What is Free zone? How many Free zones are there in Turkey? Are there any differences between Free zones?
Free Zones; are the places where the legal and administrative regulations regarding commercial, financial and economic areas that are valid in the country are not applied or partially implemented, where broader incentives are given for industrial and commercial activities and physically separated from other parts of the country.
There are 18 free zones in Turkey and 3 of them are located in Istanbul. There are geographical and strategic differences between free zones. For instance, one Free zone allows direct sea trade due to the presence of a port within its borders, while another may not have this advantage due to geographical obstacles. However, all free zones in legal and administrative terms are subject to the same legislation and offer the same advantages.
What are the Tax Advantages of Free Zones? Who Can Benefit?
In order to take advantage of the advantages offered by the Free Zone, it is necessary to operate within the scope of "Operating License for Production". In other words, investors who will carry out production activities in the free zone can take advantage of the free zone. Therefore, even if a trader aiming to buy and sell only operates in the free zone, he will not be able to benefit from the advantages of the free zone.
They are exempt from Institutions Tax.
Users who export at least 85% of the FOB value of the products produced in free zones abroad are exempt from income tax in terms of the wages paid to the employed personnel. This rate can be reduced up to 50%.
In addition, those who are engaged in production activities in the free zone are exempt from stamp duty and taxes for the papers (contracts etc.) they organize.
What are the Profit Transfer Opportunities in the Free Zone?
Earnings and income from free zone activities can be freely transferred to abroad or Turkey without any permission.
What is the Import and Export regime between Free Zone and Turkey?
The goods sold from Turkey to Free Zone are subject to export regime and the goods sold from Free Zone to Turkey are subject to import regime. Free Zone members can export goods from Turkey without paying VAT. On the other hand, foreign trade regime provisions do not apply between the free zone and other countries and other free zones.
What are the Advantages of the Free Zone in terms of Customs Tax?
If the goods are originating from Turkey or EU countries (or goods originating from third party countries that are already subject to free movement of goods in Turkey & EU) then you do not pay customs duty for import or export.
Goods originating from third party countries (also not already subject to free movement in Turkey) are subject to general custom duties for import or export to/from Turkey & EU
Is There A Time Restriction In The Free Zone?
Producers operating in the Free Zone or traders aiming to buy and sell can hold their goods / products within the borders of the free zone without any time restrictions.
What are the Strategic Advantages of the Free Zone?
Free zones located in Turkey, close to the EU and Middle East markets, Mediterranean, Aegean and the Black Sea port to large, international airports, the highway network, culture, tourism and entertainment centers were established in close proximity. This creates a serious strategic advantage for those who want to operate in the free zone.
What are the Advantages for Foreign Personnel Employment?
In Free Zones, there is no law on the work permits of foreigners numbered 4817, and therefore there are no compelling practices such as employing 5 Turkish personnel to employ foreign personnel. Companies wishing to employ Foreign Personnel can apply for a foreign employee permit for a maximum of 1 year.
How to Build a Company in a Free Zone?
There are two ways to establish a Company in a Free Zone;
The first of which, if you have a company based in Turkey, you can open a branch. Second, you can directly establish a free zone based company. If your company is not resident in Turkey, opening a branch through your foreign-based companies is not possible. According to the Circular No. 1998/4 non-resident companies in Turkey cannot open branches in the Free Zone. In this case, one of two ways will be preferred. You will need to open a branch in the free zone after first establishing a company in Turkey. Or it will be necessary to establish a company directly in the free zone.
In both possibilities, it is obligatory to obtain an "Operating License" from the Undersecretariat of Foreign Trade (Ministry of Economy).
How to Get an Operating License?
Local or foreign natural or legal persons can only operate in free zones provided that they have a license from the Undersecretariat of Foreign Trade (Ministry of Economy). Operating License Application Process:
- The necessary petitions and forms are prepared for the Operating License application.
- The Central Bank of the Republic of Turkey Dollars ($) account application fee ($ 5,000) is deposited.
- An Application Form is submitted to the General Directorate or the relevant Regional Directorate along with the original copy of the Operating License Application Form and the original receipt showing the application fee for the Draft Articles of Association.
- The application is evaluated by the General Directorate. - If positive, continue. - If it is negative, the fee is returned.
- The articles of association are approved and the company is established or branch decision is registered.
- Within 30 days, the lease agreement is concluded.
- An application is made to the General Directorate with the rental agreement.
- Operating License is issued.
What Laws Are Not Applied in the Free Zone?
The following laws are not applied in free zones;
- Law on the work permits of foreigners numbered 4817,
- Foreign direct investment law numbered 4875,
- The provisions of the municipality law numbered 5393, except death and fire situations, construction and repair of sewers, and provisions for drinking, using, providing industrial water and controlling gas, water and electricity consumption,
- Passport law No. 5682,
- 5683 foreigners residing in Turkey and travels about the laws and other laws