FREEZONES IN TURKEY

WHAT IS A FREE ZONE?

The legal status of free zones is regulated in the “Free zone Law” of Turkey. Free zones are defined as geographically restricted pieces of land, established by the government of Turkey, which provide exemptions from certain taxes, fees, tariffs and regulations for the commercial companies which obtained “Free zone Operating License” and conduct business in the free zones.

In the law, the aim of establishing the free zones is explained as “to encourage export, free trade, foreign investments, globalize the Turkish economy and develop the commercial life in Turkey”.

BENEFITS OF FREE ZONES

For both foreign and local companies, there are a lot of benefits of establishing a company in the Free zones of Turkey. These benefits include;

- Tax advantages for manufacturing companies:

Manufacturing companies which are established in the Free zones of Turkey, will be exempted from income tax and corporate tax from sales of the manufactured products. Companies which export at least %80 of the products they manufactured in the free zones will be exempted from the tax which they pay for the salaries of their employees. Export to all-production rate can be reduced to %50 from %80 by the Council of Ministers.

- Ability to mid to long term investing:

The operating licenses for free zones are provided for; 15 years for companies which rent readily-built facilities, 20 years for manufacturing companies which rent readily-built facilities, 30 years for companies which build their own facility and 45 years for manufacturing companies which build their own facility.

- No restriction for money transferring:

Money transfer in and out of the free zones are not restricted by any kind of regulations. The transactions are completely free and allowed.

- Easy Commerce availability:

The trades between Turkey and the free zones are regulated as foreign-commerce. Which means the products brought into the free zones from Turkey will be accepted as exported goods. The products which are sold into Turkey from the free zones are accepted as imported goods. This means the companies will be able to benefit from VAT-exemption for goods bought from Turkey.

- No Tariffs:

Tariffs will not be paid for the goods which are produced in EU countries or Turkey that are brought into the free zones and then re-transferred to Turkey and EU countries. Because the free-circulation status of these products doesn’t change.

- Certificate of Free Circulation for EU-Turkey:

Because the free zones are accepted as parts of the “Turkey-EU customs Union”, the goods that are produced in Turkey or EU, or the goods that have the free-circulation status in Turkey will be provided with the A.TR certificate. For the 3rd country origin goods, the tariffs will have to be paid.

- Complete Equality with Turkish Businesses:

Turkish investors and businesses will not get extra benefits in the free zones because of their nationality. All companies will be treated equally and have the same tax-exemptions and other advantages.

- No Time Limitations:

The goods can stay in the free zones indefinitely. No tax or fee will be exerted on the company for these goods.

- No Regulations:

In Turkey; some sectors will be subjected to fixed-prices, restrictive government regulations, quality standards determined by the public authorities etc. The free zone companies will be exempted from these regulations and authorizations.

- Realistic Inflation Calculations:

Every payment regarding the commercial activities in the free zones will be done in foreign currencies.

- Access to Local and Global Markets:

Commercial sales from the free zones into Turkey or to other countries are not restricted in any way. Only high-risk products can be subjected to limitations regarding the imports into Turkey from the free zones.

- Reduced bureaucracy:

The free zones are run by private organizations. The bureaucracy for all the commercial processes are practically and effectively minimized.

- Strategic Advantages:

The locations for Turkish free zones are strategically selected because of their close proximities to European and Middle East markets. The free zones are all near to the main ports, international airports, land road networks, population centers etc. The companies will benefit from the reduced transportation costs.

- Developed and Cheap Infrastructure:

The infrastructure of the free zones is built in the same fashion and quality as developed countries.