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What is a Free Zone?

What is a Free Zone?

Free Zones are special areas located outside the scope of customs territories, though they are within the political borders of the country. These zones are designed to increase the number of
export-oriented investments. Legal and administrative regulations applied in commercial, financial, and economic areas within customs territories are either not applicable or partially applicable in
free zones.
In Turkey, there are a total of 19 Free Zones, of which 18 are active and one is under construction. These Free Zones are located at points where access to international trade routes through the
ports in the Mediterranean, Aegean, and Black Sea is easily facilitated.

Advantages Provided by Free Zones

  • 100% exemption from customs duties and similar taxes.
  • 100% exemption from corporate tax for manufacturing companies.
  • 100% exemption from VAT and special consumption tax.
  • 100% exemption from stamp duty on documents processed.
  • 100% exemption from property tax.
  • 100% income and corporate tax exemption for specific logistic services provided from Free Zones, provided that all services are exported.
  • 100% exemption from income tax on employee salaries (for companies exporting at least 85% of the FOB value of the products produced in free zones).
  • Goods can be stored in free zones without a time limit.
  • Companies can transfer profits earned from free zones without any restrictions, either abroad or back to Turkey.
  • Exemption from title deed fees in property buying and selling.
  • VAT exemption in construction, project, settlement, permit, and approval processes.
  • Ready infrastructure exempt from VAT and other taxes.
  • Permission for the import of second-hand/used machinery.

Key Features of Free Zones

Duty-Free Import and Export: Goods imported into a Free Zone are typically exempt from customs duties and other import taxes. This makes them an attractive location for manufacturing and assembly operations, as companies can import raw materials and components duty-free and export finished products without incurring additional costs.

Tax Incentives: Businesses operating in Free Zones may be eligible for various tax incentives, such as reduced corporate income tax rates, exemptions from property taxes, and other tax breaks. These incentives can significantly reduce the overall cost of doing business in a Free Zone.

Simplified Regulatory Environment: Free Zones often have simplified regulatory environments, with streamlined procedures for obtaining permits and licenses. This can save businesses time and money and make it easier to start and operate their businesses.

World-Class Infrastructure: Free Zones typically offer world-class infrastructure, including modern office spaces, warehouses, and transportation facilities. This ensures that businesses have access to the resources they need to operate efficiently.

Access to Skilled Labor: Free Zones are often located in areas with a large pool of skilled labor, making it easier for businesses to find the talent they need.

Benefits of Operating in a Free Zone

Reduced Costs: Duty-free imports, tax incentives, and a simplified regulatory environment can significantly reduce the cost of doing business in a Free Zone.

Increased Efficiency: Streamlined procedures and world-class infrastructure can help businesses operate more efficiently and reduce their time-to-market.

Access to Markets: Free Zones are often strategically located near major ports and airports, providing businesses with easy access to international markets.

Innovation and Collaboration: Free Zones can foster innovation and collaboration by bringing together businesses, researchers, and investors in a single location.

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