Investment Incentive Certificate

INVESTMENT INCENTIVE CERTIFICATE

The document called the “Investment Incentive Certificate” is required to benefit from government supports and aids applied to investments planned within the borders of Türkiye. In order to obtain and use this document, Decree No. 2012/3305 on State Aids in Investments and Communiqué No. 2012/1, which sets out the procedures and principles for the implementation of this Decree, have been published. Within the framework of the provisions of the said legislation, investments are promoted and supported by the state. The Investment Incentive Certificate is issued to support investments to be carried out in our country under various conditions and in accordance with relevant regulations. Investors holding an Investment Incentive Certificate are supported through many support mechanisms and incentive practices. It is a very important tool for increasing the growth rate of our country’s industry and raising the level of economic development. It is crucial to have detailed information about incentive practices before starting an investment. You can examine our page in detail for all other incentive practices and related legislation, or you can contact us directly. Detailed information about the application process of Investment Incentive Certificates, all other stages, and all practices related to state supports are provided below.

WHAT IS AN INVESTMENT INCENTIVE CERTIFICATE?

The Investment Incentive Certificate is a document required to benefit from government-provided incentives and supports for investments in many different sectors such as industrial products, agricultural and agro-industrial products, energy and mining investments, and service sectors. To hold an Investment Incentive Certificate, it is necessary to apply properly according to various conditions and provisions and to act in compliance with all provisions stated in the legislation during the investment period. Not only during the investment period but also for 5 years after the completion of the investment, there are issues that must be observed in accordance with the provisions of the legislation. Failure to comply with these issues may result in having to pay various penalties even within the scope of a certificate that has been completed and finalized with a completion visa.

HOW TO OBTAIN AN INVESTMENT INCENTIVE CERTIFICATE?

To obtain an Investment Incentive Certificate, an application must first be made to the Directorate General of Incentive Implementation and Foreign Capital of the Ministry of Industry and Technology of the Republic of Türkiye. There are two different ways to apply for an Investment Incentive Certificate, depending on the application date. For applications made before 02/07/2018, a different method was followed, but all applications made after this date have been carried out electronically. Applications made after this date are submitted through E-TUYS, and all applications are evaluated electronically. To briefly summarize these two application methods:

All applications made before 02/07/2018 were made in physical form. In other words, all required information and documents, determined according to the type and various characteristics of the investment, had to be prepared, signed, and stamped by the person(s) authorized to represent and bind the investor and submitted in printed form to the Directorate General. All transactions required throughout the investment period for applications made on this date were also carried out in the same way by submitting all necessary information and documents physically, i.e., in printed form.

WHO CAN OBTAIN AN INVESTMENT INCENTIVE CERTIFICATE?

The Investment Incentive Certificate can be obtained by all types of companies and individuals, both domestic and foreign, planning to invest within the borders of our country; ordinary partnerships, cooperatives, associations, unions, foundations, public institutions and organizations, municipalities, professional organizations with the status of public institutions, and branches of foreign companies abroad can also benefit from incentives and government supports. All legal entities such as companies and real persons, regardless of whether they have domestic or foreign capital, can obtain an Investment Incentive Certificate. Companies entirely owned by foreign capital can also benefit from incentives provided that they invest within the borders of our country and act in accordance with the provisions specified in the legislation. Domestic and foreign companies and real persons operating in Turkey’s Free Zones also have the right to obtain an Investment Incentive Certificate in order to benefit from incentive elements.

INVESTMENT INCENTIVE CERTIFICATE SUPPORT RATES

The support rates of the Investment Incentive Certificate are one of the most important components of the system. Support rates are among the key factors to consider at the investment planning stage. Within Türkiye, a classification system based on the SEGE (Socio-Economic Development Index) study, prepared on a provincial basis, is used. Incentive applications are essentially structured based on the SEGE regional classification. One of the main purposes of investment incentives and other state supports is to reduce the differences in regional development levels. Support rates are applied in varying proportions depending on the region where the planned investment will be made. These rates are briefly referred to as the Investment Incentive Certificate Support Rates.

WHAT ARE THE INVESTMENT INCENTIVE CERTIFICATE SUPPORT RATES?

The Investment Incentive Certificate Support Rates have been determined according to the SEGE (Socio-Economic Development Index) study. In this system, the development level of provinces has been evaluated in many aspects, and the provinces of our country have been classified into six investment regions. Accordingly, the applied support rates vary. The highest support is provided in the 6th region, while the lowest is in the 1st region. The main reason is that developed regions already have sufficient investments due to proximity to raw materials and markets or logistic advantages, whereas less developed regions lack adequate production and employment opportunities.

LEGAL BASIS OF INVESTMENT INCENTIVE SUPPORT RATES

The legal basis for the issuance and use of the Investment Incentive Certificate is the Decree No. 2012/3305 and the Communiqué No. 2012/1, which also constitute the legal basis for the support rates in question. All powers regarding implementation and supervision rest with the Ministry of Industry and Technology of the Republic of Türkiye. The relevant unit under the Ministry that carries out these activities is the Directorate General of Incentive Implementation and Foreign Capital.

BENEFITING FROM LOWER REGION SUPPORT RATES

It is possible to benefit from the support rates of a lower region within the scope of the Investment Incentive Certificate. Benefiting from lower region supports means taking advantage of higher support rates because lower regions receive more incentives, while higher regions receive fewer. The conditions for benefiting from lower region supports are clearly stated in the provisions of the legislation. These are:

1. Investments within Organized Industrial Zones (OIZ): Investments made within the boundaries of OIZs benefit from lower region supports.

2. Investments within Industrial Zones (IZ): Investments made within the boundaries of IZs benefit from lower region supports.

3. Investments in Certain Districts: Investments made in districts listed in the “Districts Eligible for Lower Region Support” table, published in the Official Gazette No. 31220 dated 21/08/2020, benefit from lower region supports.

4. Combined Conditions: Investments made both in the districts mentioned in item 3 and within OIZ/IZ boundaries benefit from two lower region supports.

5. Interest Support: There is no application for benefiting from a lower region support specifically for interest support.

INVESTMENT INCENTIVE CERTIFICATE ADVANTAGES

The advantages of the Investment Incentive Certificate are among the most frequently asked topics. If these advantages are taken into account during the initial feasibility or project planning stage of an investment, it is possible to make more realistic decisions. However, these must be analyzed properly and based on accurate foresight, which can only be achieved through experience and knowledge. Otherwise, incorrect calculations may lead to poor investment decisions, meaning limited resources could be wasted. Companies and individuals aim to make the best use of their limited resources, while the state applies various incentives and supports to encourage savings to be converted into investments. As a result, investments — and consequently the Investment Incentive Certificate — bring significant advantages. However, there may also be disadvantages, and mistakes in the process could lead to losses instead of profits. For this reason, complete expertise, up-to-date information, and experience are essential.

Knowing the advantages of the Investment Incentive Certificate is crucial for investors. Understanding these benefits allows them to design projects accordingly. The certificate provides many important benefits: it increases profitability, shortens the payback period, and offers cost advantages. In turn, this also provides a competitive advantage, increasing the market survival chances for especially new investors or those launching new products. Although partially known by investors, a complete and comparative evaluation of these advantages is highly important. Below, the advantages of the Investment Incentive Certificate are explained in detail.

WHAT ADVANTAGES DOES THE INVESTMENT INCENTIVE CERTIFICATE PROVIDE?

The most important benefit is the provision of tax advantages and exemptions. This allows investments to be made with significant tax savings.

1. Allocation of Investment Land: One of the most significant state advantages is the allocation of state-owned land for investments. A company holding the Investment Incentive Certificate can have access to Treasury-owned land under favorable conditions, enabling projects to be realized even if the investor does not own suitable land.

2. VAT and Customs Duty Exemption: Machinery and equipment can be purchased without paying Value Added Tax or Customs Duties. This is one of the key benefits under the certificate.

CALCULATING THE ADVANTAGES OF THE INVESTMENT INCENTIVE CERTIFICATE

To understand these benefits more clearly, it is useful to see how they are calculated. For example, for an investment in the 6th region, within an Organized Industrial Zone, fully financed by an investment loan, employing 25 people (with a total social security premium of 1,133 TL as of August 2020), and supported under regional incentive applications:

• Machinery & Equipment Cost: 500,000 TL

• Building Construction Cost: 500,000 TL

• Total Investment: 1,000,000 TL

Support Breakdown:

1. VAT Exemption: 500,000 TL × 18% = 90,000 TL

2. Customs Duty Exemption: 500,000 TL × 10% = 50,000 TL

3. Tax Reduction: 1,000,000 TL × 55% = 550,000 TL

4. Interest Support: 1,000,000 TL × 7% = 70,000 TL

5. Employment Support: 25 people × 1,133 TL/month × 12 months × 12 years = 4,078,800 TL

Total Investment: 1,000,000 TL
Total Support: 4,838,800 TL

As can be seen, depending on the region, the Investment Incentive Certificate can provide substantial financial advantages.

DISADVANTAGES OF THE INVESTMENT INCENTIVE CERTIFICATE

While the advantages are significant, this raises the question: are there any disadvantages? The certificate requires strict compliance with incentive legislation and related regulations. Therefore, it is strongly advised to consult with professionals who have full knowledge of the subject throughout the investment period. The investment process is not only about obtaining the certificate and benefiting from supports — it must be managed holistically. If managed incorrectly, violations of the regulations can cause losses greater than the advantages gained. For this reason, working with expert consultancy ensures the process is monitored from the very beginning, preventing potential issues and ensuring steady growth under professional guidance.