June 2025 – With Presidential Decree No. 9903 published on 30 May 2025 (the “New Decree”), the system of incentive schemes in Türkiye has been overhauled. The New Decree has abolished Decree No. 2012/3305 on State Incentives for Investments (“Decree No. 2012/3305”) and Decree No. 2018/1201 on the Supporting of Investments within the Scope of the Attraction Centres Program (“Decree No. 2018/1201”), which together constituted the old system. In their place, the New Decree sets out a reworked system expanding the incentive programs into new areas and integrating the administration’s new development programs into the system.
Types of Incentives and What They Entail
The various initiatives and programs under the new system make available to investors in Türkiye the following types of incentives in various combinations:
- customs tax and VAT exemptions are provided for the machinery and equipment portions of the investment;
- hardware subsidies are provided for equipment costing more than TRY 2 million up to 25% of the cost of said equipment;
- interest and profit margin assistance are provided for loans at different rates and with differing caps under each initiative and program (except those which benefit from hardware subsidies);
- support for the social security premium are provided for investments in underdeveloped regions of Türkiye with the aim to incentivise employment by covering part or all of the social security obligations associated with employing workers;
- tax breaks are provided with regards to income and corporate taxes at different rates under different schemes; and
- investment site allocations are made in organised industrial zones and are available only to investments eligible for tax breaks.
The Turkish Century Development Initiative
The Turkish Century Development Initiative is the first leg of the new incentive system and is composed of three government programs: (i) the Technological Initiative Program, (ii) the Regional Development Initiative Program, and (iii) the Strategic Initiative Program.
Investments fulfilling the criteria of any of these programs will be eligible for customs tax exemption, VAT exemption, tax breaks, interest and profit margin assistance for loans, hardware subsidies, and investment site allocation.
Technological Initiative Program
The Technological Initiative Program concerns investments in relation to products and technologies on the “Priority Product List”. This list is prepared by the Ministry of Industry and Technology (the “Ministry”), which may be updated in January each year.
The current list contains items from the chemical, pharmaceutical, medical, electronic, electric, industrial machinery, and transportation fields, along with critical raw materials and technologies relating to natural disasters, biotechnology, green technology, electronic and mechanical technologies, resource refining technologies, and information and communication technologies.
Regional Development Initiative Program
This program aims at remedying the discrepancies between the levels of development between the various regions of Türkiye. In this regard, it is largely similar to the regional investment system under the previous Decree No. 2012/3305 and uses the same six-tiered groupings of Turkish provinces based on development, with “1” being the most developed and “6” being the least developed.
Accordingly, under both the new program and the old system, the most incentivised regions are those which are least developed. The list of investments eligible for government incentives for each region is determined by the Ministry and may be updated in January each year.
The notable difference between the old and new systems is the addition of hardware subsidies and the lack of income tax withholding support in the new program.
Strategic Initiative Program
The Strategic Initiative Program aims to meet the critical needs of the nation, ensuring supply security, reducing foreign dependence, and strengthening international competitiveness. While it is still similar to the strategic investments initiative system under Decree 2012/3305, the new initiative has a broader scope.
Whereas the old strategic investments initiative focused on incentivising the manufacture of products for which the country was import dependent and for defence sector projects, the new initiative is expanded to include investments within the scope of the “Digital Transformation Program”, which covers investments aimed at integrating new technological products and solutions to operational processes, and the “Green Transformation Program”, which incentivises environmental friendliness and sustainability goals.
Furthermore, whereas under the old system the product focus of the investment was required to be one that is the subject of a large trade deficit, under the new program the Ministry has been given the authority to determine areas eligible for this initiative in its strategic initiative subjects list.
The income tax withholding support been removed from the list of incentives, while hardware support has been added, compared to the old system.
Sectoral Incentive System
Incentives under the Sectoral Incentive System (unlike those under the Turkish Century Development Initiative) require adherence to sector-specific requirements as determined by the supplements to the New Decree. Furthermore, while investments falling under the Sectoral Incentive System are eligible for the customs tax exemption, VAT exemption, tax breaks, and interest and profit margin assistance for loans, they are not eligible for hardware subsidies and investment site allocation.
Another difference between the Sectoral Incentive System and the Turkish Century Development Initiative is that whereas investments fulfilling the criteria of Turkish Century Development Initiative are subject to evaluation by the Ministry, those under the Sectoral Investment System are directly eligible if they fulfil the conditions.
The Sectoral Incentive System is essentially based on the General Incentive System under the Decree No. 2012/3305 and therefore mainly covers investments that do not qualify for the more specific qualifications that pursue strategic or regional development goals.
The new Sectoral Incentive System includes two sections with differing degrees of incentives: (i) the Priority Investments Incentive System, which is the section that offers greater incentives covering a wide range of investments including private education, transportation, care facilities for the elderly and the disabled, data centres, cloud services, greenhouse agriculture, R&D projects, and facilities and nuclear energy, and (ii) the Target Investment Incentive System covering sectors such as agriculture, mining, manufacturing, energy and gas, water treatment, transportation and storage, hospitality, and information technologies.
Regional Initiatives
The New Decree also provides for support for the employer's share of the social security premium and support for the social security premium under the heading of “regional initiatives”. Unlike the old system, under which these incentives were available more generally, the New Decree has a stricter approach to their application. The old system took into account the regional development, so that the most developed regions were not covered, and the least developed regions were eligible for the longest amount of time. Under the New Decree, the social security premium support is only available for investments in the 6th Region (i.e., the least developed region in Turkey).
Coming into Force
Other than a few technical reporting requirements, which are due to come into force on 1 January 2026, the provisions of the New Decree came into force upon their publication on 30 May 2025.
It is important to note that the provisions of the now defunct Decree No. 2012/3305 and Decree No. 2018/1201 will continue to apply to investments that were the recipients of incentives and to the investment incentive certificates that were issued under the old decrees.