FREE ZONES
Definition:
Free zones can be described as sites considered to be outside the customs area
although they are inside the political borders of the country. Within these free
zones, legal and administrative regulations in commercial, financial and economic
fields applicable in the rest of Turkey are either not implemented at all or are partially
implemented, more extensive incentives are given for industrial and commercial
operations.
The Directorate General of Free Zones was founded in 1983 within the organization
of the Prime Ministry on the basis of Statutory Decree Nr. 151. Later in 1984 it was
included into the organization of the State Planning Organization as the Directorate
of Free Zones on the basis of Statutory Decree Nr. 223 and in 1991 it was included
into the organization of the Undersecretariat of Treasury and Foreign Trade of the
Prime Ministry as the Directorate General of Free Zones on the basis of Statutory
Decree Nr. 438. In 1994, the Directorate General of Free Zones was included into the
organization of the Undersecretariat of Foreign Trade of the Prime Ministry since the
Undersecretariat of Treasury and Foreign Trade was divided into two on the basis of
Statutory Decree Nr. 534. However, this Decree was canceled. Thereafter, as the
result of the reorganization of two Undersecretariats as the Undersecretariat of
Foreign Trade and the Undersecretariat of Treasury, with Law Nr. 4059, in 1994, the
Directorate General of Free Zones began to carry out its activities within the structure
of the Undersecretariat of Foreign trade.
For contact:
Republic Of Turkey The Prime Ministry
The Undersecretariat Of Foreign Trade Directorate General Of Free Zones
06510 Emek Ankara Turkey
Tel: (312) 212 58 87-212 89 06 -212 82 58 Fax: (312) 212 89 06
ACTIVITIES
In general, all kind of activities can be performed in Turkish Free Zones
such as:
Research and Development (R&D),
Manufacturing,
Software,
General trading,
Storing,
Packing,
Banking and insurance
ADVANTAGES OF INVESTING IN THE TURKISH FREE ZONES
1. Opportunity to Benefit from Tax Advantages for Manufacturer Users
Until the end of the taxation year including the date Turkey becomes a full member of
the European Union, the earnings of the manufacturer users, generated through the
sales of the goods they produced in the free zones, are exempted from the income or
corporate taxes.
The wages of the workers employed by the users that export at least 85 percent of
the FOB value of the goods they produce in the free zones are exempted from
income tax. The Council of Ministers can reduce this rate to 50 percent.
The transactions and arranged documents related to the activities carried out in the
zones by the manufacturer users are exempt from stamp duties and fees.
The free zone users that obtained “operating license” other than “production” before
06/02/2004, the income or corporate tax exemption continues during the validity
period of the Operating License. The free zone users that obtained operating license
other than production after 06/02/2004 do not enjoy income or corporate tax
exemption.
2. Opportunity of Medium and Long Term Planning
The validity period of an operating license:
15 years for tenant users.
20 years for manufacturer tenant users.
30 years for users who build their own working premises (investor users).
45 years for manufacturer-investor users.
Building plots and buildings on Treasury owned land can be leased or granted
easement until 49 years for the investor users.
3. Opportunity to Transfer Profits
The revenue and earnings from free zone activities can be freely transferred to
Turkey or abroad without any permission.
4. Facilitation of Foreign Trade
Since the goods sold from Turkey to free zones are subject to export regime, free
zone users can buy goods and services from Turkey without paying value added tax.
On the other hand, trade between free zones and third countries is not subject to
foreign trade regime.
Moreover, upon request, goods of Turkish origin in value less than 5000 US $ or its
equivalent in Turkish Lira can be exempted from export procedures.
5. Trade Facility Free from Customs Duty Procedure
The goods in free circulation can be sent to Turkey or to the EU countries from the
free zones without any customs duty payment. Moreover, no customs duty is applied
on the goods of third country origin at the entrance into the free zones and exit to the
third countries.
6. Easy Access to EU Countries
Since free zones are part of the Turkey-EU Customs Territory, the goods in free
circulation can be sent to the EU Countries by an A.TR certificate. Customs duties for
the goods of third country origin are also not paid at the entry into the free zones.
However, the goods of third country origin that are not in free circulation can be sent
to the EU countries by an A.TR certificate, only after the customs duties are paid over
the rates determined in the Common Customs Tariff.
7. Equal Treatment
The incentives and advantages provided in the free zones are available to all firms
regardless of their origin.
8. No Time Limitation
The goods can remain in the zones without any time limit.
9. Managing Trade Activities According to Market Demands and Conditions
In the Turkish Free Zones, unless the manufacturers demand, any authority
regarding prices, quality and standards granted to public institutions and agencies by
laws or by other legislation is not valid. Also legislative provisions pertaining to
customs and foreign exchange obligations are not applicable in the zones.
10. Inflation Accounting Opportunity
Every payment in the Turkish Free Zones is done with Convertible Currencies.
11. Access to Domestic and Foreign Markets
In contrast to most of the free zones in the world, sales to the domestic market with
the exception of consumer and risky products are allowed.
12. Reduced Bureaucratic Procedures and Dynamic Management
During application and operation process bureaucracy is minimized. Professional
private sector companies manage free zones.
Main Activity Areas in FZs:
Main activities to be performed in the FZs have been identified as production,
commerce, assembly and dismantling, maintenance and repair, banking,
underwriting, financial leasing, warehousing, office renting and various others.
Currently, a total of 19 Free Zones are operational in Turkey with a total trade volume
of 24,6 billion US$ as of 2009.
Trade Volume of the Free Zones (Mn US$)
ZONES /DATE OF
2004
2005
ESTABLISHMENT
İST-LEATHER (1992)
AEGEAN (1987)
İST-ATATÜRK AIR. (1990)
İSTANBUL THRACE (1990)
MERSİN (1985)
BURSA (2000)
EUROPE (1996)
KAYSERİ (1997)
ANTALYA (1985)
İZMİR -MENEMEN (1997)
KOCAELİ (2000)
SAMSUN (1995)
ADANA-YUMURTALIK (1992)
DENİZLİ (2000)
GAZİANTEP (1998)
TUBİTAK-MAM TEK. (1999)
TRABZON (1990)
RİZE (1997)
MARDİN (1994)
E. ANATOLIA
TOTAL
5,891
3,241
3,723
1,689
2,720
2,223
907
298
457
309
123
86
70
139
157
12
15
39
10
82
22,110
6,591
3,766
3,454
2,210
2,128
2,262
1,084
362
505
315
183
59
85
169
132
15
15
21
5
23,363
2006
6,953
4,001
3,220
2,444
1,884
1,933
1,333
520
551
383
255
55
77
66
94
30
14
8
2
23,824
2008
2009
6,002
3,764
3,539
1,863
2,638
1,605
1,576
703
729
413
705
406
263
44
143
112
67
7
0
3,867
5,659
2,955
1,190
1,919
1,279
1,181
442
606
280
811
37
173
33
111
165
43
7
0
APPLICATION PROCESS FOR OPERATION LICENCES
Fill in the Operation Licence Application Form
↓
Deposit the Application Fee ( 5,000 US Dollars) in the Central Bank of The Republic
of Turkey US Dollar Account No. TR 740 000 100 100 000 951 101 301
↓
Apply to General Directorate of Free Zones or to Free Zone Directorate with a
Petition; Operation Licence Application Form and the Bank Receipt enclosed
↓
Evaluation of the Application by General Directorate of Free Zones
i) If Unfavorable → Return of Application Fee to Applicant
ii) If Favorable
↓
Signing of the Lease Agreement with the Free Zone Operator within 30 days.
↓
Approval of Lease Agreement by the Free Zone Directorate
↓
Issue and Dispatch of the Operation Licence by the General Directorate of Free
Zones
FREE ZONE LEGISLATION OF TURKEY
Free Zones Law -Law Nr. 3218 Approved: June 6, 1985 Issued: June 15, 1985
Section One- General Provisions
Objectives and Scope
Article 1 - This Law covers issues on establishment of free zones, determination of areas
and borders and the scope of activities of the free zones, management and operation of free
zones, establishment of buildings and facilities in the zones, with the aim of promoting export
oriented investment and production, accelerating foreign direct investment and technology
entry, directing enterprises towards export and developing international trade.
Authority
Article 2 - The Council of Ministers has the authority to determine the location and
boundaries of the free zones.
The Council of Ministers grants permission for the establishment and operation of free zones
to public institutions and agencies, resident or non-resident real persons or legal entities.
Definitions
Article 3 - In the implementation of this Law:
Operator signifies the public institution and agency; the resident and non-resident real
persons or legal entities operating the free zone.
User signifies the real and legal person bearing an Operating License and having a specific
place of business within the free zone.
Foreign exchange refers to all currencies, or all types of accounts or bills, considered as
beingconvertible by the Central Bank of the Republic of Turkey.
Activities
Article 4 - Any kind of industrial, commercial and service activities approved by the Supreme
Coordination Council Of Economic Affairs can be carried out within free zones.
Except the demands from the manufacturer enterprises, any authority regarding prices,
quality and standards granted to public institutions and agencies by laws or by other
legislation is not valid in the free zones.
Free Zones Coordination Board is formed to evaluate the free zone activities, to determine
the strategies and to offer recommendations for improving the free zones and for resolving
occurring problems, The structure, working procedures and principles of the Board shall be
determined in the Governing Regulation.
Section Two – Organization of Free Zones
Principles Related to the Organization of the Zone
Article 5 - Land and facilities needed within the declared free zones may be acquired
pursuant to the provisions of the Expropriation Law.
Domestic or foreign real persons or legal entities may operate in the free zones provided that
Undersecretariat of Foreign Trade grants them an operating license. The land, building plots
and buildings exclusively Treasury owned can be leased or granted easement on for 49
years to the investor users of free zones. On the places under State dictum and disposition,
right of usage can be given for the same period.
All other permits and licenses regarding the use of land as well as the design, construction
and utilization of buildings and installations within the free zone are issued and supervised by
the zonedirectorate.
Security services for free zones are provided by the police.
Exceptions and Incentives
Article 6 - Free zones, although being parts of the Customs Territory of Turkey, for the
goods provided that they are not released for free circulation or placed under another
customs procedure or used or consumed under conditions other than those provided for in
customs regulations are deemed as being out side of the customs territory for the purposes
of import duties, commercial policy measures and exchange legislation; and are places
where the goods in free circulation can benefit from provisions normally attaching to the
export of goods by virtue of being placed in a free zone.
Legislative provisions pertaining to customs and foreign exchange obligations are not
applicable in these zones.
Regarding the account books the users must keep and documents they draw up, Ministry of
Finance is authorized to make necessary arrangements independent from the provisions of
the TaxProcedures Law No. 213 dated 4.1.1961.
During the investment and production stages of their activities, operators and users may
qualify for incentives other than tax incentives, determined by the Council of Ministers.
Revenues and Expenditure of the Free Zones
Article 7 - From the revenues obtained from the free zones;
Fees to be collected for operating licenses and permits,
Fees to be paid in advance amount to 0.1 percent of the CIF value of goods entering the
zone from abroad and fees to be paid in advance amount to 0.9 percent of the FOB value of
goods leaving the zone towards Turkey,
Payments specified in the contracts made with real persons and legal entities operating the
free zones,
Other revenues obtained from the zone activities are deposited in the Special Account to be
opened with the Central Bank of the Republic of Turkey, after deducting the income share
transfers specified in the contracts made with the legal entities by the interested
administration. After reducing the rejections and returns, the rest of the amount collected in
this account is deposited in the account of the Main Treasurers Office which is in charge of
the payments of the Undersecretariat for Foreign Trade. The amount deposited in the
account of the Main Treasurers Offices registered as revenue to the budget.
Goods utilized during the investment and construction stages, goods brought into the zone
for renovation and capacity building purposes, as well as goods, which are not owned by the
users brought into the zone for maintenance and repairing purposes, temporarily brought
instruments, tools and equipment, and goods brought for the purpose of outsourced material
processing, goods brought into the zone from abroad and/or sent to Turkey by the nonproducer users who obtained the operating license after 06/02/2004 are not subject to the
payments specified in sub-paragraph (b) of paragraph 1 of thisArticle. However, a fee is
charged on the value added created during the maintenance, repairing, and outsourced
material processing and on the goods brought into the zone from abroad and sold within the
zone by the non-producer users who obtained the operating license after 06/02/2004.
Procedures and principles concerning the management of the Special Account opened with
the Central Bank of the Republic of Turkey are determined by a regulation of the
Undersecretariat for Foreign Trade upon the approval of the Ministry of Finance. Revenues
not deposited in due course, are subject to the provisions of the Law Nr. 6183 on the
Procedures on the Collection of Public Receivables.
Section Three
Goods And Services
Goods In Free Zones
Article 8 - Trade conducted between a free zone and other regions of Turkey is subject to
the foreign trade regime.
Upon request goods of Turkish origin in value less than 5000 US $ or its equivalent in
Turkish Lira can be exempted from export procedures.
Foreign Exchange and Services
Article 9 - All payments related to free zone activities are made in the form of foreign
exchange. The Council of Ministers may decide that payments be also made in the form of
Turkish Lira.
Shipping and port services in free zones are provided either by the operator or assigned to
publicinstitutions and agencies or to real persons or legal entities.
Section Four
Labor And Social Security, Repealed And Inapplicable Provisions, And Regulations
Labor and Social Security Provisions
Article 10 - Foreign managers and qualified personnel may be employed by firms operating
in a free zone. Related principles are specified by governing statutes.
Provisions of the Social Security Regulations of the Republic of Turkey are applied in free
zones.
Repealed Provisions
Article 11 - The Free Zones Law Nr. 6209 dated December 21, 1953, is hereby repealed.
Inapplicable Provisions
Article 12 - In the free zones, Law No:4817 on Working Permits of Foreigners, Law No:4875
on Foreign Direct Investment, provisions of Municipality Law No:5393 except provisions on
death and fire, building and maintenance of sewerage, procurement of drinking, potable and
industrial water, inspection of gas, water and electric consumption, Passport Law No:5682;
Law No:5683 for Foreigners Traveling and Residing in Turkey and provisions of other laws
contrary to this Law are not applicable.
Furthermore, the transactions in second paragraph of Article 5 are not subject to the
provisions of Public Procurement Law No:2886.
Free Zone Governing Regulation
Article 13 - Where the arrangement of matters in this Law are left to governing regulations,
concerning any organization, duties, authority and/or responsibilities of operators who are
active in free zones, or granting and cancellation of any Operating Licenses provided to such
operators and/or users; concerning the maintenance of their industry and commercial
registers; concerning any payments they make to the Special Account; concerning principles
governing conduct of activities in a free zone; concerning zone entry permits and identity
cards; residence permits; and concerning work principles and other matters pertaining to the
operation of free zones are determined by governing regulations.
Interim Article 1 - (Abolished,by Law Nr: 4771)
Interim Article 2 - This Law is effective for each free zone upon the commencement of
operations in that free zone.
The date of commencement of operations is the date when the construction of the perimeter
fence, tower and gate are completed and the zone directorate, police and customs units
assume their duties.
Interim Article 3 - By the date this article comes into effect, the taxpayers, who obtained
licence to operate in the free zones that were established according to this Law, are;
excepted from income or corporate taxes on the earnings generated through their activities in
these zones, within the limits of the period specified in their operating licences as of the date
this article comes into effect. This exception does not affect the deduction carried out within
the scope of sub clause (b) of sub paragraph 6 under the first paragraph of the article 94 of
the Income Tax Law No. 193 dated 31.12.1960.
excepted from the income tax on the wages they pay to their workers until 31.12.2008.
However, if the validity period of their operating licence ends before 31.12.2008, the date of
completion of the operating licence period is taken into consideration regarding this
exception.
excepted from all taxes, levies and duties on their activities related to their free zone
operations until 31.12.2008. *Until the end of the taxation year including the date Turkey
becomes a full member of the European Union;
a) The earnings of the manufacturer taxpayers, generated through the sales of the goods
they produced in the free zones, are excepted from the income or corporate taxes. This
exception has no effect on the withholding carried out according to within the scope of sub
clause (b) of sub paragraph 6 under the first paragraph of the article 94 of the Income Tax
Law No. 193 dated 31.12.1960 and, Article 15 and Article 30 of the Corporate Tax Law
No:5520.
b) The wages of the workers employed by the taxpayers that export at least 85 percent of the
FOB value of the goods they produce in the free zones are excepted from income tax.
Council of Ministers is authorized to reduce the rate to 50 percent or to increase up to its
statutory level. The taxes that are not collected in time from the taxpayers, whose annual
sales remains below this rate, shall be collected including the delinquent tax-due without
penalties.
c) The transactions and arranged documents related to the activities carried out in the
zones are except from stamp duties and fees.
d) Ministry of Finance is authorized to determine the procedures and principles
concerning the implementation of this Article.
Interim Article 4 - Since, goods brought into the zone and/or sent to Turkey by the
nonproducer users who obtained an operating license after 06/02/2004, are not subject to
payments specified in sub-paragraph (b) of paragraph 1 of Article 7 of this Law, to
compensate the revenue allocation loss of the founder and operator companies stemming
from the exception of the payments specified in this Law in the free zones where the revenue
allocation is regulated by the founder and operator companies' operation contracts, a
modification will be made in the Governing Regulation.
Interim Article 5- The Operating Licence period and the lease period of users that obtained
operating licence before the date this Law comes in to effect that rented the Treasury owned
land, building plot and buildings can be extended up to 49 years by Undersecretariat for
Foreign Trade. The issues regarding the implementation of this Article shall be determined in
the Governing Regulation.
Interim Article 6- Free zones, until the date Turkey becomes a full member of the European
Union, are deemed to be out side of the Customs Territory of Turkey for the purposes of
customs procedures, and are deemed to be parts of the Customs Territory of Turkey for the
purposes of rules of origin.
Interim Article 7: The provisions that are contrary to Free Zones Law Nr:3218 in Article 152,
Article 157 except sub paragraph (a) of the first paragraph, Article 158 and Article 185 of this
Law are not applicable until the date Turkey becomes a full member of the European Union.
On the other hand, for the purposes of Excise Duties Law Nr: 4760, the provisions of Article
158 and Article 185 shall be applied.
For the periods before this Law comes into effect, any tax shall not be imposed according to
Law Nr: 4760, the taxes imposed before shall be renounced, the accrued amounts shall be
cancelled. The amounts collected shall not be refused and refunded.
Entry into Force
Article 14 - This Law goes into effect on the date of its publication*.
Execution
Article 15 - The provisions of this Law are enforced by the Council of Ministers.
*The second paragraph of interim article 3 shall come into effect on 1/1/2009.
Important Notice:
By the Law Nr: 5810, the Interim Article below is added to the Customs Law No:4458 dated
27/10/1999.
(PS:The English version is an unofficial translation. Only the Turkish version is legally
binding.)
Updated On: 21/04/2010 Contact Information: Directorate General of Free Zones
Email: sbgm@dtm.gov.tr