Free zones in Turkey

Free zones in Turkey .. Locations, Taxes and benefits 2023

  • Post last modified:December 23, 2022
  • Reading time:6 mins read
  • Post category:Economy / Cities

Free zones in Turkey are one of the best places that you can start your business in Turkey in.

Turkey has been using the Free Zone model as a way to attract foreign investments and revitalize its economy. Free zones allow companies to invest in Turkey without having to comply with all the regulatory requirements of the country.

Free zones in Turkey

About Free zones in Turkey

Free zones (FZ) are designated places that are regarded to be outside the customs zone, notwithstanding their physical proximity to the country’s political boundaries. FZs are meant to stimulate investment in export-oriented sectors. In FZs, legal and administrative standards applicable to the commercial, financial, and economic sectors are either not enforced or are partially implemented.

Turkey established a number of Free Zones in 1987. Free zones are defined as enclosed areas with preferential regulatory treatment for operational users in order to increase exports of goods and services.

In compared to other parts of the country, free zones offer a more pleasant and flexible business climate, which helps specific industrial and commercial firms increase their trade volume and export.

The basic objectives of free zone development and operation are to encourage export-oriented investment and production, to speed foreign direct investment and technology access, to guide enterprises toward export, and to boost international trade.

Turkey’s free zones exist due to an investment-friendly regulatory environment, geographical proximity, relatively low labor costs, and government incentives.

Turkey’s free trade zones are home to 1,900 businesses, approximately 500 of which are foreign-owned, with a combined trade volume of $22 billion in 2020.

Until 2021, foreign capital businesses invested in the zones to the tune of more than $2.5 billion.

Activities in Turkish Free Zones

In general, Turkish Free Zones allow for a wide range of activities, including:

  • Manufacturing
  • Research and Development (R&D)
  • Software
  • General trading,
  • Storing
  • Packing
  • Banking and insurance
  • Assembly and disassembly
  • Maintenance services

While investors are permitted to construct their own facilities, zones frequently offer favorable rental rates for office and warehouse space. Opportunities for joint ventures exist in every area of the economy for Turkish and foreign businesses.

Locations of free zones in Turkey

There are a total of 21 free trade zones in Turkey, most of them are located near EU and Middle Eastern markets. FZs are strategically located near ports on the Mediterranean, Aegean, and Black Seas, allowing for easy access to international trade corridors.

  • Mediterranean Region: Mersin (Where Mersin port is located), Antalya, and Adana-Yumurtalık Free Zones
  • Aegean Region: Aegean (Izmir), Denizli, and Izmir Free Zones
  • Marmara Region: Istanbul Atatürk Airport, Istanbul Industry and Trade, Istanbul Thracian, Europe, Kocaeli, Tübitak-Mam Technology, Bursa, and Sakarya İpekyolu Free Zones
  • Black Sea Region: Trabzon, Rize, Samsun, and Filyos Free Zones
  • Southeast Anatolian Region: Gaziantep, and Mardin Free Zones
  • Central Anatolian Region: Kayseri Free Zoe
Map of Free zones in Turkey
Map of Free zones in Turkey

Tax advantages for Turkish free zones

Free Zones in Turkey are a great opportunity for international investors and established companies.

Read also: Investment office in Turkey

They offer an efficient business environment due to the tax and customs benefits, some of these tax benefits are:

  • Customs and other ancillary charges are completely waived.
  • Manufacturing businesses are free from corporate income tax at 100%.
  • Value-added tax (VAT) and special consumption tax are completely excluded.
  • Stamp duty is completely waived on all relevant papers.
  • The real estate tax is completely free.
  • Tax exemptions of 100 percent on income and corporation taxes for some logistic services offered in FZs, provided they are export-oriented.
  • Employees’ earnings are tax-exempt to the full extent permitted by law (for companies that export at least 85 percent of the FOB value of the goods they produce in the FZs).
  • Goods may stay in FZs indefinitely.
  • Companies are permitted to transfer profits from FZs to other countries as well as to Turkey.
  • Exemption from title deed costs for the acquisition and sale of real estate.
  • VAT exemption is applicable throughout the construction, design, settlement, and approval stages.
  • Infrastructure that is ready to use is free from VAT and other taxes.
  • Permit for the importation of second-hand, used machinery.