Explore Free Zones In Turkey: Opportunities And Incentives

Explore Free Zones In Turkey: Opportunities And Incentives

Free Zones in Turkey offer unique opportunities for businesses looking to expand their operations with attractive tax incentives, simplified regulations, and strategic geographical advantages. These zones are specially designated areas where companies can enjoy various economic benefits, making them an appealing option for both domestic and international investors. This article explores the key aspects of Free Zones in Turkey and why they are a top choice for businesses seeking growth and profitability.

WHAT ARE TURKISH FREE TRADE ZONES?

Free Zones in Turkey are special economic zones designed to promote export-oriented investment. They provide a business-friendly environment with significant advantages, including tax exemptions, reduced customs duties, and flexible operational rules. Established under the Free Zones Law No. 3218, these zones are strategically located to enhance trade and investment.

KEY BENEFITS OF OPERATING IN TURKISH SPECIAL ECONOMIC ZONES

1- Tax Advantages

• Corporate Income Tax Exemption: Companies operating in Free Zones are exempt from corporate income tax on earnings derived from their activities within the zone.

• VAT Exemption: Transactions involving goods and services within the Free Zone are not subject to Value Added Tax (VAT).

• Income Tax Withholding Exemption: 100% exemption from income witholding tax on employee salaries for companies exporting at least 85% of the FOB value of products produced in free zones 100% exemption from income tax on employee salaries.

• Customs Duty Exemption: Goods imported into the Free Zone are exempt from customs duties, making it easier to manage supply chains and reduce costs.

• Excise Duty Exemption: Companies operating in Free Zones are exempt from the Excise Duty (ED) applied to luxury consumer goods such as jewelry and furs, and to products such as alcohol and cigarettes.

2- Operational Flexibility

• Simplified Regulations: Businesses in Free Zones enjoy simplified customs procedures and fewer bureaucratic hurdles, allowing for faster and more efficient operations.

• No Time Limit: There are no time restrictions on how long goods can remain within the Free Zone, providing businesses with greater flexibility in managing inventory and production schedules.

3- Strategic Location

• Turkey’s Free Zones are strategically located near key ports, airports, and major transportation networks, providing easy access to European, Middle Eastern, and Asian markets. This geographical advantage makes Turkey an ideal hub for global trade.

  
  

4- Labor and Financial Incentives

• Foreign Currency Operations: Manufacturer companies can conduct their operations in foreign currencies, minimizing the risks associated with currency fluctuations.

• Flexible Labor Laws: Free Zones offer more flexible labor regulations, making it easier for companies to hire and manage their workforce.

  
  

POPULAR INDUSTRIAL ZONES IN TURKEY

• Istanbul Specialized Free Zone (Software-Technology): Istanbul Specialized Free Zone was established with the Presidential Decree published in 2020 for the “development and clustering of Advanced Technology, Information Technology, Software and other foreign exchange earning activities”In this context, Istanbul Specialized Free Zone, R&D intensive, Software Information Technology, Medium-High and High Technology manufacturing companies operate.

• Mersin Free Zone: As one of the largest Free Zones in Turkey, Mersin offers excellent access to Mediterranean markets and is a hub for manufacturing, logistics, and export-oriented businesses.

• Aegean Free Zone (ESBAŞ):The Aegean Free Zone in Izmir is the center of high-tech industries such as aviation, defense, electronics, automotive and machinery manufacturing.

• Bursa Free Zone: Known for its strong automotive and textile sectors, the Bursa Free Zone is a prime location for industrial and manufacturing investments.Its proximity to the most important ports of the Marmara Sea and highways is one of its important advantages.

• Antalya Free Zone: This zone is a hotspot for the maritime industry, offering facilities for shipbuilding, maintenance, and repair, as well as other industrial activities.

  
  

HOW TO ESTABLISH A BUSINESS IN TURKEY'S FREE ZONE

Establishing a business in Turkey’s Free Zone involves several steps designed to streamline the process and provide businesses with significant advantages. Here’s how to do it:

1. Choose the Right Free Zone

• Research and Select: Identify the Free Zone in Turkey that best suits your business needs based on location, industry focus, and available incentives. Popular Free Zones include Istanbul, Mersin, and the Aegean Free Zone.

• Consultation: Engage with local consultants or Free Zone authorities to understand specific benefits and requirements.

2. Prepare a Business Plan

• Detailed Proposal: Develop a comprehensive business plan outlining your company’s objectives, operational strategy, financial projections, and the potential impact on the Free Zone.

• Compliance: Ensure your business activities align with the permitted activities within the chosen Free Zone.

3. Apply for a Free Zone Operating License

• Submission: Submit your business plan and application to the Free Zone Directorate or the relevant Free Zone authority.

• Documentation: Provide all necessary documentation, including identification, company registration details, and financial statements.

• Approval Process: The Free Zone authority will review your application, and if approved, you will be granted an operating license.

4. Register Your Company

• Trade Registry: Once you have your operating license, you need to register your company with the Turkish Trade Registry.

• Legal Entity: Choose a suitable legal structure for your business, such as a Limited Liability Company (LLC) or Joint Stock Company (JSC).

• Documentation: Submit the required documents, including the Articles of Association, proof of identity, and proof of address.

5. Lease or Purchase Property

• Facility Setup: Depending on your business needs, lease or purchase land, offices, or manufacturing facilities within the Free Zone.

• Infrastructure: Ensure the facility meets all operational requirements, such as utilities, technology, and logistical support.

6. Hire Staff and Set Up Operations

• Labor Laws: Take advantage of the flexible labor regulations in Free Zones to hire the right talent for your business.

• Operational Start-Up: Begin setting up your business operations, including importing equipment, setting up production lines, and initiating business activities.

7. Comply with Ongoing Regulations

• Regular Reporting: Adhere to the reporting and compliance requirements of the Free Zone authority, including financial reporting and operational updates.

• Tax Compliance: While Free Zones offer tax exemptions and incentives, ensure compliance with any applicable taxes and duties outside the zone.

8. Take Advantage of Free Zone Benefits

• Tax Incentives: Benefit from corporate income tax exemptions, personel income withholding tax exemptions, VAT exemptions, and customs duty exemptions available in Free Zones.

• Export Facilitation: Utilize the Free Zone’s infrastructure to enhance your export capabilities, taking advantage of Turkey’s strategic location for global trade.

  
  

Take Your Place in Turkey Free Zones

Establishing a business in Turkey’s Free Zones is a strategic move that can provide your company with significant financial benefits, operational flexibility, and access to global markets. By following the steps outlined above, you can efficiently set up your business and leverage the advantages offered by these specialized economic areas.

Whether you are a domestic company or a foreign investor, exploring benefits & opportunities of Turkey’s Free Zones can be a crucial step in achieving long-term financial success.

We continue to offer cost-effective solutions to global investors who want to enter the Turkish market smoothly and quickly and to individual entrepreneurs who want to invest in Turkey, to ensure their full compliance with local legislation and to reach out tax & social security incentives in Turkey.