04.03.2022/16
Amendments to the Decree on State Aids in Investments
Summary In the Official Gazette dated 24/02/2022 and numbered 31760, the Decision Amending the Decision on State Aids in Investments (Decision No. 5209) was published. With this Decision amending the Decision No. 2012/3305;
Used or refurbished machinery and equipment, which are deemed appropriate to be imported within the scope of the complete facility, but which cannot benefit from customs duty exemption, can be included in the fixed investment amount without providing VAT exemption and customs duty exemption.
Within the scope of the “Manufacturing Based Import Substitution Support Package”, the interest support limit will be increased by one fold for loans and financial leasing transactions collateralized by the Credit Guarantee Fund.
It is now possible for more than one intermediary institution to make a request within the scope of the same incentive certificate in the application of interest support.
In the event that incentive certificates are canceled or partially sanctioned, a regulation has been made regarding the collection of the amount of interest and profit share support paid to investors.
Investors who do not apply for a completion visa within 6 months following the investment period will be notified by the Ministry to apply for a completion visa and will be given additional time.
Investments that benefit from another support of other public institutions and organizations related to the loan used within the scope of the investment can benefit from other support elements.
It is possible to benefit from regional supports for some investment activities.
The VAT refund period for building construction expenditures for the manufacturing industry with an investment incentive certificate has been extended until 2024.
The list of machinery and equipment that cannot benefit from customs duty exemption has been updated.
Explanations regarding these amendments are given below:
1. Used or refurbished machinery and equipment, which are deemed appropriate to be imported within the scope of the complete facility, but which cannot benefit from customs duty exemption, can be included in the fixed investment amount without providing VAT exemption and customs duty exemption.
The machinery and equipment specified in the fourth paragraph of Article 9 of the Decree No. 2012/3305 on State Aids in Investments and included in Annex (8) of the Decree cannot be provided as used or reconditioned within the scope of the incentive certificate. However, with the amendment made, it is possible to import the used or reconditioned machinery and equipment in Annex-8, which are deemed appropriate to be imported within the scope of the used complete facility, without providing VAT exemption and customs duty exemption and can be included in the fixed investment amount.
2. The scope of automobiles that are allowed to be imported based on the incentive certificate within the scope of automobile production investments has been expanded.
In the seventh paragraph of Article 9 of the Decree No. 2012/3305 on State Aids in Investments, within the scope of investments for automobile production, manufacturers are allowed to import automobiles by providing customs duty exemption if certain conditions are met. With the new regulation, the scope of these conditions has been expanded. Accordingly, in case a new investment with a minimum capacity of one hundred thousand units/year is made or the installed capacity of the existing facilities is increased by at least one hundred thousand units/year in investments for the production of automobiles and/or commercial vehicles, provided that they are hybrid and/or electric, following the realization of twenty percent of the fixed investment amount registered in the incentive certificate, investors will be allowed to import up to 2.5 percent of the additional capacity and up to 2. 500 cm³ and the import of automobiles and / or motor vehicles with a gross weight of more than 5 tons for the transportation of goods will be allowed, provided that it is within the investment period.
3. Within the scope of the “Manufacturing Based Import Substitution Support Package”, the interest support limit will be increased by one fold for loans and financial leasing transactions collateralized by the Credit Guarantee Fund.
Pursuant to the third paragraph of Article 11 of the Decree No. 2012/3305 on State Aids in Investments, the amounts of interest or profit share support to be provided on a project basis for investments to be made within the scope of regional incentive practices cannot exceed 1 million, 1 million 2 hundred thousand, 1 million 400 hundred thousand and 1 million 8 hundred thousand Turkish Liras in the 3rd, 4th, 5th and 6th regions, respectively.
However, the upper limits specified in this paragraph shall not apply to the loans provided by the intermediary institutions to be announced by the Ministry for the investment incentive certificates issued for the manufacturing industry investments to be realized in the organized industrial zones or industrial zones of the districts listed in Annex-7 of the 3rd region provinces listed in Annex-1, in the organized industrial zones or industrial zones of the 4th region provinces listed in Annex-1, in the 5th and 6th region provinces listed in Annex-1 (US-97 Code: 15-37) for the investment incentive certificates issued for the manufacturing industry investments to be realized in the 5th and 6th region provinces in Annex-1 (US-97 Code: 15-37) and for the TL-denominated loans and TL-denominated financial leasing transactions provided by the intermediary institutions to be announced by the Ministry and collateralized by the Credit Guarantee Fund within the scope of the “Manufacturing-Based Import Substitution Support Package”.
4. It is now possible for more than one intermediary institution to make a request for interest support within the same incentive certificate.
Pursuant to the eighth paragraph of Article 11 of the Decree No. 2012/3305 on State Aids in Investments, more than one intermediary institution could not make a request for interest or dividend support for the investment under the same incentive certificate, but more than one intermediary institution could make a request for strategic investments. With this Decree, the said paragraph has been repealed and it is now possible for more than one intermediary institution to submit a request for the same incentive certificate.
5. In the event that incentive certificates are canceled or partially sanctioned, a regulation has been made regarding the collection of the amount of interest and profit share support paid to investors.
With the 13th paragraph added to Article 11 of the Decree No. 2012/3305 on State Aids in Investments with the Decree No. 5209, in the event that the incentive certificates are canceled or partial sanctions are applied, the amount of interest or profit share support overpaid to the investors will be recovered with default interest to be calculated from the date of each payment by applying the interest or profit share rate applied by the intermediary institution on the date the loan was extended or the borrowing was made. This newly introduced provision will also apply to incentive certificates issued pursuant to this Decree and previous decisions.
6. Investors who do not apply for completion visa within 6 months following the investment period will be notified by the Ministry to apply for completion visa and will be given additional time.
Pursuant to the fourth paragraph of Article 24 of the Decree No. 2012/3305 on State Aids in Investments, the investor shall apply to the local unit issuing the incentive certificate or the Ministry for the completion visa of the investment within 6 months following the end of the prescribed period or additional period. With the amendment made in the said paragraph, in case of failure to apply for the completion visa, the Ministry will notify the company to apply for the completion visa and the incentive certificate may be canceled in case of failure to apply for the completion visa within 2 months following the notification date.
7. Investments that benefit from another support of other public institutions and organizations related to the loan used within the scope of the investment can benefit from other support elements.
Pursuant to Article 29 of the Decree No. 20212/3305 on State Aids in Investments, investments that benefit only from subsidized credit support of other public institutions and organizations can benefit from the support elements under this Decree, provided that no interest or profit share support is provided for the subsidized credit. With the amendment made, investments that benefit from another support of other public institutions and organizations related to the loan used within the scope of the investment (provided that no interest or profit share support is provided) can also benefit from other support elements within the scope of this Decree.
8. The opportunity to benefit from regional supports was introduced for some investment activities.
With the amendment made in the table numbered Annex-2B and titled “Sector Numbers Regarding the Sectors of Provinces that can benefit from Regional Supports” of the Decree on State Aids in Investments numbered 2012/3305, footnote 12 was first removed and the following footnotes were added to footnotes 9 and 13;
a) Except for the province of Istanbul; investments in the production of hemp, flax, jute, etc. shell fibers into fiber and integrated yarn investments will benefit from the regional supports applied in the region where they are located.
b) Investments for ferro-chrome production with US- 97 code 2710.8.02, except for Istanbul;
– Applied in the 4th region if they are realized in the 1st, 2nd and 3rd regions,
– If they are realized in the 4th, 5th and 6th regions, they benefit from the regional supports applied in the region where they are located.
c) Within the scope of unlicensed activity and provided that it is limited to the contract power in the connection agreement, solar energy-based electricity generation facility investments and wind energy-based electricity generation facility investments are included in the scope of regional supports. Accordingly, the investments in question without interest/profit share support;
– In case they are realized in the 1st, 2nd and 3rd regions, they are applied in the 4th region
– If they are realized in the 4th, 5th and 6th regions, they will benefit from the regional supports applied in the region where they are located.
9. The VAT refund period for building construction expenditures for the manufacturing industry with an investment incentive certificate has been extended until 2024.
Pursuant to the amendment made in the provisional Article 8 of the Decree No. 2012/3305 on State Aids in Investments, the VAT refund period for building-construction expenditures made within the scope of investment incentive certificates issued for the manufacturing industry has been extended until the end of 2024.
10. The list of machinery and equipment that cannot benefit from customs duty exemption has been updated.
With the amendment made, the table numbered Annex-8 and titled “List of Machinery and Equipment that cannot benefit from Customs Duty Exemption” of the Decree No. 2012/3305 on State Aids in Investments has been updated.
You can access the relevant decision here.
Sincerely,
BİLGENER
