Free Zones Law and the Law Regarding Amendments on Certain Laws and Legislative Decrees have been published in the Official Gazette dated 24 February 2017. Certain amendments on the concerning law are as presented below. - The Council of Ministers will be able to decide for expropriation of lands and facilities located in areas declared as free zone. In publicizing lands and facilities, the Council of Ministers would decide on whether the operator demanding expropriation will cover the costs and expenses required for transactions or not. It would be possible to lease or give utilization permit to the places under state control and buildings/facilities constructed over them. Turkish Defense Ministry's opinion will be sought for the lands and buildings allocated to the use of Turkish Armed Forces. - Users and operators receiving the incentives and other utilizers are different. The existing regulation based on letting the users and operators benefitting of free zone incentives to make use of non-tax incentives also will be carried on. Users that do not benefit free zone incentives and operating companies will be permitted to make use of tax and non-tax incentives within the scope of law. Within that context, investment incentive certificates concerning free zone investors will be drafted as excluding incentive elements in terms of activities indicated in law and the incentive elements entitled in line with the free zones structure. Within the scope of this arrangement, during the phases of investment and production, The users and operators that their income are exempted of income and corporate tax will be permitted to benefit of the non-tax incentives to be set by the Council of Ministers. Within the scope of this arrangement, users whose income were not exempted from income and corporate tax would be let to benefit of the tax and non-tax incentives within the context of concerning legislative provisions. - Payment would be required in case the goods brought from abroad subject to fee and goods produced by manufacturer users are sold within region and released to Turkish market later. - The Council of Ministers would be authorized to decrease the special account fee rates for the investments to be supported based on project in terms of subject, sector, features and investments that are strategical, large scaled and with priority to zero, make changes or increase up to the legal level regarding their region, sector, field of activity and investment type. - The Law re-arranges the renewal, change and deadline extension of operational contracts. Pursuant to that, before the operational contracts finalize, provisions within the existing contract could be re-arranged and contract deadline could be extended in case the commitments of operator indicated in the contract had been fulfilled and Economy Ministry's future investment demands are accepted. In short, contract deadline would be extended by the Economy Ministry. - The Law also re-arranges setting up sites abroad. As per that, the Council of Ministers would be authorized to identify the countries where special sites, foreign trade centers and logistics centers should be located. Establishing and operating these sites through a company resident in Turkey will be permitted by the Council of Ministers. The Council of Ministers would also be authorized for determining the state aids to be supplied to investments made in the sites established abroad by companies resident in Turkey. - So as to develop service exports; income and corporate tax exemption will be provided for repair, maintenance, assembly, de-montage, handling, unbundling, packaging, labeling, testing and storing services. For these services, conditions of being handled in Turkey physically, receivers' being resident abroad and not returning to Turkey would be sought. - Since the aforementioned exemption is an income exemption to be benefitted on the condition that the activities of an enterprise in that context are entirely directed to foreign countries, the companies to take permits within the scope of this activity should only be working dedicated to foreign markets. - Pertaining to that, the income tax calculated following the application of minimum living allowance over wages paid to the employees hired by taxpayers exporting at least 85 % of FOB cost of goods produced at free zones would be cancelled by being deducted from the accrued taxes on withholding tax return to be submitted. The Council of Ministers would be assigned to decrease this rate to 50 % or increase up to the legal level. - The Council of Ministers could be exercising this authority by making changes or cascading regarding the investments to be supported based on project in terms of subject, sector, features and investments that are strategical, large scaled and with priority in line with their region, sector and field of activity. Taxes that are not collected from taxpayers with annual sales amount under that rate would be demanded with a late fee, but no penalties. The Economy Ministry has been authorized for making arrangements within the frame of Free Zones Law and the concerning regulation and the related amendments within law have been enacted as of 24.02.2017.
Our explanations provided above include general information on the issue. No responsibility can be claimed against
EY and/or Kuzey YMM ve Bağımsız Denetim A.Ş. due to the implications arising from the context of this document or emerging with respect to its context.
Best Regards,
Kuzey YMM ve Bağımsız Denetim A.Ş.
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