Investment is defined as the use of a resource to generate income from that resource. Investment is one of the important terms in the labor market. Especially under today's conditions, there are incentives for foreign individuals or institutions that make investments to increase. However, to understand these incentives, it is necessary to comprehend the essence of the definition of a foreign investor.

According to the Law on Direct Foreign Investments No. 4857, a foreign investor is defined as real persons who are citizens of any foreign country and make direct investments in Turkey, as well as Turkish citizens residing abroad, legal entities established according to the laws of foreign countries, and international organizations. An incentive, on the other hand, is the authority used by the investor to make investments to ensure commercial activity in the country.

When looking at incentives for foreign investors, the most prominent incentive is for those who do not have Turkish citizenship and are citizens of any other country, as well as those who are Turkish citizens but reside abroad, to invigorate the commercial network in the country and provide economic benefits to the country.

What Are the Government Incentives for Foreign Investors?

The T.C. Ministry of Industry and Technology has announced on its page titled Investment Incentive Practices that the General Directorate of Incentive Applications and Foreign Capital provides 4 basic incentive programs for firms and organizations with national or international capital regarding their investment projects in our country. The incentives offered to foreign investors are as follows:
● General Investment Incentive Practices
● Regional Investment Incentives
● Strategic Investment Incentives
● Project-Based Investment Incentives can be listed.

When looking at the details, general investment incentive practices include tax exemptions for the machinery and equipment that the foreign investor will acquire, regardless of the region where the foreign investor will invest.
● VAT Exemption
● Customs Duty Exemption

Regional investment incentive practices refer to high incentives for investments made by foreign investors in regions that are less developed on a regional basis.
Region 6 Incentives:
● Customs Duty Exemption
● VAT Exemption
● Corporate Tax Reduction
● Social Security Premium Support (Employer Share)
● Land Allocation (Medium-High Technology Product Incentives)
● Interest Rate Support (Priority Incentives) can be listed.

Strategic investment incentive practices are high incentives for investments made by foreign investors in areas with high import rates.
Strategic Investment Incentives:
● Customs Duty Exemption
● VAT Exemption
● Corporate Tax Reduction
● Social Security Premium Support (Employer Share)
● Land Allocation
● Interest Rate Support
● VAT Refund can be listed.

Project-based investment incentive practices involve tailor-made incentives for foreign investors making investments in areas of critical importance for our country.
Project-Based Investment Incentives are as follows;
● Grant Support
● VAT Exemption
● Customs Duty Exemption
● Corporate Tax Reduction
● Social Security Premium Support (Employer Share)
● Income Tax Withholding Support
● Qualified Personnel Support
● Energy Support
● Interest Rate Support
● Capital Contribution
● Land Allocation
● Infrastructure Support
● Purchase Guarantee
● Facilitation in Permit/License Processes
● VAT Refund

How Can Foreign Investors Obtain the Incentives Offered to Them?

According to the announcement published by the T.C. Ministry of Industry and Technology, as of July 2, 2018, all applications regarding the issuance of incentive certificates for new investments must be directed to the General Directorate of Incentive Applications and Foreign Capital, as well as notifications made by foreign investors about the companies or branches they will operate in Turkey, via the internet address called E-TUYS.

Foreign investors wishing to benefit from incentives must send their application documents for authorization focusing on the Procedures and Principles for Electronic Incentive Application and Foreign Capital Information System Authorization via the Registered Electronic Mail (KEP) to the Directorate General’s KEP address. Necessary reviews are carried out after the request for authorization of the application is forwarded to the Directorate General.

As a result of the reviews, authorized persons or institutions with the right to process on the E-TUYS page can log into the system and initiate their applications and processing steps for the incentives offered. It is recommended to refer to the guide or to benefit from ODS Consulting services for the steps to be correctly conducted on the E-TUYS address.

Moreover, foreign investors can obtain investment incentive certificates through E-TUYS. The process of obtaining an incentive certificate occurs in 5 steps.
1st step - Authorization: The foreign investor logging into the system is directed to the Directorate General’s KEP address along with the application documents.
2nd step - Authorization confirmation email: A confirmation email is sent to the email address contained in the documents the foreign investor will apply with, confirming that the authorization has been granted.
3rd step - User updating investor information: The authorized foreign investor is expected to update their investor information as specified in the Investor Information Guide on E-TUYS by following the steps and submit it for approval to the ministry.
4th step - Approval of investor information: The foreign investor’s information update is reviewed by the ministry, and the approval of the update occurs.
5. Application for Incentive Certificate through E-TUYS: The new incentive certificate application must be carried out by the authorized foreign investor in accordance with the Incentive Certificate Guide on E-TUYS following the specified steps and submitted for approval to the ministry.
With the ministry's approval, foreign investors can obtain the incentive certificate.

What Documents Are Required to Obtain the Incentives Offered to Foreign Investors?

In the ‘Documents Required for Application’ section of the Third Chapter of the Regulation on the Implementation of Direct Foreign Investments Law, it is stated that certain documents must be submitted to the ministry to establish authorized institutions and organizations in Turkey and applications must be made to the ministry.
In order to benefit from the incentives offered by the ministry, the following documents are required from foreign investors:
● Application form for incentives.
● There are transactions to be carried out by the liaison office. A declaration specifying the scope of these transactions and stating that the office will not engage in commercial activities. In addition to this declaration, a document showing that the foreign investor or the authorized signatory of the foreign investor has signed the declaration, indicating the signature authority.
● A document outlining the Activities of the foreign investor's company or institution indicating that the relevant Turkish Consulate is apprised of or prepared based on the Hague Conference on Private International Law stipulations regarding the Rescission of the Requirement for the Certification of Foreign Official Documents.
● A document showing the activity report or financial statement, including the income statement of the foreign investor's company, institution, or business that will undertake investments.
● A power of attorney granted to a person assigned to carry out the transactions of foreign investors in the liaison office.
● A power of attorney in the event that transactions of foreign investors are conducted through any other person during the establishment transactions of the liaison office.
In the case the original application documents sent by foreign investors for incentives and the documents submitted to the General Directorate during the liaison office’s operation are presented, a copy of the approved documents will be returned to the applicant.

In Which Areas Does the Government Provide Incentives to Foreign Investors?

The government offers certain incentives to foreign investors. However, there are specific alternatives and subject headings regarding these. The incentives provided by the government to foreign investors fall mainly under 4 subject headings.

Detailed information regarding these incentives is examined in detail in the Investment Incentive System of the T.C. Ministry of Industry and Technology. However, it is reported that the incentive system that came into force with the Cabinet Decision No. 2012/3305 on 15.06.2012 operates in 4 different areas. These are;
● General Incentive Practices,
● Regional Incentive Practices,
● Promotion of Priority Investments,
● Promotion of Strategic Investments.

The supporting elements of the incentives related to the subject are as follows:
● VAT Exemption.
● Customs Duty Exemption.
● Tax Reduction.
● Employer's Share of Social Security Premium Support.
● Employee's Share of Social Security Premium Support.
● Interest or Profit Share Support.
● Investment Location Allocation.
● VAT Refund.