New regulations to incentivize investors

New regulations to incentivize investors

ANKARA – Anadolu Agency
Three new regulations targeted at investors battling to overcome barriers set by Turkey’s high current account deficit are set to be introduced, according to Turkish Finance Minister Mehmet Şimşek. 

The Finance Ministry is seeking to implement the regulatory measures as part of wider efforts in tackling the high current account deficit, which is seen as Turkish economy’s most fragile issue.

The regulations will streamline procedures relating to research and development (R&D), provide for benefits from tax incentives and renewable energy-based power generation facilities, Şimşek said. “So, the share of high added-value products in the country’s production structure will increase, energy imports will decrease, thus creating a more investor-friendly environment,” he said. 

As the current regulation says R&D centers are obligated to employ 50 full-time equivalent R&D staff, this number will be reduced to 30, he said. R&D activities’ need to be boosted to achieve 2023 targets, he said. The Ministerial Cabinet will be authorized in making the decision on reducing R&D staff quotas in relation to the sector’s need, until a quote of 30. So, R&D centers that do not require 50 personnel and can carry out operations with 30 staff will be able to do so, thus benefiting from the incentives, Şimşek said.

The new regulation will also lead local investors to establish new R&D centers and foreign investors to base their offices in Turkey, he said, adding that it would contribute to transform Turkey into a R&D center.

Şimşek stated that current regulation that enforces a company that uses documents with fake or misleading- documents cannot benefit from any tax incentive or government support for six years. New regulation will prevent companies that make “minor faults” (sometimes unknowingly) in their documentation from being excluded from the incentives scheme and it will remove obstacles against larger investments. 

The third regulation concerns the reduction of energy imports, one of the main causes of the current account deficit. Şimşek recalled that they introduced a regulation last month that enabled some facilities to generate electricity without having to apply for a license. If investors fulfill commitments during the pre-permission period, they will obtain the right of usage or easement (right of renting) of the renewable energy-based power generation facilities, according to the new regulation, he said. For 500 kilowatt installed power facilities the investors will have these rights for 20 years as for facilities between 500 kilowatt and 1 megawatt installed power there will be a rise to 30 years, he said. “So, our domestic resources will rise and energy imports will decrease. It will directly trigger the reduction of the current account deficit,” Şimşek said.