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Incentives on Railway Industry in Turkey

Incentives on Railway Industry in Turkey

Within the perspective of Turkish legal system, there exist five different types of incentives:

 

 Regional Incentives

 

 Prioritized Investment Areas

 

 

By considering these different types of incentives, several factors of support are envisaged such as:

 

 Exemption from VAT : Regarding the machinery and equipment (domestic and abroad supplies) within the scope of Investment Incentive Document (YatırımTeşvikBelgesi)

 

 Exemption from Customs Tax: Regarding the machinery and equipment (domestic and abroad supplies) within the scope of Investment Incentive Document (YatırımTeşvikBelgesi)

 

 Tax Reliefs: Deduction of Income Tax or Corporate Tax until it reaches the level of envisaged contribution amount

 

 Support for Interests: Financing of the interest or share of profits until they reach the level of 70% of the amount of investment marked in the Investment Incentive Document (YatırımTeşvikBelgesi).

 

 Allocation of Investment Area: It is possible to allocate an area for investment within the rules and procedures applied by Ministry of Economy for the ones having an Investment Incentive Document (YatırımTeşvik Belgesi).

 

 Support for Employer’s Contribution on National Insurance: Ministry covers the minimum amount of expenses of the Employer concerning the insurance premiums of additional employment for investments having an Investment Incentive Document (YatırımTeşvikBelgesi).

 

 Insurance Premium Support: Ministry covers the minimum amount of expenses concerning the insurance premiums of additional employment for the investments having an Investment Incentive Document (YatırımTeşvikBelgesi).

 

 Income Tax Withholdings Support: Cancellation of the income tax withholdings until the amount of minimum wage.

 

 VAT Return: Returns of the VATs collected for the expenses on construction regarding the strategic investments having a value exceeding 500 million Turkish Liras. 

 

 Large Scaled Investments

 

 Strategic Investments

 

 General Incentives 

 

1. Regional Incentives

 

The main purpose of this type of incentive is to diminish the difference between the citied concerning their level of development by increasing their export and production potential. Throughout Turkey, there exist six different regional classifications for cities on their level of development. THis regions might be shown on map situated above.

 

2. Prioritized Investment Areas

 

Support of previously determined investment topics with the supports concerning the 5th region

 

3. Large Scaled Investments

 

Support of investments having the capability to increase the capacity of technology and R&D.

 

4. Strategic Investments

 

Support of investments having additional values which may contribute to the diminishment of current deficit. 5. General Incentives Support of the investments not falling under the scope of the mentioned investment subjects.

 

INCENTIVES IN RAILWAY INDUSTRY

 

Regarding the railway industry, the authorities envisaged the following incentives:

 

 Incentives for Transportation

 

 Incentives for Production

 

1. INCENTIVES FOR TRANSPORTATION

 

This kind of incentive consists of investments by private sector concerning the intercity transportation of passengers/freight and inner-city transportation of freight. The above mentioned investments are considered as “Prioritised Investments” and benefit from VAT exemption, Customs Tax exemption, Tax Deduction, Support for Employer’s Contribution on National Insurance, Support for Interests. For further information, please see the table herein below:

Table 1

SUPPORT FACTORS

REGIONS

I

II

III

IV

V

VAT EXEMPTION

YES

CUSTOMS TAX EXEMPTION

YES

TAX DEDUCTION

CONTRIBUTION TO INVESTMENT (%)

40

DEDUCTION (%)

80

SUPPORT FOR EMPLOYER’S CONTRIBUTION ON NATIONAL INSURANCE

7 YEARS

ALLOCATION OF INVESTMENT AREA

YES

INTEREST SUPPORT  

DOMESTIC LOANS

5 POINTS

LOANS ON EXCHANGE/LOANS BASED ON EXCHANGE

  1. POINTS

 

1.      Incentives for Production

These incentives are provided for the production of railways and tramway locomotives and wagons.

For the investments having a maximum amount of 2 million Turkish Liras, by the exemption of Istanbul, Regional Incentives (for further information, please see information on page 2) are envisaged.   Regarding regional incentives for production please see the Table 2.

For the investments having a maximum amount of 50 million Turkish Liras, Incentives for Large Scaled Investments (for further information, please see information on page 2) are envisaged.  Regarding incentives for large scaled investments please see the Table 3.

 

 

Table 2. Supports Regarding the Productions ≤2 million Turkish Liras, excluding Istanbul

 

SUPPORT FACTORS

REGIONS

I

II

III

IV

V

VI

VAT EXEMPTION

YES

YES

YES

YES

YES

YES

CUSTOMS TAX EXEMPTION

YES

YES

YES

YES

YES

YES

TAX DEDUCTION

CONTRIBUTION TO INVESTMENT (%)

Out of the OIZ[1]

15

20

25

30

40

50

In the OIZ

20

25

30

40

50

55

SUPPORT FOR EMPLOYER’S CONTRIBUTION ON NATIONAL INSURANCE

Out of the OIZ

2 YEARS

3 YEARS

5 YEARS

6 YEARS

7 YEARS

10 YEARS

In the OIZ

3 YEARS

5 YEARS

6 YEARS

7 YEARS

10 YEARS

12 YEARS

ALLOCATION OF INVESTMENT AREA

YES

YES

YES

YES

YES

YES

INTEREST SUPPORT

DOMESTIC LOANS

NO

NO

3 POINTS

4 POINTS

5 POINTS

7 POINTS

LOANS ON EXCHANGE/LOANS BASED ON EXCHANGE

1 POINT

1 POINT

2 POINTS

2 POINTS

INSURANCE PREMIUM SUPPORT

NO

NO

NO

NO

NO

10 YEARS

INCOME TAX WITHHOLDINGS SUPPORT

NO

NO

NO

NO

NO

10 YEARS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 3 Supports Regarding the Investment in Productions of Locomotives and Wagons

 

SUPPORT FACTORS

REGIONS

I

II

III

IV

V

VI

VAT EXEMPTION

YES

YES

YES

YES

YES

YES

CUSTOMS TAX EXEMPTION

YES

YES

YES

YES

YES

YES

TAX DEDUCTION

CONTRIBUTION TO INVESTMENT (%)

Out of the OIZ[1]

15

20

25

30

40

50

In the OIZ

20

25

30

40

50

55

SUPPORT FOR EMPLOYER’S CONTRIBUTION ON NATIONAL INSURANCE

Out of the OIZ

2 YEARS

3 YEARS

5 YEARS

6 YEARS

7 YEARS

10 YEARS

In the OIZ

3 YEARS

5 YEARS

6 YEARS

7 YEARS

10 YEARS

12 YEARS

ALLOCATION OF INVESTMENT AREA

YES

YES

YES

YES

YES

YES

INTEREST SUPPORT

DOMESTIC LOANS

NO

NO

3 POINTS

4 POINTS

5 POINTS

7 POINTS

LOANS ON EXCHANGE/LOANS BASED ON EXCHANGE

1 POINT

1 POINT

2 POINTS

2 POINTS

INSURANCE PREMIUM SUPPORT

NO

NO

NO

NO

NO

10 YEARS

INCOME TAX WITHHOLDINGS SUPPORT

NO

NO

NO

NO

NO

10 YEARS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[1] OIZ: Organized Industrial Zone


  

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