Tax free investments for 20 years in new economic incentive package

Special Risk Report on Turkey
August 9, 2016
Putin signals warming relations with Turkey
August 16, 2016

Tax free investments for 20 years in new economic incentive package

The government is set to announce a new incentive package for both local and global investors including a tax exemption of 20 years in strategic sectors, 10-year fixed prices for electricity, purchase guarantees with loan interest paid by the state, according to Daily Sabah, a Turkish newspaper.

Detailing the contents of the package, Economy Minister Zeybekci offered an illustrative example of the construction of a strategically important port. The relevant company will construct their factory, while the government will provide it with loan interest, as well as a 20-year tax exemption and a 10-year fixed price for electricity. The state will buy the products produced in the factory and continue to do so for a while. An exchange guarantee will be given for investments that meet the consumption needs of the state. Recalling that Japan and South Korea implemented similar incentive systems in the 1980s, Zeybekci said the state would also provide land for investment. Turkey’s needs in certain sectors are to be determined. The need in the sectors of energy, nuclear power, as well as iron and steel are known, but technology, transmission and production bodies should mainly be privatized, according to Zeybekci. A few firms will be selected and provided with incentives to build computers and components for the Akkuyu nuclear power plant.

Which strategic sectors are being considered  ?

A strategic sector-oriented study conducted by the Ministry of the Economy will be completed at the end of 2016. Certain companies will be invited and negotiation processes will be opened, chaired by Prime Minister Yıldırım. Incentives will be given by taking their demands and needs under consideration. The strategic sectors that will be provided with incentives include the defense industry, health technologies, petrochemicals and electronics.

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