Free Trade Zones in Turkey

Registration on Free Trade Zone Area

Local or foreign real or legal persons wishing to operate in free trade zones must complete the necessary procedures and obtain an activity license.

There is not any capital threshold for domestic or foreign legal entities to operate in free trade zones. Investors can establish a company by showing the free trade zone as the company address, provided that they operate exclusively in the free trade zone.

There are two different methods to establish a company in a free trade zone in Turkey. The first one is to open a branch of a company based in Turkey in the free trade zone area, and the second one is to establish a new company based in the free trade zone. If your existing company is not located in Turkey, it is not possible to open a branch of this company in the free trade zone. As a matter of fact, no matter which method is used to establish a company in the free trade zone, an activity license must be obtained.

Real and legal persons who will operate in the free trade zone must obtain an activity license. They are required to fill in the "Activity License Application Form" and deposit the application fee to the "Free Trade Zones Special Account" at the Central Bank of the Republic of Turkey (CBRT). According to the Circular No. 2009/3 issued by the General Directorate of Free Trade Zones, the operating license fee is USD 5,000 for tenant companies.

If the Directorate General deems it appropriate to grant an activity license, the applicant shall be notified in writing. The applicant shall be given a period of 30 days to submit a copy of the contract for the provision of the workplace where the activity will be carried out and other necessary documents to the Directorate General of Free Trade Zones.

Companies that are deemed eligible to obtain an activity license are required to make lease agreements with any institution holding a lease license in the free trade zone. The rental contract for the place in free trade zone has to be submitted to the Directorate General of Free Trade Zones within 30 days following the issuance of the license.

Legal Entities who want to operate in the Free Trade Zone by establishing a company can proceed to the company establishment phase after obtaining the Activity Licence.

The articles of association prepared in accordance with the Circular No. 1998/4 shall be sent to the General Directorate of Free Trade Zones together with the Activity Licence Application Form and the documents required to be attached to the form. After the receipt of approval regarding the establishment of the company by the General Directorate of Free Trade Zones, an application is made to the trade registry for the establishment of the company. The company will be established in accordance with the provisions of the Turkish Commercial Code and will be able to start its activities in the free trade zone.

The application for an Activity License shall be submitted to the Free Trade Zone Directorate together with its annexes detailed below.

• Activity License Application Form

Documents to be attached to the Activity License Application Form:

• The real or legal person making the application and explanatory information about the free trade zone activity should be stated on a separate page.

  • The authorization certificate and signature circular of the signatory and the authorization certificate and signature declaration of the company representative, if any, should be included.

  • For foreign companies, a copy of the certificate of incorporation valid in their own country certified by Turkey's representative in that country

  • If it is a company to be established in the free trade zone, the draft articles of association,

  • Balance sheets and profit and loss statements for the last three years,

  • Original and photocopy of the bank receipt showing that the Activity License fee has been deposited in the Central Bank of the Republic of Turkey,

  • Document showing the amount of foreign currency brought to Turkey in the last three years by the applicant (if any),

  • Original and a photocopy of the completed Activity License Application Form.

License Types in FreeTrade Zone

Activity license types are as follows;

• Production : Purchase of raw materials and intermediate goods used in production, sale, branding, packaging, labeling and display of the goods produced.

  • Purchase - Sale : Buying and selling, storing, labeling, packaging, packaging and displaying of traded goods.

  • Warehouse Management : Goods of users or other non-user persons or organizations can be stored. - Workplace Rental : Ready workplaces can be rented to users for warehousing purposes.

  • Assembly and Disassembly : Goods can be assembled or de-assembled.

  • Maintenance and Repair : Goods can be maintained and repaired without taking ownership.

  • Banking

  • Other

The duration of the license depends on the procurement of the workplace and license type;

• Companies renting ready-made workplaces

  • 20 years for Production License

  • 15 years for other licenses

  • Companies Self - Building workplaces

    • 45 years for Production License

    • 30 years for Other Licenses

Exemptions in Free Trade Zone

Free Trade Zone licenses provide advantages to Companies. Extent of the advantages depends on the license type as explained below.

• Exemptions for Production License

• Exemptions for Purchase - Sale License

• Corporate Tax / Income Tax Exemption (Earnings)

The earnings of the free trade zone users from the sale of the products they manufacture are exempt from Income or Corporate Tax. Production License is required in order to carry out manufacturing activity in the FTZ,

• Income Tax Exemption (Personnel Wages)

The wages paid to the personnel employed by the users who export at least 85% of the FOB value of the products produced in free trade zones are exempt from income tax.

• Stamp Duty/Duties Exemption

The transactions and agreements made and contracts issued by free trade zone users engaged in production activities in relation to the activities carried out in free trade zones are exempt from stamp tax and fees.

• Customs duty and value added tax exemption

• Customs duty and value added tax exemption

Free circulation status of the goods originating from Turkey or the EU or in free circulation in these countries does not change. Therefore, no customs duty shall be paid on the entry of the goods brought to the free trade zone from Turkey or from EU member countries.

In addition, no customs duty shall be paid on the entry of goods originating from third countries into the free trade zone and on the shipment of these goods to third countries other than Turkey or EU member countries.

However, customs duty shall be paid at the rate specified in the Common Customs Tariff for goods originating from third countries that are not in free circulation and sent from the free trade zone to Turkey or EU member countries.

For the sale of goods which are out of the customs union between the EU and Turkey, the sale to Turkey’s internal market is not exempted from any taxes or duties except where there is a state procurement.

Common Exemptions Granted for All Activities

• Profit transfer and Foreign Exchange Incentive : Earnings and income derived from free trade zone activities can be freely transferred to Turkey or abroad without any authorisation. Foreign currencies can be converted into Turkish Lira without tax or duties.

  • 100% Exemption from value added tax (VAT) and special consumption tax: Free trade zone users can purchase goods and services from Turkey (in Free Trade Zone Area) at export price (without VAT).

  • Supply Chain Opportunities :Free trade zones offer uninterrupted supply opportunities at world prices and conditions for intermediate goods and raw materials, especially for export-oriented production companies.

  • 100% exemption from the real estate tax in the FTZ.

  • 100% income and corporate tax exemption for certain logistics services to be offered at the Free Trade Zones, provided that they are export-oriented.

  • Goods can remain in FTZ for an unlimited period

  • Exemption from title deed fees when acquiring and selling a property

  • VAT exemption during construction, design, settlement, and approval processes.

  • Ready infrastructure exempt from VAT and other taxes.

  • Import permit for second-hand, used machinery.

Free Trade Zones in Turkish Law

Free Trade Zones (FTZ) were established in Turkey through the Free Zones Law No. 3218 (FZL) in 1985. There are currently 21 Free Zones in Turkey, all established in accordance with this law. Regardless of location, they are all subject to the same legislation, ensuring that the opportunities afforded to Free Zones are similar.

Free trade zones are the areas which are exempted from the laws regarding foreign trade regime and which are generally located near an international port or airport to facilitate export and import activities. These zones are deemed as outside of customs areas and are principally meant for export with the opportunities presented.

The objectives of free trade zones are to incent the local companies to export, increase foreign trade volume, facilitate imports and exports and to accelerate technology transfers into the country. In this regard, free trade zones are established with the purpose of increasing export, the foreign investments and technology in the country.