Turkey’s Investment Incentive System
Turkey offers one of the most comprehensive investment incentive systems among emerging market economies. The system is designed to:
- Attract foreign direct investment
- Develop less developed regions
- Promote high-technology and import-substituting industries
- Create employment
The current framework is based on Council of Ministers Decree No. 2012/3305 (as amended) and is administered by the Ministry of Industry and Technology (Sanayi ve Teknoloji Bakanlığı).
Foreign-owned Turkish companies are fully eligible for all incentive programs — there is no discrimination between domestic and foreign investors.
The Investment Incentive Certificate
The cornerstone of Turkey’s incentive system is the Investment Incentive Certificate (Yatırım Teşvik Belgesi). This document:
- Confirms that a specific investment qualifies for defined incentives
- Must be obtained before beginning the investment to activate benefits
- Is issued by the Ministry of Industry and Technology for investments above 1 million TRY
- For smaller investments in certain provinces, applications may be made to Regional Development Agencies
Four Investment Incentive Programs
1. General Investment Incentive Program
Available to all qualifying investments nationwide (not region-dependent).
Benefits:
- VAT exemption on machinery and equipment purchases (domestic and imported)
- Customs duty exemption on imported machinery and equipment
Minimum investment: 1 million TRY
This program applies to investments not eligible for the specialized regional, priority, or strategic programs. It provides basic cost savings on equipment acquisition.
2. Regional Investment Incentive Program
Turkey is divided into 6 investment regions based on their level of economic development. Less developed regions offer more generous incentives to attract investment:
| Region | Example Provinces | Incentive Level |
|---|---|---|
| Region 1 | Istanbul, Ankara, Izmir (developed) | Lowest |
| Region 2 | Bursa, Kocaeli, Antalya | Low–Medium |
| Region 3 | Adana, Mersin, Samsun | Medium |
| Region 4 | Erzurum, Trabzon, Van | High |
| Region 5 | Ağrı, Batman, Bingöl | Higher |
| Region 6 | Şırnak, Mardin, Hakkari (least developed) | Highest |
Benefits by region (examples for Region 6):
| Benefit | Region 1 | Region 6 |
|---|---|---|
| VAT exemption | Yes | Yes |
| Customs duty exemption | Yes | Yes |
| Corporate tax reduction | No | Up to 90% reduction |
| Income tax withholding exemption | No | Yes (employers) |
| SGK employer premium support | No | Yes (7–12 years) |
| Interest rate support | No | Up to 7 points |
| Land allocation | No | Yes |
Regional incentives require a minimum number of jobs to be created, increasing with the region number.
3. Priority Investment Incentive Program
The Priority Investment program targets specific strategic sectors regardless of location, providing incentives comparable to Region 5.
Qualifying sectors include:
- Defense and aviation manufacturing
- Rail and sea vehicles manufacturing
- Chemical and pharmaceutical production
- Automotive manufacturing (specific components)
- Mechanical equipment manufacturing
- Information and communications technologies
- Mining
- Tourism (resort and hotel investment)
- Urban renewal projects
Benefits (Region 5 equivalent):
- VAT exemption
- Customs duty exemption
- Corporate tax reduction (up to 50%)
- Income tax withholding support
- SGK employer contribution support
- Interest rate support
4. Strategic Investment Incentive Program
The most generous incentive program, designed for large-scale investments in import-substituting industries — sectors where Turkey imports significant volumes and where domestic production would reduce import dependency.
Qualifying criteria (all three must be met):
- Minimum investment of 50 million TRY
- Annual imports of the product category exceed 50 million USD
- Domestic production of the product covers less than 40% of domestic supply (OR the investment adds significant value-added)
Benefits:
- VAT exemption
- Customs duty exemption
- Corporate tax reduction to 2% (effectively 90%+ reduction from standard 25%)
- Income tax withholding exemption: Up to 50% of the total investment amount
- SGK employer premium support (10 years)
- Interest rate support
- Land allocation: Free land from the Treasury
- 50% of investment allowed as deduction from withholding tax on wages
How to Apply for an Investment Incentive Certificate
Step 1: Determine Program Eligibility
Evaluate which program(s) your investment qualifies for based on:
- Investment type and sector
- Location
- Investment amount
- Job creation potential
Consult with an investment advisor or the Invest in Turkey agency (invest.gov.tr) to identify the optimal program.
Step 2: Prepare the Application
Gather required documents:
- Company registration documents (or draft documents if pre-formation)
- Business plan with investment details (sector, machinery list, production capacity)
- Financial projections (turnover, employment, export projections)
- Environmental impact assessment (if applicable)
- Land ownership or lease documents (if applicable)
Step 3: Submit to the Ministry
Applications are submitted online through the Ministry of Industry and Technology’s e-incentive portal. The Ministry reviews the application and may request additional information.
Processing time: 2–4 weeks for most applications; longer for strategic investments requiring inter-ministerial review.
Step 4: Use the Certificate During Investment
Once the certificate is issued:
- Purchase machinery and equipment with customs duty and VAT exemptions
- Apply for interest rate support at Turkish banks
- Keep detailed records for corporate tax reduction claims
- Meet all conditions (job creation, completion deadlines) to maintain incentive eligibility
Technopark and Free Zone Incentives
Additional incentive programs operate separately from the Investment Incentive Certificate system:
- Technopark companies: Corporate tax exemption on R&D and software income through December 31, 2028
- Free zone companies: Corporate tax exemption for manufacturers exporting ≥85% of production
See our Technology Startup guide and Free Zone guide for these sector-specific incentives.
Summary: Which Program Is Best for You?
| Your Situation | Best Program |
|---|---|
| Manufacturing anywhere in Turkey | General + possibly Priority |
| Manufacturing in a less developed region | Regional (Region 3–6) |
| Large-scale import-substituting production | Strategic |
| Defense, aviation, automotive, pharma | Priority |
| Software/R&D in technopark | Technopark exemption |
| Manufacturing for export (85%+) | Free zone |
Frequently Asked Questions
Can foreign-owned companies apply for investment incentives? Yes. Foreign-owned Turkish companies are fully eligible for all investment incentive programs on equal terms with Turkish companies. The Investment Incentive Certificate system does not discriminate by ownership nationality.
What is the deadline for applying for an incentive certificate? Applications should be submitted before the investment begins. Machinery and equipment already purchased before the certificate is issued do not qualify for exemptions. Apply as early as possible in the planning process.
Is the investment incentive certificate renewable? Certificates are issued for a specified investment completion period. If the investment is not completed within the validity period, the certificate may expire. Extensions can be requested from the Ministry.
Does taking an incentive certificate commit me to completing the investment? Yes. Investment Incentive Certificates come with conditions including minimum investment amounts, job creation targets, and completion timelines. Failure to meet conditions can result in clawback of incentives received plus interest and penalties.