural gas and telecommunication costs.
d) No tax is payable in cases of merging and/or separation of plots.
e) Exemption from municipality tax for the construction and usage of the plant.
f) Exemption from the municipality tax on solid waste if the OIZ does not avail of the municipality service.
3. Free Zones
Free zones (FZ) are special sites deemed outside the customs area, although they are physically located within the political borders of the country. FZs are designed to boost the number of export-focused investments. Legal and administrative regulations in the commercial, financial and economic domains that are applicable within the customs area are either not implemented or partially implemented in FZs.
Advantages of FZs
a) 100% exemption from customs duties and other assorted duties.
b) 100% exemption from corporate income tax for manufacturing companies.
c) 100% exemption from value-added tax (VAT) and special consumption tax.
d) 100% exemption from stamp duty for applicable documents.
e) 100% exemption from the real estate tax.
f) 100% income and corporate tax exemption for certain logistics services to be offered at the FZs, provided that they are export-oriented.
g) 100% exemption from income tax on employees’ wages (for companies that export at least 85% of the FOB value of the goods they produce in the FZs.
h) Goods can remain in FZs for an unlimited period.
i) Companies are free to transfer profits from FZs to abroad as well as to Turkey, without restrictions.
j) Exemption from title deed fees when acquiring and selling a property.
k) VAT exemption during construction, design, settlement and approval processes.
l) Ready infrastructure exempt from VAT and other taxes.
m) Import permit for second-hand, used machinery.