Tax Deduction

Reduced income or corporate tax rates will be imposed on the investor’s income under the incentive scheme according to the characteristic of the investment until the amount calculated on the basis of government’s contribution rate, determined by the same scheme and corresponding to a certain percentage of the fixed investment amount, is reached. 

The contribution rate to investment refers to the rate of the fixed investment subject to tax deduction, whereas tax deduction refers to the rate of income or corporate tax to be reduced until the contribution rate is reached.

Tax Deduction Example

An investor can receive a tax deduction worth of about 20 million Turkish Liras, for a total fixed investment of 50,000,000 TL covered by certain Investment Incentive Schemes (e.g. the Regional Scheme) where the investor can use 50% of the total tax deduction during the investment period and 50% after the investment is completed, with 80% tax deduction and 40% contribution rate. Until the amount of tax deducted from annual tax liabilities reach this total, the investor can pay a reduced rate of corporate tax 4%, which is normally 20%. The investor will get a 10 million TL tax deduction during the investment period, since this incentive instrument is extended to the period before the completion of the investment.