Investment in Turkey

INCENTIVES PURSUANT TO THE EMPLOYMENT ENCOURAGEMENT LAW NO. 5084

Last updated on March 21, 2005

A	The provinces covered by Law No 5084

Law No. 5084 envisages supporting fixed investments to be made in the provinces where income per capita was less than $1500 in year 2001. Thus, the number provinces which met this criterion was found to be 36 and those provinces are as follows:

Provinces covered by Law No. 5084

Adiyaman	Bingöl	Hakkari	Siirt
Afyonkarahisar	Bitlis	Igdir	Sinop
Agri	Çankiri	Kars	Sivas
Aksaray	Diyarbakir	Kirsehir	Sanliurfa
Amasya	Düzce	Malatya	Sirnak
Ardahan	Erzincan	Mardin	Tokat
Bartin	Erzurum	Mus	Usak
Batman	Giresun	Ordu	Van
Bayburt	Gümüshane	Osmaniye	Yozgat

B	Incentives

1	Income Tax & Social Contribution exemptions

For the fixed investments in those 36 provinces, income and corporate tax payers who

started operating after October 1, 2003 and
employed additional employees after October 1, 2003

will be exempt from income tax and social insurance contributions as follows:

	Operation location (in the covered provinces)	Amount of Exemption
Income Tax	Industrial Zones or Organised Industrial Zones (OIZ)	100% of the income tax to be calculated out of the minimum wage
Income Tax	Places other than IZ and OIZ	80% of the income tax to be calculated out of the minimum wage
the employer's share of social Insurance contribution (payable to SSK -the private sector wage earners & public sector workers' scheme)	IZ or OIZ	100% of the social insurance contribution (the employer's share) to be calculated out of the minimum wage
	Places other than IZ and OIZ	80% of the social insurance contribution (the employer's share) to be calculated out of the minimum wage

2	Land Support

Lands belonging to the Treasury or local governments can be allocated to the use of investors who will create 10 or more jobs in the covered 36 provinces or Priority Development Regions provided that no space is left in the Organised Industrial Zones or Industrial Zones in the relevant province.

3	Energy Support

Beneficiaries

Selected agro-industrial and stock breeding firms, and freezing-warehousing companies (determined in line with Communiqué No. 2004/1 issued by the Undersecretariat of Treasury) are able to benefit from the energy support program provided that their production capacity surmounts the following levels.

Sector/Activity	Product	Minimum Capacity
Manufacturing	Flour	Processing of 1000 tonnes of wheat per day
	Animal feed	Production of 80 tonnes of animal feed per hour
	Pasta/Macaroni	Production of 100 tonnes of pasta per day
	Semolina	Production of 150 tonnes of semolina per day
	Tomatoes/Pepper Paste	Processing of 1,500 tonnes of tomatoes per day
	Vegetable oil (raw)	Processing of 400 tonnes of seeds per day
	Vegetable oil (refinery)	Refinery capacity of 150 tonnes/day
	Cotton	Processing capacity of 36,000 tonnes/5 months for Rollergin type cotton Processing capacity of 110,000 tonnes/5 months for Sawgin type cotton
	Biscuits	Production capacity of 150,000 tonnes/day
Stock Breeding	Cattle (breeding & butchery)	Breeding & butchery facilities for 500 cattle per season
	Cattle (breeding & milk processing)	Breeding & milk processing facilities for 150 cattle per season
	Sheep/Goats (breeding & butchery)	Breeding & butchery facilities for 1000 animals per season
	Sheep/Goats (breeding & milk processing)	Breeding & milk processing facilities for 1000 animals per season
	Poultry (breeding & butchery)	Breeding capacity of 120,000 poultry animals per season & butchery capacity of 3000 animals per hour
	Poultry (breeding & egg production)	Breeding & poultry feed production facilities for 100,000 animals per season
	Reproductive poultry (meat & egg oriented)	Breeding and 'brooder & poultry feed production' facilities for 30,000 hens per season
	Turkey breeding	Breeding capacity of 35,000 turkeys per season & butchery capacity of 625 turkeys per hour
Warehousing	Freezing Warehouse/Depot	A closed area of 1000 m²

Amount of energy subsidies

Energy subsidies in percent of total energy expenditure to be billed by the supplier

Minimum

Subsidy Increments

Maximum

Newly established firms which employ 10 or more employees

20% for 10 employees

0.5% for each additional employee

50% for IZ* and OIZ**

40% for other places

Firms established before October 2003 and keep operating which increased the number of employees to 10 from a level below 10

20% for 10 employees

0.5% for each additional employee

50% for IZ* and OIZ**

40% for other places

For firms established before October 2003 and keep operating afterwards which increased the number of employees by 20% from a level 10 or more

20% for the increased number of employees

0.5% for each additional employee

50% for IZ* and OIZ**

40% for other places

IZ: Industrial Zones; OIZ: Organised Industrial Zones