Contents 14 sections
Turkey offers two different incentive routes that are often confused: an Investment Incentive Certificate for an approved project and a free zone operating licence for an approved activity at a designated location. They can both reduce investment and operating costs, but they do not create the same rights, follow the same application process or apply to the same transactions.
The short answer for investors
Choose the investment incentive route when the main question is how to finance and reduce the tax cost of a mainland factory, capacity expansion, technology upgrade or other qualifying fixed investment.
Test the free zone route when the business is export-oriented and can genuinely operate from a licensed free zone premises. A free zone is not a blanket tax holiday: the activity, licence, product flow, customer destination and accounting evidence determine the result.
This guide reflects the official framework reviewed on 28 September 2026. Because Turkish-lira thresholds in the investment incentive legislation are revalued and programme calls may impose their own limits, the current amount shown in E-TUYS or the relevant official call should be confirmed before a board approves the project.
Investment certificate or free zone: the practical difference
| Point | Investment Incentive Certificate | Free zone regime |
|---|---|---|
| Regulator | Ministry of Industry and Technology | Ministry of Trade, Directorate General of Free Zones |
| Legal trigger | An approved project, expenditure list and incentive certificate | An approved activity licence and operations inside a designated free zone |
| Best fit | Greenfield, expansion, modernisation, digital or green transformation investments | Export manufacturing and qualifying cross-border service or logistics models |
| Core benefit logic | Support is limited to the certificate, eligible assets, region, programme and implementation period | Benefit depends on licence type, actual activity, transaction flow and destination of sales or services |
| Application channel | E-TUYS, through an authorised user | Application to the relevant Free Zone Directorate using the activity licence form and annexes |
| Main risk | Ordering or invoicing before eligibility and certificate timing are secured | Assuming all free-zone income or mainland-Turkey sales are automatically tax-free |
Turkey’s investment incentive system in 2026
Presidential Decision No. 9903 reorganised the system around development, sectoral and regional priorities. Foreign-owned Turkish companies are generally treated on the same basis as domestic investors; the decisive questions are the project’s activity, technology level, location, scale and compliance with the programme rules.
1. Türkiye Century Development Initiative
This route targets strategic, technology-intensive or locally transformative projects and has three main strands:
Technology Initiative: projects involving medium-high and high-technology products on the Ministry’s priority product list.
Local Development Initiative: province-specific investment subjects selected for local resources, skills, value chains and development needs.
Strategic Initiative: high-value, R&D-intensive investments designed to reduce dependency on critical imported products and strengthen supply security.
2. Sectoral and regional incentives
The Sectoral Incentive System includes priority and target investment routes. Regional support then changes the depth or duration of selected benefits according to where the project is located. A project should therefore be modelled by activity and province together, not by looking at a regional map alone.
3. Project-based and transformation programmes
Large, high-impact projects may be considered under project-based programmes such as HIT-30. Separate digital and green transformation routes may also be relevant where the investment is supported by an approved transformation roadmap. These programmes are not automatic extensions of the standard certificate: they have their own technical assessment, application window and documentation.
2026 threshold caution
Decision No. 9903 contains base Turkish-lira amounts, but the Decision also requires TL figures to be updated annually by the revaluation rate. Do not copy a 2025 minimum investment amount into a 2026 feasibility study. Confirm the current E-TUYS amount and any programme-specific call threshold on the application date.
What can an Investment Incentive Certificate support?
The certificate is not a single standard package. Depending on the route, region and project, the official system can include the following instruments:
| Instrument | How it generally works | Control point |
|---|---|---|
| VAT exemption | Eligible machinery and equipment on the approved list may be purchased without VAT. | Asset, invoice, seller and list details must match the certificate process. |
| Customs duty exemption | Eligible imported machinery and equipment may be relieved from customs duty. | Other import taxes, trade-policy measures or product permits may still apply. |
| Reduced corporate tax | Corporate tax may be reduced until the approved investment contribution is used. | Track qualifying investment expenditure and contribution utilisation separately. |
| Employer social security support | The government may cover the employer share for qualifying employment, subject to limits and duration. | Employment, payroll and completion conditions must be reconciled. |
| Employee premium and withholding support | Available only in specified circumstances, commonly tied to particular regions or programmes. | Never assume these apply merely because an incentive certificate exists. |
| Interest or profit-share support | Part of financing cost may be covered for eligible loans. | Loan type, currency, lender, timing and cap matter. |
| Investment land allocation | Land may be allocated where available and legally suitable. | It is not a guaranteed cash benefit and requires a separate land process. |
| Programme-specific support | Machinery grants, infrastructure, energy or qualified personnel support may appear in designated programmes. | Use the current call and award terms, not a generic incentives table. |
For an overview of the broader tax setting, see our doing business in Turkey guide. Corporate tax mechanics and filing should be modelled separately from the incentive itself; our 2026 corporate tax guide explains that baseline.
How to apply for an Investment Incentive Certificate
Define the project perimeter. Separate new machinery, imported equipment, construction, intangible assets, financing and working capital. Not every cost is eligible.
Classify the activity and product. Determine the correct NACE/US-97 or applicable activity coding, production subject, capacity and technology classification.
Compare the programmes and locations. Test the sectoral route, regional overlay and any technology, strategic, digital, green or local-development programme before selecting the site.
Build the financial model. Model each support instrument by eligible expenditure, timing, tax capacity and payroll—not as a headline percentage of total project cost.
Authorise the E-TUYS user. The application and later revisions are handled electronically by the company’s authorised person.
Submit before unsupported commitments arise. Pre-application expenditure is generally outside the certificate under Decision No. 9903. Align purchase orders, pro forma invoices, financing and import timing with the application.
Operate the certificate as a live compliance file. Reconcile invoices, machinery lists, imports, employment and project changes; request revisions before facts diverge from the document.
Complete the investment and obtain the completion visa. Benefits can be reviewed against actual expenditure, capacity and employment at closing.
Invoice discipline matters
Decision No. 9903 links domestic supplies under the certificate to e-Invoice or e-Archive Invoice records. The investment team, procurement, customs broker, finance provider and accounting function should use the same approved asset list and project code.
How Turkey’s free zones work
A Turkish free zone is inside Turkey geographically but, until full EU membership, treated as outside the Turkish customs territory for customs-regime purposes and inside it for origin rules. Goods sent from Turkey to a free zone follow the export regime; goods released from a free zone into mainland Turkey follow the release-for-free-circulation regime.
This distinction is commercially important. A free zone can defer or remove certain customs and VAT costs for goods held or processed for export, yet a later movement into mainland Turkey can create import procedures and taxes. For a deeper look at those taxes, read our guide to customs duty and import VAT in Turkey.
Who may operate in a free zone?
A Turkish or foreign individual or legal entity may apply, but commercial activity requires an approved licence and a workplace in the zone. The official May 2026 information note lists production, trading, warehousing, assembly/disassembly, simple processing and handling, workplace leasing, maintenance and repair, banking, and other activities approved by the Directorate General.
The Ministry assesses production and export orientation, technology level, investment and export commitments, employment, the zone’s purpose and cluster compatibility. This means a legal entity’s eligibility does not guarantee approval for every proposed activity.
Investor and tenant licences
| Status | Production licence | Other activity licence | Operational model |
|---|---|---|---|
| Investor user | Up to 45 years | Up to 30 years | Builds or acquires its own superstructure in the zone |
| Tenant user | Up to 20 years | Up to 15 years | Rents an approved office, warehouse or production area |
Commercial operations require either a company headquartered in the free zone or a branch in the zone. A company already resident in Turkey must conduct its free-zone operation through a branch. Conversely, a free-zone-headquartered company cannot conduct business elsewhere in Turkey under the same trade name.
Free zone tax, customs and payroll benefits in 2026
| Benefit | 2026 rule | Important limitation |
|---|---|---|
| Manufacturing profit exemption | For a production-licensed user, profit from products manufactured in the zone and sold abroad, within the same free zone or to another Turkish free zone is exempt from income or corporate tax. | The 2026 extension covers same-zone and inter-zone sales; profit from sales into mainland Turkey is not included in this stated manufacturing exemption. |
| Payroll withholding exemption | Available where at least 85% of the FOB value of goods manufactured in the zone is exported abroad. | The export ratio and manufacturing nexus must be documented; it is not a general payroll exemption for all users. |
| VAT treatment | Eligible supplies from Turkey to the zone and services supplied to free zones or export-purpose cargo transport may qualify for VAT exemption under the applicable rules. | The exact goods, service, delivery and documentary conditions must be tested; “free zone” does not make every invoice VAT-free. |
| Customs position | Goods can enter from abroad without immediate customs duty while remaining under the free-zone regime. | Release into mainland Turkey is an import. Origin, tariff classification, customs value and trade-policy measures remain relevant. |
| Stamp tax and fees | Transactions and documents related to free-zone activities are exempt within the legal scope. | The document must be demonstrably connected with the licensed free-zone activity. |
| Property tax | A user-owned building occupied for the user’s activity can be exempt. | The official note excludes buildings that are rented out. |
| Qualifying service profits | Profits may be exempt for specified maintenance, repair, assembly, disassembly, handling, sorting, packaging, labelling, testing and storage services where the entire service is supplied abroad. | A general consultancy, software or domestic service model should not assume this exemption. |
What changed from 1 January 2026?
Law No. 7577 amended Temporary Article 3 of the Free Zones Law. The Ministry of Trade confirmed that, for production-licensed users, the manufacturing-profit exemption now covers qualifying sales of zone-manufactured products not only abroad but also within the same free zone and to other free zones. The change is effective from 1 January 2026. It does not convert sales to mainland Turkey into exempt sales.
Specialised free zone support
The Ministry’s May 2026 note also lists additional support under the Specialised Free Zones framework for high-value, R&D-intensive and high-technology production. Subject to the relevant decision and implementation rules, the official limits are:
Employment support: 50% of the monthly gross wage for up to 10 qualified employees, capped at USD 1,250 per employee per month and USD 15,000 per employee per year.
Rent support: 50% of eligible land and building rent expenditure, capped at USD 75,000 per year.
These are programme caps, not automatic entitlements for every free-zone user. Confirm the zone, activity, approval and expenditure period before including them in a forecast.
Costs and controls that a free-zone model must include
A robust feasibility study should include the compliance cost as well as the tax relief. The May 2026 official note states that production-licensed users are charged a Special Account fee of 0.1% of CIF value when goods enter the zone from abroad and 0.9% of FOB value when goods leave the zone for mainland Turkey.
Every movement of goods is monitored through a Free Zone Transaction Form and the Free Zones Computer Application Programme (SBBUP).
Third-country goods must first be placed in free circulation before an A.TR movement certificate can be issued for shipment to the EU.
Inventory, production yield, scrap, subcontracting and customer-destination records should reconcile with accounting and customs data.
The legal entity or branch structure must match the licence and the actual operational footprint.
Domestic and exempt revenue streams should be traceable through separate cost and revenue records.
Can an investment certificate and free zone licence be combined?
Potentially, yes. A qualifying investment inside a free zone may be assessed for an Investment Incentive Certificate while the company also holds a free zone activity licence. The two approvals remain legally distinct: one does not replace the other, and the same expenditure or tax item cannot simply be claimed twice.
Before combining the regimes, prepare an incentive matrix that allocates each asset, import, invoice, employee and income stream to the relevant legal basis. Obtain confirmation for any interaction that is not explicit in the certificate, activity licence or legislation.
Which route fits which business model?
| Business model | Likely starting point | Why |
|---|---|---|
| Mainland manufacturing plant selling in Turkey and abroad | Investment Incentive Certificate | Machinery, import, tax and employment support can be matched to the fixed investment without routing domestic sales through a free-zone import. |
| Export manufacturer with imported inputs and limited mainland sales | Free zone feasibility, then test both regimes | Customs cash-flow and 2026 manufacturing-profit rules may be valuable, but domestic entry costs and operational separation matter. |
| Warehouse or trading hub | Free zone operating model | Goods can be held and moved under free-zone rules, but the manufacturing profit exemption should not be assumed. |
| SaaS, consulting or shared-service centre | Compare non-free-zone export and R&D regimes first | The free-zone service-profit exemption is limited to specified services supplied entirely abroad; a generic digital-service model may not qualify. |
| Digitalisation or decarbonisation of an existing plant | Digital/green transformation incentive route | The investment case is driven by an approved transformation roadmap and eligible assets, not by relocating trade flows. |
Investor due-diligence checklist
Project facts
Product, activity code, capacity, technology level, project location, imported content, timeline and financing.
Commercial flows
Supplier origin, customer destination, Incoterms, mainland Turkey sales, EU flows and after-sales movements.
Tax capacity
Expected taxable profit, investment contribution utilisation, transfer pricing, VAT recovery and loss position.
People model
Headcount, workplace, payroll entity, export ratio, social security registration and expatriate work permits.
Legal structure
Turkish company or branch, free-zone branch, licence holder, premises agreement and intercompany contracts.
Evidence file
E-TUYS records, certificate lists, invoices, customs documents, transaction forms, production and export reconciliations.
Common mistakes
Choosing a location before testing whether the activity and product qualify there.
Treating a benefit cap as guaranteed cash rather than a limit subject to approval and actual expenditure.
Signing purchase orders or receiving invoices before the incentive timing has been reviewed.
Assuming every free-zone company is exempt from corporate tax.
Ignoring the import consequences of selling free-zone goods into mainland Turkey.
Mixing licensed and non-licensed activities without separate accounting evidence.
Using last year’s revalued threshold or an outdated programme call in a 2026 model.
Build the incentive model before committing capital
We can compare the Investment Incentive Certificate and free-zone routes against your actual product, location, import profile, export ratio, employment plan and tax forecast—then map the application and compliance steps.
For implementation, bookkeeping and tax-return controls after setup, see our Turkish tax advisory services.
Official sources
Ministry of Industry and Technology — Presidential Decision No. 9903 on State Aid for Investments
Ministry of Industry and Technology — Investment Incentive Systems
Ministry of Trade — Free Zones General Information Note, May 2026
Ministry of Trade — 2026 expansion of the manufacturing profit exemption
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