Incentives for Solar Energy Systems (SPP) Investments
The importance of renewable energy sources is increasing due to the rising costs of fossil-based energy and the negative effects of fossil fuels on nature. Solar energy is one of the leading renewable sources.
The energy obtained from SPPs reduces costs on the one hand, and on the other hand, it is encouraged by the State with various supports.
This study summarizes the incentives provided by the government for SPP investments.
SPP Investments and Regional Incentives
The basis of the incentive legislation in Turkey is the Decree No. 2012/3305 on State Aids in Investments. Incentives according to this Decree;
– Priority Investments
– Strategic Investments
– Regional Incentives
– General Incentives
as four classes. SPP investments are largely supported under Regional Incentives.
In the regional incentive scheme, the provinces of our country are divided into 6 regions. The support elements provided for each region differ according to their development levels. These regions and provinces can be seen in the map below.
SPP investments are supported in a privileged manner, unlike many other investment areas. In other words, 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 benefit from the regional supports applied in the 4th region if they are realized in the 1st, 2nd and 3rd regions, and in the 4th, 5th and 6th regions.
Accordingly, even if a SPP investment is made in regions 1-3, it will be able to benefit from the advantageous incentive elements in the 4th region.
Incentives that can be utilized for SPP Investments
The details of the support elements that can be provided for SPP investments are summarized below:
- VAT Exemption: Pursuant to the Value Added Tax Law No. 3065, import and domestic deliveries of machinery and equipment to be made to investors holding an incentive certificate within the scope of the incentive certificate, and sales and leases of software and intangible rights within the scope of the certificate may be exempt from VAT. Accordingly, in case of SPP investment within the scope of the incentive certificate, it is possible to make purchases without VAT. This exemption applies to investments to be made in all regions.
- Customs duty exemption:The import of investment machinery and equipment covered by the incentive certificate is exempt from the customs duty to be paid in accordance with the Import Regime Decree in force. However, as per Article 8 of the Implementation Communiqué, customs duty exemption is not applied for solar panels and solar panel carrier construction systems to be procured from abroad within the scope of SPP investments.
- Tax Reduction:For investments subject to an incentive certificate, a certain portion of the investment is covered by the State through the tax foregone by applying discounted corporate tax. This amount is calculated with the investment contribution rate. Investment contribution rate varies according to regions.As mentioned above, a SPP investment to be made in any of the provinces of the 1st-4th regions will benefit from the incentives of the 4th region. The contribution to investment rate for 4th region investments is 30%. In other words, the amount to be found as a result of multiplying this rate by the total investment is covered by the State by applying discounted corporate tax. For example, if a GES investment of 4.000.000 TL is made, (4.000.000*30%)=1.200.000.-TL of the investment will be covered by the State by applying reduced corporate tax.
If the investment in question is made in the 5th region, 40% investment contribution rate is applied, and if it is made in the 6th region, 50% investment contribution rate is applied. Accordingly, depending on the region, 30-50% of the SPP investment is covered by the State by applying discounted corporate tax.
For the parts that cannot be utilized due to insufficient earnings, these amounts can be indexed every year at the revaluation rate after the completion of the investment. At the same time, it is possible to start benefiting from the discounted corporate tax application during the investment period.
- Insurance Premium Employer Share Support:In the event that additional employment is created with the SPP investment, investments supported within the scope of regional incentive practices, provided that it does not exceed the employment registered in the incentive certificate with a completion visa;
a) In the case of complete new investments, provided by the investment realized within the scope of the incentive certificate,
b) For other types of investments, following the completion of the investment, the portion corresponding to the minimum wage of the employer’s share of the insurance premium to be paid for the employment added with the investment realized within the scope of the incentive certificate to the average number of workers reported in the monthly premium and service certificate submitted to the Social Security Institution in the last six months prior to the date of commencement of the investment (for investments with seasonal characteristics, the seasonal employment averages of the previous year are taken into consideration) is covered from the Ministry’s budget.
Accordingly, the portion of the employer’s share of the insurance premium corresponding to the minimum wage of the personnel to be employed for the SPP investment to be made in regions 1-4 will be covered by the State for 6 years. In addition to the duration, another restriction here is that the employer’s share support amount cannot exceed 25% of the fixed investment made for the 4th region. Accordingly, in case of an investment of 4.000.000.-TL, the insurance premium support will not exceed (4.000.000*25%)=1.000.000.-TL in total.
This rate and duration is 35% and 7 years in Region 5. In the 6th region, there is a 10-year time limit.
- Investment Location Allocation: For strategic investments for which an incentive certificate has been issued by the Ministry and for investments that will benefit from regional supports, an investment location may be allocated according to the procedures and principles determined by the Ministry of Environment and Urbanization within the framework of the additional article 3 of the Law No. 4706 dated 29/6/2001. The process regarding the allocation of land for the investment to be made within this scope will be carried out before the relevant Ministry.
- Insurance Premium Support: Applicable only for SPP investments to be made in the 6th region. For the additional employment provided by the SPP investment, provided that it does not exceed the number of employment registered in the incentive certificate with the completion visa, the portion of the insurance premium employee share corresponding to the minimum wage that must be paid by the employer to the Social Security Institution can be covered from the Ministry budget on behalf of the employer for 10 years following the completion visa.
Points to Consider
In order for SPP investments to benefit from the support elements, the minimum fixed investment amount must be 3.000.000.-TL in the 1st and 2nd regions and 1.500.000.-TL in the 3rd, 4th, 5th and 6th regions.
In addition, in solar electricity generation investments; investments in the nature of modernization, investments with a capacity of less than 240 KW (including roof) cannot benefit from the incentive elements.
In addition, solar panels and solar panel carrier construction systems to be procured from abroad within the scope of solar energy-based electricity generation investments are not evaluated within the scope of the incentive certificate.
The interest and profit share support provided for loans to be used, which is applied for other investments, is not applied for SPP investments.
Finally, SPP investments outside the scope of unlicensed activities are not covered by the regional incentives detailed above. These investments are within the scope of general incentives and are supported with VAT exemption and customs duty exemption. The nature and conditions of these supports are as described in regional incentives.
