What is a Free Trade Zone?

With the expansion of the trade network globally and the globalization of commerce, the boundaries of shopping have begun to disappear. The concept of a free trade zone that emerged from this situation holds great importance within trade relations. The free trade zone, which allows people to shop freely without dealing with restrictions, is used as a method hosting significant advantages within trade activities.

The areas referred to as free trade zones are regions located within the political borders of customs zones but are considered outside of customs line in terms of foreign trade, customs, and tax legislation. Free trade zones are established to increase trade and grow investments. In terms of trade in these zones, compliance with any customs practice that does not allow free circulation is not mandatory. Additionally, these regions are considered outside of Turkey's customs zone in terms of customs duties, trade, and exchange practices. However, the application is different for goods in free circulation. These goods are regulated according to the laws of exit practices.

Which Provinces in Turkey Have Free Trade Zones?

Today, many provinces within Turkey are recognized as free trade zones. The free trade zone activities in Turkey are concentrated in the locations where the easiest and most efficient shopping can be done in the country. These regions, especially in the Mediterranean, Black Sea, and Aegean, have been chosen to make the best use of extensive market opportunities. In addition, these provinces can be considered as points that allow goods to reach sellers and buyers easily and cheaply. Therefore, the free trade zones located in Turkey are of great importance in terms of their locations.

We can list the provinces in Turkey that have free trade zones as follows:
• MERSIN FREE ZONE
• ANTALYA FREE ZONE
• EGE FREE ZONE
• IST. AHL. FREE ZONE
• TRABZON FREE ZONE
• IST. TRACIA FREE ZONE
• ADANA YUMURTALIK FREE ZONE
• IST INDUSTRY AND TRADE FREE ZONE
• SAMSUN FREE ZONE
• EUROPEAN FREE ZONE
• RIZE FREE ZONE
• KAYSERI FREE ZONE
• IZMIR FREE ZONE
• GAZIANTEP FREE ZONE
• TÜBİTAK-MAM FREE ZONE
• DENIZLI FREE ZONE
• BURSA FREE ZONE
• KOCAELI FREE ZONE

Why Were Free Trade Zones Established?

The main objective behind the establishment of free trade zones has been to increase trade activities. By means of free zones, it has been aimed to progress in terms of imports and exports by increasing foreign capital investments and providing advantages to domestic producers in international competition. In addition, free zones have been established to increase foreign currency inflow, create new job opportunities, encourage producers by eliminating production problems, boost the country’s economy, raise economic standards and quality, find advanced methods as a result of foreign analyses, and generally support the development of industries.

What are the Objectives of Free Trade Zones?

Free trade zones have been established generally to contribute to the economy and advance trading activities. However, these zones also have other specific purposes. In this context, the objectives of establishing free trade zones can be listed as follows:
• Increasing investment in exports and encouraging producers through free trade zones
• Ensuring that companies focus on their export activities
• Growing in international trade to reach a stable position in the global market
• Facilitating the entry of foreign investments and technological developments
• Enabling easier and more extensive use of external financing opportunities
• Increasing trading opportunities
• Capturing the opportunity to procure affordably and regularly
Free trade zones contribute to the growth of trade in accordance with the listed objectives.

What Advantages Do Free Trade Zones Provide?

Since these zones generally facilitate trade development, they lead to significant advantages economically and open up new commercial opportunities for countries. The most important advantages of free zones, along with their benefits, can be listed as follows:
• One of the most significant advantages of free trade zones, transit trade allows countries to use land and maritime routes in the most effective ways. This is of great importance for Turkey, which is positioned significantly between continents, and thanks to free zones, this situation can be turned into an advantage.
• By contributing significantly, free zones play a major role in the country’s economy. Free zones enable the growth of exports, thus increasing production and investment.
• They accelerate the entry of technological developments into the country, thus allowing openness to new methods and planning.
• They encourage companies to export and produce.
• Along with tax advantages, free trade zones provide beneficial exemptions for businesses carrying out commercial activities.
• Due to VAT exemptions in free zones, the tax burden is reduced.
• Free zones are also exempt from income tax.
• Offering cheap energy, free trade zones are less costly compared to other regions.
• They strengthen international communication networks.
• They play a significant role in the growth and success of companies.
• They provide freedom in legal obligations due to their flexible rules.
• They present a trade opportunity without customs duty procedures being imposed.
• Businesses are offered interest support on loans for trade activities within these zones.
• Each enterprise benefits equally from the incentives prepared specifically for these zones, according to the principle of equality.
• Free trade zones offer profit transfer opportunities.
• These zones have the capability of obtaining operational licenses for both short and long term.
• They provide the opportunity to recognize the global market.
• They contribute to the country’s employment, ensuring the realization of new job opportunities.
• In free trade zones, it is possible to reduce production costs, which is the biggest factor affecting profit in trade. Products transported in large quantities to free zones can be imported into the country in smaller amounts, thus ensuring cost reductions.
• They provide convenience and speed in import and export activities.

Activities That Can Be Conducted in Free Zones

Domestic or foreign investors, real or foreign legal entities can obtain operational licenses and carry out activities by fulfilling the procedures of free zones. There is no ownership limitation for domestic or foreign capital for legal entities to operate in free zones.

Companies established or to be established in free zones can operate in various fields. Manufacturing, banking, assembly - disassembly, insurance, warehouse operations, financial leasing, workplace rentals, maintenance - repair, and coastal banking are areas of activity that can be conducted in free zones.

The Function of Free Zones

In our country, free zones were organized by the Free Zones Law No. 3218 in 1985. The primary aim of these zones is to invest in exports and promote production, accelerate foreign direct investments and technology entry, redirect businesses towards exports, and develop international trade.

Free zones are generally areas where administrative and legal regulations regarding financial, commercial, and economic fields valid in the country are made or partially implemented, where quite extensive incentives for commercial and industrial activities are recognized, and which are physically separated from other parts of the country.