Amendments on the Free Zones Law
The amendments on the Free Zones Law (“FZL”) numbered 3218 for facilitating investments and decreasing the financial burden of the public were published in the Official Gazette of 24.02.2017 numbered 29989. The details regarding these amendments are provided below:
Expropriation
Within the scope of the amendment a provision was added to the 5th Article on organization of free zones which determines that the Council of Ministers may decide for urgent expropriation of lands and facilities that are declared as a free zone. Expropriation procedures are undertaken as per the Expropriation Law numbered 2942 under Turkish law. In case of an urgent expropriation, the expropriation is made within seven days via the court’s valuation and therefore the remaining expropriation proceedings may be completed afterwards this valuation.
Also for land and facility expropriation, the Council of Ministers may decide that the expropriation costs and other expenses required by expropriation procedures will be reimbursed by the operator that requested the expropriation.
With the additional provision to the Article 5 of the FZL, it is set out that the lands that are fully owned by the state including the facilities and properties above may be leased or a certificate of occupancy may be provided for the same period.
Exemptions and incentives
Legislative provisions pertaining to customs and foreign exchange obligations are not applicable in the free zones. With the additional provision to the Article 6 on exemptions and incentives, the users and operators that are exempted from the income or corporate tax shall continue to benefit from the nontax incentives determined by the Council of Ministers. For the nonexempted users and operators, it is determined that tax and nontax incentives outside the scope of the FZL may be benefitted from pursuant to the related legislation.
Revenues and expenditure of free zones
As per Article 7 of the FZL some revenues such as fees to be collected for operating licenses and permits, fees to that are calculated as per CIF or FOB value of goods are deposited in the special account opened with the Central Bank of the Republic of Turkey and afterwards deposited in the account of the Treasury.
With the amendment on the Article 7 it is determined that the Council of Ministers is authorised to decrease, differentiate or increase the ratios within this article up to the legal ceiling as per zone, sector, area of activity or type of investment for strategic, large scale or priority investments and the investments that are decided to be supported on a project basis due to their sector or qualifications.
Operation contracts
The additional provision to the FZL regulates the renewal, amendment and extension of operation contracts. Within this scope, the operation contracts may be extended before the end their period by the Ministry of Economy if the operator performed its undertakings within the contract and the Ministry’s investment requests for the future are accepted.
For the free zones where the period of operation will end and the conditions defined above are not met, a permit of operation may be provided via decision of the Council of Ministers upon the proposal of the Ministry which should not be more than 49 years. The details regarding this Article shall be set out by a regulation.
Free zones abroad
With the amendment on the FZL, it is set out that the Council of Ministers is authorised to determine the countries where free zones, special zones, foreign trade centres and logistics centres will be established and these zones may be established and operated by companies incorporated in Turkey.