Turkey new inv_incentives_18072012

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Investment Incentives Program of Turkey, 2012

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Turkey new inv_incentives_18072012

  1. 1. REPUBLIC OF TURKEY MINISTRY OF ECONOMY GENERAL DIRECTORATE FOR FOREIGN DIRECT INVESTMENT AND INCENTIVES & FOREIGN INVESTMENT INVESTMENT INCENTIVES IN TURKEY INVESTMENT CLIMATE AND THE NEW INCENTIVE SYSTEM IN TURKEY MURAT ALICI DEPUTY DIRECTOR GENERAL, GENERAL DIRECTORATE OF INCENTIVES AND FOREIGN INVESTMENT July, 2012 TOKYOFor further inquiries: tesvik@ekonomi.gov.tr
  2. 2. Turkey: One of the Eight Growth Markets of Future Growth Markets Brazil Russia India China Mexico Korea Turkey Indonesia Source: Goldman Sachs Asset Management, 2011For further inquiries: tesvik@ekonomi.gov.tr
  3. 3. Investing in Turkey = Doing Business in the Region 4 - HourFor further inquiries: tesvik@ekonomi.gov.tr 3
  4. 4. Policies to bring together international capital with Turkey’s assets FDI Regime • National treatment • No pre-entry screening /minimum capital requirements • Right to acquire real estate • Guarantee to transfer proceeds • Right to employ key expatriate staff • Right to access international dispute settlement • Bilateral Investment Treaties with 84 countries • Double Taxation Agreements with 76 countries • Customs Union with the EU • Free Trade Agreements with 19 countries Improving investment climate : Moving target for the government since 2002 • Streamlining procedures for investments and eliminating administrative and bureaucratic hurdles in line with changing priorities and needs of business • Political ownership • Making full use of public-private dialogue through permanent platforms (Coordination Council for Improvement of Investment Climate, Investment Advisory Council)For further inquiries: tesvik@ekonomi.gov.tr 4
  5. 5. Improvement of the Investment Environment in Turkey COUNCIL OF MINISTERS Coordination Council for the Improvement of Investment Environment (YOIKK) Investment Advisory Council (IAC) Monitoring Steering Committee Working Groups for Assesment and Evaluation TECHNICAL COMMITTEES Company registration and Input Supply Strategy (GITES) Land for investment, environmental Taxes and Employment and zoning permits corporate governance and Sectoral Licensing Incentives Foreign Trade and Intellectual Property Legislation of Customs Access to Finance Infrastructure Rights and R&D Investment Climate For more information http://www.yoikk.gov.tr/engFor further inquiries: tesvik@ekonomi.gov.tr
  6. 6. Improvement of the Investment Environment in TurkeyInvestment Advisory Council Executives of leading multinational firms, Heads of international institutions (IMF, World Bank, European Investment Bank) and Heads of TOBB, TUSIAD, YASED, TIM. Investment Advisory Council of Turkey had 7 meetings since 2004. For further inquiries: tesvik@ekonomi.gov.tr & Foreign Investment General Directorate for Incentives
  7. 7. New trend : Turkey as a regional headquaters for multinationalsFor further inquiries: tesvik@ekonomi.gov.tr 7
  8. 8. FDI Figures FDI inflows (cumulative) Companies with Intr.Capital (cumulative) • 1923-2002 : 15 billion USD 6.000 • 2003-2011 : 110 billion USD 30.000 A.T. Kearney FDI Confidence Index Rankings • 2010 23 • 2012 13 25 USD Billion 22,0 20,2 19,5 20 15,9 15 10,0 10 8,4 9,0 6,5 5 3,4 2,8 1,1 1,7 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Jan-May Source: Ministry of Economy, 2012 JuneFor further inquiries: tesvik@ekonomi.gov.tr 8
  9. 9. New investment incentive system The New Investment Incentives Program General General Regional Regional Large Scale Large Scale Strategic Strategic Investment Investment Investment Investment Investment Investment Investment Investment Incentive Scheme Incentive Scheme Incentive Scheme Incentive Scheme Incentive Scheme Incentive Scheme Incentive Scheme Incentive Scheme Customs Duty Customs Duty Customs Duty Customs Duty Customs Duty Customs Duty Customs Duty Customs Duty Exemption Exemption Exemption Exemption Exemption Exemption Exemption Exemption VAT Exemption VAT Exemption VAT Exemption VAT Exemption VAT Exemption VAT Exemption VAT Exemption VAT Exemption Tax Reduction Tax Reduction Tax Reduction Tax Reduction Tax Reduction Tax Reduction Social Security Social Security Social Security Social Security Social Security Social Security Premium Support Premium Support Premium Support Premium Support Premium Support Premium Support (Employer’s Share) (Employer’s Share) (Employer’s Share) (Employer’s Share) (Employer’s Share) (Employer’s Share) Land Allocation Land Allocation Land Allocation Land Allocation Land Allocation Land Allocation Interest Support Interest Support Interest Support Interest Support VAT Refund VAT RefundMoreover, investments in Region 6 are eligible for income tax withholding allowance and social securitypremium support (Employee’s share). For further inquiries: tesvik@ekonomi.gov.tr
  10. 10. The New Investment Incentives Program GENERAL REGIONAL LARGE SCALE STRATEGIC INVESTMENT INVESTMENT INVESTMENT INVESTMENTINCENTIVE SCHEME INCENTIVE SCHEME INCENTIVE SCHEME INCENTIVE SCHEME For further inquiries: tesvik@ekonomi.gov.tr
  11. 11. New investment incentives : Diversified regional opportunitiesFor further inquiries: tesvik@ekonomi.gov.tr 11
  12. 12. Support MeasuresVAT Exemption for the machinery and equipment within the scope of theinvestment. (around 18%)Customs Duty Exemption: Customs duty is not paid for the importedmachinery and equipment within the scope of the investment. (around 2%)Tax Reduction: Reduced income/ corporate tax rate (50-90 %) until the totaldeduction reaches to the rate of contribution. (15-60 %)Loan Interest Support: For the credits used by the company, a certain portionof the interest share will be covered by the Ministry. (3-5% for TL credits, 1-2%for foreign currency credits) (500K-900K TL limits)Land Allocation: Limited amount of lands are allocated to the investmentstaking account of the importance of investments.VAT Refund: VAT payments for the building & construction expenses will berebated . (only for strategic investments which costs at least 500 Million TL)For further inquiries: tesvik@ekonomi.gov.tr
  13. 13. Support Measures for the additional employment generated by the investmentSocial Security Premium Employer’s Share, on portions of labor wagescorresponding to amount of legal minimum wage, will be covered by theMinistry.Social Security Premium Employee’s Share, on portions of labor wagescorresponding to amount of legal minimum wage, will be covered by theMinistry. (only for Region 6)Income Tax Withholding will provide exemption from income tax withholding.(only for Region 6)For further inquiries: tesvik@ekonomi.gov.tr
  14. 14. SUMMARY TABLE REGIONAL INVESTMENT INCENTIVE SCHEME Incentives Region 1 Region 2 Region 3 Region 4 Region 5 Region 6VAT ExemptionCustoms Duty ExemptionTax Reduction out of OIZ 15 20 25 30 40 50“Rate of Contributionto Investment” (%) in OIZ 20 25 30 40 50 55 10Social Security out of OIZ 2 years 3 years 5 years 6 years 7 years yearsPremium Support(Employer’s Share) in OIZ 12 3 years 5 years 6 years 7 years 10years yearsLand AllocationInterest Support N/A N/A 10Income Tax Withholding N/A N/A N/A N/A N/A yearsSocial Security Premium 10 N/A N/A N/A N/A N/ASupport (Employee’s Share) years For further inquiries: tesvik@ekonomi.gov.tr
  15. 15. Priority Investments PRIORITY INVESTMENTSFollowing priority investments will benefit from terms and rates of thesupport measures of Region 5 even they take place in Regions 1 to 4. Tourism investments in Cultural and Touristic Preservation and Development Regions determined by the Council of Ministers Decree. Mining investments Railroad and maritime transportation investments Specific pharmaceutical investments and Defense Industry investments with minimum investment amount of 20 Million TL Test facilities, wind tunnel and similar investments made for automotive, space or defense industries International fairground investments with a minimum covered area of 50.000 m2 Primary, Middle and High School investments by private sector Investments made to produce products developed by an R&D Project which is supported by Ministry of Science, Industry and TechnologyFor further inquiries: tesvik@ekonomi.gov.tr
  16. 16. The New Investment Incentives Program GENERAL REGIONAL LARGE SCALE STRATEGIC INVESTMENT INVESTMENT INVESTMENT INVESTMENTINCENTIVE SCHEME INCENTIVE SCHEME INCENTIVE SCHEME INCENTIVE SCHEME For further inquiries: tesvik@ekonomi.gov.tr
  17. 17. Large Scale Investments Goals of the Scheme: To improve technology and R&D capacity To provide a global competitive advantageIncentive measures available for Large Scale Investments: VAT Exemption, Customs Duty Exemption, Tax Reduction, Social Security Premium Support Land AllocationFor further inquiries: tesvik@ekonomi.gov.tr
  18. 18. Large Scale Investments Minimum Investment Investment Subjects Amount (Million ¨) (Million 1 Refined Petroleum Products 1000 2 Chemical Products 200 3 Harbours and Harbour Services 200 4 Automotive OEM and Autoparts 4-a Automotive OEM Investments 200 4-b Autoparts 50 5 Railway and Tram Locomotives and/or Railway Cars 50 6 Transit Pipe Line Transportation Services 50 7 Electronics 50 8 Medical, High Precision and Optical Equipment 50 9 Pharmaceuticals 50 10 Aircraft and Space Vehicles and/or Parts 50 Machinery (including Electrical Machines And 11 50 Equipments) 12 Integrated Metal Production 50For further inquiries: tesvik@ekonomi.gov.tr
  19. 19. Large Scale Investments Large Scale Investment Incentives Support Measures I II III IV V VIVAT ExemptionCustoms Duty ExemptionTax Reduction out of OIZ 25 30 35 40 50 60Investment ContributionRate (%) within OIZ 30 35 40 50 60 65Social Security out of OIZ 2 3 5 6 7 10Premium Support(Duration years) within OIZ 3 5 6 7 10 12Land AllocationInterest Support N/A N/A N/A N/A N/A N/AIncome Tax Withholding (Years) N/A N/A N/A N/A N/A 10Social Security Employee Share N/A N/A N/A N/A N/A 10Support (Years)For further inquiries: tesvik@ekonomi.gov.tr
  20. 20. The New Investment Incentives Program GENERAL REGIONAL LARGE SCALE STRATEGIC INVESTMENT INVESTMENT INVESTMENT INVESTMENTINCENTIVE SCHEME INCENTIVE SCHEME INCENTIVE SCHEME INCENTIVE SCHEME For further inquiries: tesvik@ekonomi.gov.tr
  21. 21. Strategic InvestmentsStrategic Investments – An investment for the production of intermediate or final products of which more than 50% of the country demand is supplied by imports. – Energy investments for exclusive use of such strategic investmentsGoals of the scheme – On the basis of the “Input Supply Strategy”, this scheme aims at supporting production of intermediate and final products with high import dependence with a view to reduce current account deficit. – It also targets encouraging high-tech and high value added investments with a potential of strengthening Turkey’s international competitivenessFor further inquiries: tesvik@ekonomi.gov.tr
  22. 22. Strategic InvestmentsEligibility Criteria riteria For the production of intermediate and final products • with high import depedence • of which more than 50% are supplied by imports With a minimum investment amount of 50 Million TL and a minimum 40% local value added With an import figure of at least 50 Million $ in the previous year (This condition will not be applied for goods with no domestic production)For further inquiries: tesvik@ekonomi.gov.tr
  23. 23. Strategic Investments Strategic Investment Incentive Scheme Incentives All RegionsVAT ExemptionCustoms Duty Exemption Rate of Contribution 50% (50% of the contribution can be benefitedTax Reduction to Investment (%) before the investment is completed)Social Security Premium Support(Employer’s Share) 7 Years (10 years for Region 6 )(Term of Support)Land Allocation The building and construction costs of investmentsVAT Refund of more than 500 Million TL Limited to 5% of total investment amount andInterest Payment Support with a cap of 50 Million TLIncome Tax Deduction Support 10 years only for Region 6Social Security Premium Support - 10 years only for Region 6Employee’s Share (Term Of Support)For further inquiries: tesvik@ekonomi.gov.tr

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