Introduction
Free zones in Turkey are specialized areas designed to facilitate foreign trade and promote various commercial, financial, and economic activities. These zones operate independently of the country’s customs borders, providing unique regulatory advantages to businesses. These advantages aim to enhance trade volume and exports, particularly for specific industrial and commercial sectors, compared to other regions of the country.
Legal Framework
The establishment, management, and operation of free zones in Turkey are regulated by the Free Zones Law No. 3218. Additionally, specific regulations, such as the “Free Zones Implementation Regulation,” the “Establishment, Duties, Authorities, and Working Principles of Free Zone Directorates,” the “Decision on Payments to be Made in Free Zones in Turkish Lira,” and Circulars issued by the General Directorate of Free Zones, govern these zones.
Activities in Turkish Free Zones
Turkish free zones allow various business activities, including:
Manufacturing: Companies engaged in manufacturing benefit from significant tax advantages within free zones. They are 100% exempt from corporate income tax on their profits, compared to the regular corporate tax rate of 20% in Turkey.
Research and Development (R&D): Free zones provide an ideal environment for R&D activities, encouraging innovation and technological advancements.
Software Development: Software development companies can operate efficiently in free zones, taking advantage of tax exemptions and other benefits.
General Trading: Free zones offer a range of benefits for general trading companies, including customs-related exemptions.
Storage and Warehousing: The storage and warehousing of goods in free zones are key activities, supported by customs duty exemptions.
Packaging: Packaging companies can benefit from logistical advantages and tax exemptions in free zones.
Banking and Insurance Services: Financial institutions and insurance companies find a conducive environment for their operations within free zones.
Assembly and Disassembly: Businesses involved in assembly and disassembly operations benefit from reduced bureaucracy and streamlined processes in free zones.
Maintenance Services: Companies offering maintenance and related services can operate efficiently in free zones, enjoying various advantages.
Turkish Free Zones: Locations
Turkey boasts 18 free zones located in various cities, each with its unique advantages and characteristics. These include:
Antalya Free Zone – Antalya
Mersin Free Zone – Mersin
Aegean Free Zone – Gaziemir/İzmir
Istanbul Atatürk Airport Free Zone – Havalimanı/İstanbul
Trabzon Free Zone – Liman İçi/Trabzon
Istanbul Thrace Free Zone – Çatalca/İstanbul
Adana-Yumurtalık Free Zone – Ceyhan/Adana
Istanbul Industry and Trade Free Zone – Tuzla/İstanbul
Samsun Free Zone – Limaniçi/Samsun
Europe Free Zone – Çorlu/Tekirdağ
Rize Free Zone – Rize
Kayseri Free Zone – Kayseri
İzmir Free Zone – Menemen/İzmir
Gaziantep Free Zone – Çakmak/Gaziantep
TÜBİTAK MRC Free Zone – Gebze/Kocaeli
Denizli Free Zone – Çardak/Denizli
Bursa Free Zone – Gemlik/Bursa
Kocaeli Free Zone – İzmit/Kocaeli
Objectives of Free Zones
The establishment of free zones in Turkey serves several key objectives:
Promoting Export-Oriented Investments: Free zones are designed to encourage investments with a focus on export-oriented production and activities.
Attracting Foreign Direct Investments: These zones aim to attract foreign investors and promote technology transfer to enhance economic development.
Directing Enterprises Toward Export Markets: By providing a favorable environment for export-focused activities, free zones help businesses expand into global markets.
Developing International Trade: Free zones facilitate international trade by offering customs-related benefits and logistical advantages.
Advantages of Turkish Free Zones
Turkish free zones offer a plethora of advantages, including:
Tax Advantages: Companies in free zones can enjoy tax exemptions, including corporate income tax and income tax over salaries, under certain conditions.
Profit Transfer: Revenue and earnings from free zone activities can be freely transferred to Turkey or abroad without restrictions.
Customs Duty Exemptions: Goods originating from Turkey or the European Union brought into free zones are exempt from customs duties when re-entering Turkey or the EU.
Access to EU Markets: Free zones are part of the Turkey-EU Customs Territory, allowing goods in free circulation to be sent to EU countries.
Planning Flexibility: Operating licenses in free zones have varying validity periods depending on the nature of the activities, offering flexibility to businesses.
Facilitated Foreign Trade: Goods sold from Turkey to free zones are subject to export regulations, allowing free zone users to purchase goods and services from Turkey without paying value-added tax (VAT).
Equal Treatment: Incentives and advantages in free zones are available to all firms regardless of their origin.
No Time Limitation: Goods in free zones are not subject to time restrictions, providing flexibility in operations.
Flexible Market Regulation: Free zones offer flexibility in pricing, quality, and standards without external regulatory influence.
Inflation Accounting: Payments in free zones are made using convertible currencies or the equivalent in Turkish Lira.
Access to Domestic and Foreign Markets: Sales to the domestic market (except for specific products) are allowed.
Reduced Bureaucracy: Free zones minimize bureaucratic processes, with professional private sector companies managing them.
Strategic Locations: Turkish free zones are strategically located near EU and Middle East markets, with easy access to major ports and international transportation routes.
Competitive Infrastructure: Free zone infrastructure meets international standards, providing essential services without VAT.
Supply Chain Management: Free zones offer supply chain management opportunities, especially for export-oriented manufacturers.
Easy Work Permits for Expatriate Employees: Recent amendments in the Free Zones Law have made it easier to employ foreign personnel in free zones.
Inapplicable Provisions: Certain Turkish laws do not apply within free zones, simplifying regulatory compliance.
In conclusion, Turkish free zones present a compelling opportunity for businesses seeking a flexible and advantageous environment for various commercial activities. With their tax benefits, customs-related exemptions, and strategic locations, these zones play a vital role in promoting international trade and attracting foreign investments to Turkey.
