ANNOUNCEMENT 23 Jun 2018

On 23 June 2018, the government of Turkey approved Eko Energy’s investment project to be eligible for the project-based investment incentive program.

NUMBER OF INTERVENTIONS

4

  • 4 harmful
  • 0 neutral
  • 0 liberalising

SOURCE

Official Gazette of Turkey, Decree of Council of Ministers on Granting Project-Based Investment Incentive to the Production of photovoltaic solar panel in Niğde. Niğde İlinde Yapılacak Olan Fotovoltaik Güneş Paneli Üretim Tesisi Yatırımına Proje Bazlı Devlet Yardımı Verilmesine İlişkin Karar No. 2018/11817. Available at: https://www.resmigazete.gov.tr/eskiler/2018/06/20180623-12.pdf

Inception date: 23 Jun 2018 | Removal date: open ended

Tax or social insurance relief

On 23 June 2018, the government of Turkey approved Eko Temiz Enerji Anonim Şirketi (Eko Energy)’s investment project concerning the production of photovoltaic solar panels in Nigde within the scope of project-based investment incentive program. Eko Energy plans to make greenfield investment in the production of photovoltaic solar panels with an annual capacity of 1,000 MWp per year. The investment period was started on 20 December 2017.

The investment has a total value of TRY 3.8 billion (USD 824 million) with a commitment of hiring 1,500 new employees and 25 qualified personnel. The investment period is 6 years with an option to extend this period up to 9 years.

Under the project-based investment incentive program, the Turkish government agreed to provide to Eko Energy’s investment project the following tax relieves:

Customs duty exemption: Imports of the machinery and equipment to be used in the production process are subject to customs duty exemption.

VAT exemption: Imported and/or locally provided investment machinery and equipment, as well as selling/buying and renting of intangible rights and software, are exempted from value-added tax.

VAT refund: Value-added tax collected on the building & construction expenses are rebated.

Insurance premium employer’s share support for 10 years: For any additional employment created by the investment, the amount corresponding to the employer's share of the social security premium on legal minimum wage, paid by the investor, is covered by the Government.  Within the investment project, 1,500 new employees are planned to be hired. The calculated insurance premium employer’s share support for 10 years is roughly USD 12 million. 

Income tax withholding support for 10 years: The withholding tax imposed on the income tax of employees will not be levied for new staff employed for the investments for 10 years. It is calculated based on the minimum wage. Within the investment project, 1,500 new employees are planned to be hired. The calculated Income tax withholding support for 10 years is roughly USD 9.9 million.

Tax deduction: Under the investment project, the Turkish government agreed to provide tax deduction from the corporate tax. This amount cannot exceed 70% of the rate of contribution of the fixed investment amount. The contribution rate to investment refers to the rate of the fixed investment subject to a tax deduction, whereas tax deduction refers to the rate of corporate tax to be reduced until the contribution rate is reached. In this framework, within the investment period (up to 9 years), the Turkish government provided a corporate tax allowance of approximately USD 568 million.

Apart from the above-mentioned support instruments, the Turkish government also agreed to provide qualified personnel support, interest rate support, and energy support (please see related interventions).

The project-based investment incentive program which was launched in 2016 is the most comprehensive investment scheme in Turkey. It is also known as the super investment incentive package and granted to top investment projects.

 

AFFECTED SECTORS

 

AFFECTED PRODUCTS

 
Inception date: 23 Jun 2018 | Removal date: 06 Feb 2020

Interest payment subsidy

On 23 June 2018, the Turkish government announced approving Eko Energy’s investment project in the amount of TRY 3.8 billion (USD 824 million) concerning the production of photovoltaic solar panels in Nigde within the scope of project-based investment incentive program. Under the investment project, Eko Energy will produce photovoltaic solar panels with an annual capacity of 1,000 MWp per year. Eko Energy plans to hire 1,500 new employees.

Under the investment project, the Turkish government agreed to provide interest payment support (and/or dividend support) to the company. Interest payment support is granted for 10 years, provided that the total amount borrowed from a financial institution does not exceed 80% of the fixed investment amount. The Turkish government agreed to grant up to TRY 350 million (USD 74.3 million) interest payment subsidy within 10 years from the date when the credit is received.

Apart from the interest payment support, the Turkish government also agreed to provide following support instruments (see related interventions): Customs duty exemption, VAT exemption, VAT refund, insurance premium employer’s share support for 10 years, income tax withholding support for 10 years, tax deduction, qualified personnel support, and energy expenses support.  

Update

On 7 February 2020, the government of Turkey, decreased the interest payment support granted to Eko Energy’s investment Project concerning the production of photovoltaic solar panels from TRY 350 million (USD 58.5 million) to TRY 200 million (USD 33.5 million) (see related state act).

Inception date: 23 Jun 2018 | Removal date: 22 Jun 2023

Financial grant

On 23 June 2018, the government of Turkey accepted Eko Energy’s investment project concerning the production of photovoltaic solar panels in Nigde within the scope of the project-based investment incentive program. Under the investment project which has a total value of TRY 3.8 billion (USD 824 million), Eko Energy plans to producer photovoltaic solar panels. Eko Energy also plans to hire 1500 employees and reach an annual capacity of 1,000 MWp per year. The investment period is 6 years with an option to extend this period up to 9 years.

Within the scope of the investment project concerning the production of photovoltaic solar panels in Nigde, the Turkish government agreed to provide wage support for qualified personnel. Wage support is applied for 5 years. For each qualified personnel, wage support cannot exceed twenty times the monthly minimum wage. In the photovoltaic solar panels investment project, 25 qualified personnel is planned to be hired. For the qualified personnel, the government announced granting a maximum of TRY 72 million (USD 15.3 million) within 5 years.

Other than the wage support for qualified personnel, the Turkish government also agreed to provide following support instruments (see related interventions): Customs duty exemption, VAT exemption, VAT refund, insurance premium employer’s share support for 10 years, income tax withholding support for 10 years, tax deduction, interest payment support, and energy expenses support.  

Inception date: 23 Jun 2018 | Removal date: 22 Jun 2028

Financial grant

On 23 June 2018, the Turkish government announced approving Eko Energy’s investment project concerning the production of photovoltaic solar panels in Nigde within the scope of the project-based investment incentive program. Eko Energy plans to produce photovoltaic solar panels with an annual capacity of 1,000 MWp per year. Under the investment project which had a total value of TRY 3.8 billion (USD 824 million), 1,500 new employees are planned to be hired.

Within the scope of the investment project, the Turkish government agreed to provide support for the energy expenses for 10 years. For the energy expenses the Turkish government grants up to TRY 500 million (USD 106.2 million) energy support provided that this amount does not exceed 50% of the total energy expenses of the factory.  

Apart from the energy expenses support, the Turkish government also agreed to provide following support instruments (see related interventions): Customs duty exemption, VAT exemption, VAT refund, insurance premium employer’s share support for 10 years, income tax withholding support for 10 years, tax deduction, interest payment support, and wage support for qualified personnel.