# A New Era in Investment Incentives in Turkey: 2025 Reform Explained # A New Era in Investment Incentives in Turkey: 2025 Reform Explained **Published: June 5, 2025** **Author: Evren Özmen, CPA** ## Introduction On May 30, 2025, a landmark Presidential Decree numbered 9903 was published in the Official Gazette (No. 32915), officially ushering in a new chapter for Turkey’s investment incentive framework. Replacing the outdated Decrees No. 2012/3305 and No. 2018/11201, this reform introduces a strategic, project-based, and integrated system that aligns with Turkey’s long-term development goals—including its green and digital transformation agenda. Let’s explore what this new system entails, how it affects investors, and which strategic sectors will benefit most. --- ## Overview: What Changed in 2025? The former incentive schemes—primarily based on broad regional or sectoral priorities—have been replaced by a **three-pillar structure** designed to promote strategic, high-value, and transformation-driven investments: ### 1\. Türkiye Century Development Initiative (TCDI) * **Technology Leap Program** * **Local Development Program** * **Strategic Initiative Program** ### 2\. Sectoral Incentive Scheme * **Priority Investments** * **Targeted Investments** ### 3\. Regional Support Add-ons Investments under the above programs are now eligible for region-based support mechanisms. Each investment will be evaluated on a **project-by-project basis**, with support levels tailored to its alignment with national priorities such as reducing import dependency, enhancing supply chain resilience, and promoting digital and green transformation (i.e., "twin transition"). --- ## The New Support Framework ### ✅ Key Incentive Tools Available | Support Tool | TCDI | Sectoral | | --- | --- | --- | | VAT Exemption | ✔ | ✔ | | Customs Duty Exemption | ✔ | ✔ | | Corporate Tax Reduction | ✔ | ✔ | | Interest or Profit Share Support | ✔ | ✔ | | Land Allocation | ✔ | ✔ | | Employer’s Social Security Premium Support | ✔ | ✔ | | Social Security Premium Support (6th Region only) | ✔ | ✔ | | Machinery Support (NEW) | ✔ | ✖ | The introduction of **machinery support** is a significant new feature, available only under the Türkiye Century Development Initiative (TCDI), signaling a focus on capital-intensive and technologically advanced projects. --- ## Corporate Tax Reduction (CTD): Re-Defined ### ➤ New Parameters in the Decree No. 9903 The most noteworthy innovation comes in the restructuring of the **corporate tax reduction (CTD)** mechanism under Article 32/A of the Corporate Tax Law (No. 5520). While the framework for calculating contribution amounts remains familiar, the **contribution rates and deduction percentages** have been restructured to align with strategic goals. ### 📊 Updated Investment Contribution Ratios | Program / Scheme | Investment Contribution Rate | | --- | --- | | Technology Leap Program | 50% | | Local Development Program | 50% | | Strategic Initiative Program | 40% | | Priority Investments | 30% | | Targeted Investments | 20% | The **corporate tax discount rate** has been fixed at 60% across all schemes. ### ⛔ Cap on Non-Investment Income A critical update: Only **50%** of the investment contribution amount can now be applied to income not directly resulting from the investment itself during the investment period—down from the previous 80%. This aims to direct public support primarily to capital expenditure-based activities. --- ## Machinery Support: A Strategic New Feature Under Decree No. 9903, a **budget-financed machinery support scheme** is available only for investors under the TCDI. ### 🛠️ Key Terms: * Support applies only to machinery and equipment priced at **2 million TL or more**. * 25% of eligible expenditures are reimbursed by the Treasury. * Maximum support ceilings: * **Tech/Local Programs**: Up to 240 million TL or 15% of fixed investment. * **Strategic Program**: Up to 180 million TL or 15%. Importantly, **projects receiving machinery support are not eligible for interest/profit share subsidies**, to avoid overlapping incentives. --- ## Sector and Regional Eligibility To qualify for support, investments must be listed in **Annex-3** of the Decree and meet specific conditions. Exceptions exist for projects focused on: * Green transformation * Digital transformation * Post-disaster resilience (e.g., earthquakes, fires) ### 📍 Minimum Investment Thresholds | Region | Minimum Fixed Investment | | --- | --- | | Regions 1 & 2 | 12 million TL | | Regions 3-6 | 6 million TL | --- ## Annual Adjustment: Revaluation Principle All monetary thresholds and support ceilings will be updated annually using Turkey’s official **revaluation rate**, ensuring the system remains aligned with macroeconomic realities. --- ## Transition Rules for Existing Certificates * Certificates issued under the **old system** (pre-May 30, 2025) will remain valid under the terms of their original regulation. * However, old machinery or equipment **cannot be transferred** to a new certificate under the new regime. * Projects in the process of expansion must also comply with the **new limitations**, particularly if they include non-eligible investment items. --- ## Deadline for Applications Decree No. 9903 will be **effective for applications submitted before December 31, 2030**. Certain provisions (e.g., Article 5/11-14) will come into force on **January 1, 2026**, but all others are already in effect. --- ## Strategic Insight: What This Means for Investors The Turkish government has clearly signaled a **paradigm shift** in how it supports investment. Rather than blanket incentives, support is now: * **Selective**: Only high-impact and transformation-oriented projects will benefit. * **Performance-based**: Investors must demonstrate alignment with green/digital transition goals. * **Tightly governed**: Dual support for a single activity (e.g., machinery + interest subsidy) is no longer possible. ### Key Takeaway: If you're planning to invest in Turkey, **compliance with strategic program goals** is now not just a bonus—it's a prerequisite. --- ## Final Thoughts The 2025 investment reform represents more than a bureaucratic update; it’s a clear **policy signal**. Turkey is steering capital toward projects that will modernize its economy, reduce environmental impact, and boost technological competitiveness. Investors—particularly in manufacturing, green tech, and regional development—should consider aligning their projects with the Türkiye Century Development Initiative. Doing so could unlock a rich combination of tax reliefs, cost reimbursements, and regulatory advantages. --- **Need support navigating Turkey’s new investment incentive regime?** Contact our CPA office for a project-specific analysis and application guidance. ✉️ [info@ozmconsultancy.com](mailto:info@ozmconsultancy.com) | 🌐 [www.ozmconsultancy.com](http://www.ozmconsultancy.com/) ![](https://cdn.hashnode.com/res/hashnode/image/upload/v1749108745217/7e7ad145-d730-463e-9318-06cc64e52e04.png align="center")