The Code on the Amendments of Certain Laws and Decrees on the Improvement of Industry and Support of Production
The Code on the Amendments of Certain Laws and Decrees on the Improvement of Industry and Support of Production (hereinafter as “Code”) has entered into force on 1 July 2017 with the Official Gazette no. 30111. The objectives of the Code are to support Turkish industry creating new industrial areas for domestic and foreign investors with granted state incentives for organized industrial zones (hereinafter as “OIZ”), industrial zones, technology development zones, industrial sites, and free zones.
Accordingly, aiming to decrease the license fees of workplaces, Weekend Holiday Law no. 394 abolished and the obligation to obtain a license in order to be able to work on weekends is no longer required. Thus, the industrial businesses are now authorized to operate on Sundays, on the condition that employees have at least one whole day off per week conforming to the Labor Law no. 4857.
Industrial Registry Law no. 6948 now includes enterprises producing software and information technology under the definition of « industrial enterprise ». Accordingly, regardless of how many employees they have software and information technologies producers must now be registered both to the Trade Registry and to the Industrial Registry.
Moreover, the Code grants new rights to the enterprises registered to the Industrial Registry: TRT-Share exemption is granted for their electric expenses with advantageous electricity tariffs. There will be an exemption from Banking and Insurance Transactions Tax for the financing of machinery and equipment. In addition, VAT exemption is realized on the sale to exporters of goods to be exported.
Most significant changes brought by the Code are related to Organized Industrial Zones:
- In order to prevent basic infrastructure service outages, water, electricity, and natural gas revenues collected by OIZs may not be subject to seize on the grounds of OIZ debt.
- The restrictions based on subject, region, and specialization for ministerial loans provided to OIZs have been abolished, and OIZs are assured of obtaining loans from the Ministry of Industry and Commerce for their projects approved by said Ministry.
- For loans taken by OIZs from banks or financial institutions, the Ministry of Industry and Commerce is now competent to give interest support.
- Prior to the amendment to the Law on Organized Industrial Zones, only OIZ participants or their tenants were able to operate on one plot of land. The amendment of the Production Reform Package now provides that a controlling company may share its plot with its affiliates.
- OIZ participants will also have the right to establish energy facilities with the permission of the relevant OIZ, without incorporating a company.
- Companies and OIZs in Turkey may now establish OIZs abroad, while the Council of Ministers has become competent to determine the plot allocations given to these OIZs established abroad.
- OIZs now have the competence to establish real estate investment companies with the condition to operate only within the boundaries of the OIZ.
- As regards organized industrial zones, industrial zones, technology development zones, and industrial sites, land plot allocation contracts and commitments concluded for these zones are exempt from stamp duty. Furthermore, (i) procedures requiring land registry annotations because of plot allocations on these zones, (ii) assignments and registrations made accordingly to the allocation contracts and (iii) procedures about classification changes of buildings that have been constructed on these zones, are exempt from fees. Lastly, the buildings on these zones are now exempt from real estate tax.
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