INVESTMENT INCENTIVES ON THE RISE

A new regulation in the investment incentives system has increased incentives. Businesses will receive interest rate support, tax exemptions will increase, and financial leasing limits will be raised.

Taking into account economic developments in Turkey and worldwide, as well as the views and requests of private and public sector stakeholders, the Ministry of Economy announced changes to the current investment incentive system, which has been in effect since 2012, to address implementation problems and ensure the sustainability of the dynamic structure of the investment incentive system. The regulations made to the incentive system by the Council of Ministers, published in the Official Gazette, are as follows:

*In financial leasing transactions covered by investment incentive certificates, the minimum amount required for machinery and equipment was TRY 200,000, but with the regulation it has been raised to a minimum of TRY 500,000 in Regions 1-4 and TRY 300,000 in Regions 5-6.

*For firms that will make large-scale livestock fattening farm investments within the scope of priority investments, regulations have been made to facilitate the import into Turkey of products obtained from animal husbandry activities carried out abroad in this scope, in order to encourage such overseas activities.

*Import of livestock up to a maximum of 50 percent of the annual domestic actual capacity of the investments in question obtained from fattening farms located abroad is permitted through a customs duty exemption provided for 10 years from the date the domestic facility is put into operation.

*Higher interest rate support rates (7 basis points in TL, 3 basis points in foreign currency or foreign currency-indexed credit) and amounts (up to TRY 1,400,000) are provided for automated modern greenhouse investments of at least TRY 6 million in 50 decares or more and high-capacity integrated livestock farming investments.

Furthermore, with the regulation made, the period of application of interest rate support in high-capacity livestock farming investments has been extended from 5 years to 10 years, and interest rate support amounts have been increased by regions (TRY 1 million in Region 3, TRY 1.2 million in Region 4, TRY 1.4 million in Region 5, TRY 1.8 million in Region 6) and in R&D and environmental investments (TRY 1 million) to expand financing opportunities for investments.

*While the employer share of insurance premium support in shipbuilding is currently applied for 18 months, the possibility has been created for the employer share of insurance premium support provided for ships built for the Undersecretariat for Defence Industries (SSM) to be applied for the duration of the contract signed with SSM.

In order to meet the qualified personnel needs of the aviation transportation and aircraft repair and maintenance sectors, training investments in aircraft use, repair and maintenance have been included in the scope of priority investments with a minimum investment amount of TRY 20 million envisaged.

*Automated modern greenhouse investments, integrated livestock farming investments above a certain capacity (minimum 5,000 large-scale livestock capacity for milk-oriented integrated livestock farming, minimum 10,000 large-scale livestock capacity for meat-oriented integrated livestock farming), waste recovery and disposal facility investments exceeding TRY 5 million, elderly/disabled care villages and wellness facility investments, and mid-high technology investments amounting to at least TRY 500 million have been included in the scope of priority investments.

*In order to enable the completion of strategically significant investments and their contribution to the country's economy, additional time equal to half the registered period in the certificate has been provided for these investments.

*The minimum investment amounts required in finishing investments have been graduated according to types of investment, and finishing investments other than complete new production with low minimum investment amounts and expansion-type garment manufacturing exceeding TRY 2 million have been supported on a regional basis in Regions 1 and 2.

Furthermore, by removing the minimum system number requirement for knitting investments, problems encountered in completing completion visas of incentive certificates have been prevented.

*In line with increasing cotton cultivation in Iğdır, lint cotton processing investments are supported exclusively there through the regional system.

*The EK-5 list concerning iron-steel investments that can be supported from the general system when meeting certain criteria together has been made compatible with EU legislation.

*Investment subjects that can benefit from Region 4 support have been expanded because they are classified as mid-high technology investments according to OECD classification, and in this way chemical products such as cosmetics, soap and detergents and mid-high technology products such as valves and taps are provided to benefit from Region 4 support.

*For integrated livestock farming investments above a certain capacity included in the scope of priority investments, incentive certificates to be issued in 2018 have been provided to benefit from higher rates of tax reduction support.

*A regulation has been made for general-purpose investments to be made in the OSBs (Organized Industrial Zones) of Regions 4 and 5 and Kilis province OSB falling within the scope of the Attraction Centers Program to benefit from the support rates and periods provided in Region 6, applicable to incentive certificate applications made as of 22 November 2016.