Customs, Free Trade Zone, Incentives

Free Trade Zones in Turkey

Free Trade Zones (FTZs) in Turkey are special areas that are determined by the Council of Ministers where all types of industrial, commercial and certain service activities are encouraged by tax exemptions and incentives.

According to Article 1 of the Free Trade Zones Law; purposes of FTZs are:

  • to improve investments and production for export purposes
  • accelerate foreign direct investment and technological development,
  • direct companies to export activities and improve international trade.

Free Trade Zones are within the political borders of Turkey, but from a Turkish customs legislation perspective, they are considered and treated outside the customs borders of Turkey. Therefore, products brought to FTZ from abroad are not subject to import regime but movement of goods from a Turkish FTZ to Turkey is subject to import regime. On the contrary, movement of goods from Turkish customs territory to a FTZ is considered as export. This consideration allows significant advantages for companies operate in a FTZ.

Production, trade and service activities are allowed in Free Trade Zones. For this purpose, companies should obtain the related activity licence.

Some other advantages are;

  • Corporate Tax exemption for production companies
  • Income Tax withholding on employee salaries exemption for companies exporting more than 85%
  • Procure goods and services from Turkey with VAT exemption

If you have further queries on this issue, please feel free to contact us.