July 2009
FREE ZONES IN TURKEY AND THE ESTABLISHMENT OF A COMPANY IN THE FREE ZONES
In this bulletin we are going to cover the free zones which not only arouses interest in local investors but also foreign investors too. The free zones are regulated with the Free Zones Act, The Free Zones Implementing Regulation, The Establishment, Duty, Authority and the Working Basis for the Free Zone Managements, the Decision about the Matter of Payments which can be made with Turkish Lira in the Free Zones and The Free Zones General Management Notice.
If needed to summarize in general the Free Zones; may be defined as the places which although are in the country’s political borders are excepted as outside the customs frontier, and while valid in the country the legal and administrative regulations on commercial, financial, and economics are not applied or partially applied, where encouragement for industrial and commercial activities is given more widely and are places which are physically apart from the country’s over parts. The definition of the free zones is made in the 3218 numbered Free Zones Act under the title of EXEMPTIONS AND INCENTIVES in article 6( alteration article 29.01.2004-5084 numbered ), (Alteration paragraph: 12/11/2008-5810 numbered /Article 4) in this way : Free zones while being parts of the Turkish customs area; goods which are not in free movement without being subjected to any customs regime and without being put into free movement, not to be used outside the frame of the customs regulation or which is put with the condition of not to be consumed, in the execution of the rules on import tax and commercial politics precautions and exchange legislation is excepted as outside the Turkish Customs area and also a object which is in free movement after being put into a free zone understandably benefits from the resources which comes from to the export of the goods.
In the 3218 numbered Free Zone Act altered by the 25/11/2008 dated and 5810 numbered Act article 1, it is expressed that the reason of the establishment of the free zones, is to encourage the investment and production which is in the direction of export, to directly hasten foreign investments and the input of technology, to direct businesses in the direction of export and to improve international trade.
In this frame, in order to do business in the free zones while evaluating of the necessary applications for a business licence(including renewal and expansion applications). By the General Manager of Free Zones keeping in mind the regional and sectional differences the following points are taken into account.
1. The activities should have a productive character and mostly be in the direction to sell abroad.
2. Also in purchase and sale activities the principle is to sell abroad. But with priority it may be permitted in certain proportions to sell raw materials, intermediate goods and investment goods in Turkey.
3. The activities applied for
a) Should not be harmful for human health and the environment.
b) Should not include the delicate materials determined by the Head office.
c) In the domestic market should not be destructive and should not have a character which creates an unfair competition environment.
4. The activity;
a) Should have the nature of creating employment at a certain capacity.
b) Must have a direct foreign investment characteristic.
c) Must include new or/and high technology.
d) The service must have the nature of supporting international trade.
e) Must be compatible with the specialization of sector and aggregation in the free zone.
Theses are kept in mind in the assessment period.
Along with providing contribution to the Turkish economy, with their flexible and modern administrative structure the Free zones create the necessary investment enviroment to companies who want to head towards foreign trade also as logistic bases their importance in our country is increasing.
The free zone managements found in Turkey: Adana-Yumurtalık free zone(Ceyhan/Adana), Antalya Free Zone Management (Antalya), Europe Free Zone Management (Corlu/Tekirdag), Bursa Free Zone Management (Gemlik/Bursa), Denizl Free Zone Management(Cardak/Denizli), Eastern Anatolian Free Zone Management(Erzurum), Ege Free Zone Management(Gaziemir/İzmir), Gaziantep Free Zone Management (Cakmak/Gaziantep), Istanbul Ataturk Airline Free Zone Management(Havalimanı/Istanbul), Istanbul Leather and Industry Free Zone Management(Tuzla/Istanbul), Istanbul Trakya Free Zone Management(Catalca/Istanbul), Izmir Menemen Leather Free Zone Management(Menemen/Izmır), Kayseri Free Zone Management(Kayseri) Kocaeli Free Zone Management(Izmit/Kocaeli), Mardin Free Zone Management (Istasyon/Mardin), Mersin Free Zone Management(Mersin), Rize Free Zone Management (Rize), Samsun Free Zone Management (Limanici/Samsun), Trabzon Free Zone Management (Limanici/Trabzon), Tubitak Mam Teknoloji Free Zone Management (Gebze/Kocaeli).
- The activity areas of the companies established in the free zones may be, Production, Storage management, Banking, Renting a workplace, Assembling- Dissembling, Maintenance-Repairs, Insurance trade, Trading(purchase-sale), Offshore Banking and Leasing.
Although the production of goods in the free zone is unrestrained, some goods are forbidden and some need a special permit.
The goods which are illegal to be brought into the free zone or goods which need special precautions are arranged like this; Inflammable, explosive, ignitable, combustive goods or materials which are dangerous to the goods when they are in the same place, with the condition that special precautions are made may be brought into the zones. The entering and exiting of Narcotic substances (drugs), psychotropic substances and chemical substances which are involved with these and also their pharmaceutical preparations are subjected to the regulations that the Minister of Health applies.
From the point of companies which will show activity in the free zones there is no restriction for foreign or domestic capital. A %100 domestic capital company or a 100% foreign capital company may be active in the free zones. Also from the point of exemptions and encouragements a distinction between domestic and foreign capital companies is not made.
With the purpose of being able to be active in the free zones the procedures needed to be followed in order to get the necessary licence are as follows:
1. An application for an activity licence is made. The activity licence application may be done to the Foreign Trade Undersecretary ( Inonu Bulvarı, 06510 Emek / ANKARA – TÜRKİYE) or also may be done to the Free zone Management Office.
The duration of the activity licence, for rent users who do business by renting a workplace it is 10 years, for investment users who do business by building their own workplace it is 20 years. But, this duration; for the rent users who do business regarding production it is 15 years, and for Investment users it is 30 years but in order for this to be valid the mentioned production must be continuous.
2. A 5000USD application fee is paid (in case the application is refused the fee is returned)
3. An application form is filled (here the activity area of the company should be notified in detail.)
4. The application is evaluated by the Head Office. If is denied then the application fee is given back. If it is accepted:
5. A rent or sale contract is made( user investors-people who build on the property- that are active in the free zone may be rented land, estate and buildings which is the Treasury’s personal property or may gain the right to constitute a servitude on these for up to 49 years).
6. The head office is applied to with the rent contract.
7. An activity licence is drawn up.
8. A certificate is given concerning that the activity licence is suitable for a company to be established. And with these and the other necessary certificates an application is made to the trade register for the establishment of the company.
9. In order to get a work permit for a foreign manager or qualified personel an application is made to the regional or the Head Office. From the employees perspective The TR social security legislation rules are enforced and insurance premium is paid to the social security establishments.
Source: T.C. Undersecretariat of Foreign Trade of the Prime Ministery
Free Zones General Management
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