A Comprehensive Guide to State Investment Incentives in Türkiye

Understanding Türkiye’s Investment Incentive System

Türkiye offers a robust and tiered incentive system to attract global and domestic capital. The government designs these supports to reduce initial investment costs and accelerate returns. The Ministry of Industry and Technology manages most of these programs through a regional development map. This map divides Türkiye into six regions. Region 1 includes the most developed cities like Istanbul, while Region 6 includes the least developed areas. Incentives become more generous as you move from Region 1 to Region 6.

1. The Four Pillars of Investment Incentives

The Turkish incentive regime consists of four main schemes. Each targets different investment scales and technological levels.

General Investment Incentive Scheme

This is the entry-level support for projects that do not qualify for regional or strategic status. It applies regardless of the investment location, provided the project meets the minimum fixed investment amount. In Region 1 and 2, the minimum is TRY 3 million. In other regions, it is TRY 1.5 million.

• VAT Exemption: No Value Added Tax on imported or locally provided machinery and equipment.
• Customs Duty Exemption: No customs duties on imported machinery and equipment.

Regional Investment Incentive Scheme

This scheme supports specific sectors in designated regions. It aims to reduce regional development gaps. The support intensity increases significantly in Regions 3, 4, 5, and 6.

• Tax Reduction: Corporate tax is calculated with reduced rates until the total tax savings reach a specific percentage of the investment.
• Social Security Premium Support: The government covers the employer’s share of social security premiums for 2 to 12 years.
• Land Allocation: Government-owned land may be allocated for the investment project.
• Interest Rate Support: For loans taken in Regions 3 through 6, the government pays a portion of the interest.

Strategic Investment Incentive Scheme

This scheme targets products with high import dependency. To qualify, the investment must exceed TRY 50 million and create high added value. The goal is to reduce Türkiye’s current account deficit.

• VAT Refund: VAT collected on building and construction expenses is refunded for investments over TRY 500 million.
• Enhanced Tax Rates: Strategic investments receive the highest tax reduction rates available across all regions.

Project-Based Incentive Scheme

This is a tailor-made system for "mega-projects." It usually requires a minimum investment of TRY 1 billion. The President of Türkiye grants these incentives directly to projects that provide technological transformation or energy security.

2. Incentives for High-Tech and Priority Sectors

Türkiye prioritizes specific industries regardless of their physical location. These are treated as if they are in Region 4 or 5, even if they are built in Istanbul.

Medium-High Technology Investments

Investments in sectors like chemicals, machinery, and motor vehicles receive Region 4 incentives. This applies even if the factory is in a more developed region.

Priority Investment Areas

Certain investments are always treated as Region 5 projects. These include:

• Defense industry projects.
• Test centers and wind tunnel investments.
• High-speed train and maritime transport.
• Specific pharmaceutical and biotech investments.
• Mining and ore processing.

3. Employment and Labor Support

The Turkish Employment Agency (İŞKUR) provides significant financial relief for hiring and training. These programs help companies build a skilled workforce while lowering payroll costs.

On-the-Job Training Programs

İŞKUR pays the stipends and insurance for trainees for up to 6 months. This allows companies to evaluate potential employees at zero cost. If the company hires the trainee, they often receive further social security exemptions.

Women and Youth Employment Incentives

Employers who hire women or young people (ages 18-29) can receive social security premium support for up to 54 months. The employee must have been unemployed for at least six months before being hired.

4. R&D, Design, and Innovation Incentives

Türkiye is a hub for R&D. The government offers massive tax breaks for companies that establish R&D or Design Centers.

• 100% Tax Deduction: All R&D and design expenditures are deductible from the corporate tax base.
• Income Tax Withholding: Up to 95% of the income tax for R&D staff is exempted.
• Stamp Duty Exemption: Applicable to all documents related to R&D activities.
• Technoparks (TDZs): Companies operating inside Technology Development Zones pay zero corporate tax on profits derived from software and R&D activities.

5. Free Trade Zones (FTZs)

There are 18 Free Trade Zones in Türkiye. They are ideal for export-oriented manufacturers. If a company exports at least 85% of its production, it pays 0% corporate tax. FTZs also offer exemption from customs duties, VAT, and property taxes.

6. How to Apply: The E-TUYS System

Investors must manage all applications through the Electronic Incentive Application and Foreign Capital System (E-TUYS). This is a paperless, digital platform. You must obtain an Investment Incentive Certificate (IIC) before starting the project to benefit from these supports.

Summary Table: Regional Support Levels

Region	Tax Reduction Rate	SS Premium Support (Years)	Interest Support
Region 1	50%	2 Years	No
Region 3	60%	5 Years	Yes
Region 6	90%	10-12 Years	Yes

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