A synopsis of the recent amendments to the Decree on State Aids for Investments

Law on Amendments to Decree on State Aids for Investments (“Amendment Law”) has been published in the Official Gazette no 29848 on 5 October 2016 and aims at reviving the investment environment in Turkey by way of further increasing government incentives contained in Decree on State Aids for Investments No. 2012/3305 (“Decree”).


Under the Decree, investments are divided into 4 categories, namely; (i) general, (ii) regional, (iii) large scale and (iv) strategic. For an investment to qualify for any of the above categories, such investment must meet the eligibility criteria set out under the Decree for the particular incentive category. The Decree also divides Turkey into 6 regions, all of which have their own set of rules and requirements for enjoying investment incentives. The investors who qualify to benefit from the incentives under the Decree are granted an incentive certificate by the State. Upon the completion of an investment, the investors must apply to the Administration to obtain a completion visa, which will mark the end of the application of the incentives.


The Amendment Law allows investors who are qualified to be benefitted from the regional incentives to apply to local authorities for an incentive certificate, which was previously available only to investors qualified for general incentives, provided that their investments were worth less than 10 million Turkish Liras. The availability term of incentives for large scale and regional investments has also been prolonged by the Amendment Law. In addition to the foregoing, the table under Article 15 of the Decree, which specifies the rate of contribution to investment, and also corporate and/or income tax reduction rates which apply respectively to regional and large scale investments to be realized in any of the regions 1 to 6 has been updated so as to offer higher rates to investors. The Decree also offers income or corporate tax reduction for investor’s income which generates from their business activities outside the scope of their incentive certificate subject to certain conditions. The Amendment Law unified these conditions and the amended Article 15/5 now stipulates that the investors’ income can be benefitted from tax reduction so long as it does not exceed the total investment amount and 80% of the total investment contribution rate of the investor. Pursuant to amended Article 24 of the Decree, the investments which cannot be completed within the allowed time-limit, as specified under each incentive certificate, may be permitted to continue enjoying the incentives subject to the issuance of a completion visa at the end of the extension period. Finally, the Amendment Law included Annex 6 in the Decree, which lists the middle and high technology investment areas that can enjoy Region 4 investment incentives.