I-INTRODUCTION:
Republic of Turkey requests certain financial obligations such as fees, duties, premiums and taxes from their own citizens and foreign investors as required by the state’s taxation authority.
Anyone engaged in trading activities must comply with these obligations not to charge with any criminal and administrative sanctions.
Especially for foreign investors, it is important to have accurate information about legislation in the country of investment and to evaluate their risks accordingly.
II- COMPANIES’ TAX OBLIGATIONS AND GENERAL NOTIFICATIONS:
Taxes are generally as follows;
- Value Added Tax
- Income Tax
- Corporation Tax
- Stamp Tax
- Customs Duty
- Environment Tax
- Announcement and Advertisement Tax
Mandatory declarations for commercial enterprises are as follows;
- Tax Statement/Declaration
- Provisional Tax Return
- BA and BS Forms
The context of notifications to the Social Security Institution and insurance premiums are as follows;
- Payments made to Social Security Systems are called insurance premium. This system is managed by the Social Security Institution in Turkey and that enables employees and employers to benefit from health and retirement services provided by the state. This social security premium is also called SGK (SSI) premium. This premium is paid by the employee and the employer partially. For contracted employees 32% of the monthly fee shall paid to the state as insurance premium payment.
- Newly established companies are obliged to submit the declaration (via e-insurance) to the Social Security Institution until beginning date of employment. Processes such as dismissal, employment leaves and medical report periods must also be reported to the institution via e-insurance.
III- INVESTMENT INCENTIVES FOR FOREIGNERS:
For investments in accordance with the specified conditions, some incentives are applied by the Ministry of Industry and Technology regulations.
These are proportional discounts or complete abolition of the above-mentioned tax and insurance premium obligations and land allocation for investments.
These incentives periodically vary and change according to the economic and sociocultural structures and needs of our country.
As of 2020 investment incentives can be reduced as follows;
The Ministry of Industry and Technology has announced significant incentives that will affect investments that are considered as strategic. Four fundamental criteria are required for strategic investments. Fixed investment expenditures must be over 50 million Turkish Liras, domestic production capacity must be less than import capacity, minimum 40% added value must be provided with the investment and the total amount of imports realized in the last year must be over 50 million USD. Strategic investments are exempted from VAT and Customs Tax, and insurance premium support is also provided for at least seven-year contracted employees. Also, the place of investment is allocated by the state and VAT refund is provided for investments above a certain rate.
Apart from the strategic investments, regional investment incentives are also determined if there is a minimum investment amount. Regional investments are applied by separating the invested regions according to economic and socio-cultural needs. While corporation tax and insurance premium supports are applied at different rates according to the investment needs of the regions, VAT and customs tax exemptions are applied for all regions. In the field of taxation, VAT and customs duty exemptions applied for machinery and equipment, also VAT refund and tax reduction is provided for construction expenses until the investment contribution rate is reached. From the point of employment support, insurance premium and income tax withholding supports are applied to the additional employments provided by the investors. In addition, land allocation and loan supports are also provided for regional investments.
Mining and mineral exploration investments, transportation investments by rail, sea or airway, specific tourism accommodation investments, education investments, defense industry investments, specific quality automotive primary and sub-industry investments, investments of high-tech products according to the OECD technology density definition (pharmaceuticals, electronics, medical devices and measurement devices, air and space vehicles), turbine and generator manufacturing for renewable energy productions and investments in wind turbine blade manufacturing, investments in products obtained as a result of R&D, greenhouse and integrated cattle breeding investments based on automation of a specific nature, waste recycling and/or disposal facility investments with a minimum amount of 5 million Turkish Liras are identified as priority investment areas. For the investments which made in the aforementioned areas; premium incentives, tax supports and more suitable investment loan opportunities are applied without regional limitations compared to other investment areas.
Providing turn-key factories, consultancy supports, investment and business loan supports are expected to become legal in the upcoming period.
It is also observed that the acquisition of real estate has been facilitated and for real estate sales and rental incomes, tax support is provided for foreign investors. Foreigners also acquire citizenship rights by obtaining work permits, purchasing real estate or investing specific amounts in Turkey.
Turkey is highly preferred by foreign investors with its geographical and economic advantages of natural resources, as well as underground and aboveground resources.
With before mentioned incentives, it is aimed to facilitate and increase the foreign investments in Turkey.
Gizem Güreşen & İlayda Takbak