Legal ReviewFREE TRADE ZONES IN TURKEY

Free trade zones are defined as the regions that have been established with the intention of developing international trade and employment and though they are within the national boundaries of the countries, are left beyond the customs duty zones, in order that the tax and customs legislations to be applied. In the abovementioned zones, there are encouragement and advantages such as various tax exemptions, cheap import credits, cheap worker wages, profit transfer guarantees and diminishment of formalities. By means of the said guarantees and advantages, to develop investments and productions for export, to accelerate foreign capital and technology entry, to provide the input need of economy in a cheap and regular way, to be benefited from the means of foreign finance and commerce in a large scale, have been aimed.
First free trade zones in our country have actually been established in Mersin and Antalya in 1987.
Though the most important advantages being profited by the beneficiary companies in Turkey free trade zones were the tax exemptions including income, company and Value Addition Tax (VAT) taxes, pertained to the income obtained from the activities in the said free trade zones but these exemptions were limited by the new amendments. Due to the amendment of free trade zones have been deemed beyond the customs duty zones and cambio exchange obligations not to be applied in the said zones and in these regions tax legislations will be valid, the exemptions of full have been put to an end. In short, by means of this new legislation, the application of exemption has been transferred to the application of exception. The companies established in free trade zones and activating there by obtaining permissions, or other taxpayers though their establishments are situated beyond free trade zones have branches there, after 06.02.2004, are obliged to pay taxes for their benefits being obtained in free trade zones. That means, there haven’t been any difference between the taxpayers situated in free trade zones and the other taxpayers activating beyond these zones in Turkey.
Besides, all of the income and profits, being obtained from the activities in free trade zones cab be transferred abroad or Turkey, irrespective of any permissions and tax obligations.
Additionally, as the goods being sold to from Turkey to free trade zones are subject to the import regime and the benefactors of free trade zones can buy goods from Turkey without paying VAT, for the cost export price. Since the encouragements and advantages are equally provided by either foreign or national companies, they enable great advantages especially to the foreign companies. Besides the companies activating in free trade zones may get permissions up to 99 years. As for the goods there’s no limit for them to be kept there.
As to the status of free circulation of trade remains the same, the goods imported into free trade zones concerning EU or Turkish origin or those that freely circulate in such regions, they are not under the obligation of paying customs duties either entering into Turkey or EU countries. Besides, the goods being imported from the countries whose origins aren’t EU or in case these goods are sent either to Turkey or other countries outside EU, there is no obligation of paying customs duties. However the goods exported to Turkey or EU member countries from free trade zones whose origin belonging to other countries consequently not in position of free circulation trade, customs duties are proportionally paid according to the tariff GATT.
As for employment provided to the employers, either strike or lockout events cannot take place within established free trade zones for 10 years after beginning of activating there. Besides, the goods can be kept in free trade zones without any time limit. The authorizations being provided to the government institutions or establishments pertaining to the prices, qualities and standards aren’t to be applied in free trade zones.
By means of the above mentioned facilities provided to the companies dealing in free trade zones, there have been an opportunity for the foreign capital and technology to be imported into the country and ability for the some raw materials and intermediary goods needed by industrialists to be obtained, goods of low cost productions to be exported and new possibilities for employment are to be realized.