New Investment Incentive System in Türkiye Under Decree No. 9903: What Foreign Investors Need to Know

Türkiye’s investment incentives framework was substantially restructured through Decree No. 9903, published in the Official Gazette on 30 May 2025. The reform reorganised the incentive architecture around technology upgrading, regional development, and strategic capacity building, while maintaining the “investment incentive certificate” as the principal gateway to benefits. For foreign investors, the key issue is not merely the existence of incentives, but whether the investment can be classified correctly, certified on time, and kept compliant throughout implementation.

1) The new architecture: programme-based incentives

Decree No. 9903 is built on three overarching pillars:

1. Türkiye’s Century Development Initiative
2. Sectoral Incentive System
3. Regional Incentives

Within the Development Initiative, three programme tracks are commonly referenced: Technology Initiative, Local Development Initiative, and Strategic Initiative. Separately, the Sectoral system typically distinguishes between Priority Investments and Targeted Investments. Regional incentives then overlay these tracks depending on the investment location and its classification.

From a deal perspective, this structure matters because it shifts incentives from a one-size-fits-all approach toward a more selective model in which the “programme label” materially affects the tax and financial support profile.

2) What support instruments may be available

Foreign investors usually evaluate incentives through the lens of CAPEX relief, tax relief, and labour-cost relief. Depending on the investment type and region, Decree No. 9903 contemplates support instruments such as:

• VAT exemption (especially important for machinery and equipment procurement)
• Customs duty exemption (critical for imported equipment)
• Tax deduction / discounted corporate tax (often the largest IRR driver)
• Interest or profit-share support (financing cost relief in eligible projects)
• Machinery support (a programme-based contribution mechanism for qualifying equipment)
• Investment site allocation (particularly relevant in land-intensive industrial projects)
• Employer social security premium support (notably within regional incentive logic)

For investors, the practical implication is that incentives are not simply “claimed”; they must be engineered into procurement, invoicing, project scheduling, and reporting.

3) Eligibility thresholds and compliance constraints to model early

Decree No. 9903 imposes filters that can determine whether the project qualifies and how much value can be captured. Key examples include:

• Minimum fixed investment thresholds (varying by region)
• Rules for leasing-based machinery/equipment procurement (minimums and structuring constraints)
• A defined application horizon (applications evaluated within the decree’s scope until a set end date)
• No retroactive coverage as a general rule (spend incurred before application is typically outside the incentive scope)
• Limitations on intangible assets (e.g., licences/know-how counted within fixed investment up to capped ratios in standard cases)

An investor-grade compliance plan should treat these not as legal footnotes but as financial variables: if a portion of spend becomes “non-qualifying,” the expected incentive value can fall materially.

4) The incentive certificate process is digital: process discipline matters

Decree No. 9903’s implementation is documentation-intensive and system-driven. In practice, incentive certificates and related procedures are handled through a digital workflow. For foreign investors, this increases the importance of:

• consistent procurement documentation,
• traceable invoices and customs records,
• equipment lists aligned with certificate scope,
• timely notifications and progress reporting, and
• audit-ready filing discipline.

Incentives often fail not because the project is ineligible, but because the execution file cannot demonstrate eligibility and compliant spend.

5) Tax deduction design: programme-driven modelling

Tax incentives are frequently the most valuable component in the package, but they require careful modelling. Under the decree’s logic, discounted corporate tax applies until the “investment contribution” ceiling is reached, and the applicable contribution rate depends on the selected incentive track. A sophisticated investor will therefore evaluate:

• whether the group has sufficient taxable profits in the relevant period to utilise the benefit,
• whether restrictions exist on using the discount against profits from other activities, and
• how the incentive interacts with financing structure, depreciation profile, and projected cash flows.

This is why incentive analysis should be integrated into the financial model from the term-sheet stage, not treated as a post-signing administrative step.

6) Machinery support: why sponsors and lenders care

Machinery/equipment support mechanisms can be attractive, but only if procurement and acceptance are aligned with incentive definitions. In practical terms, this requires:

• a certificate-consistent equipment list (with clear categorisation),
• delivery/acceptance milestones that match reporting requirements, and
• a disciplined change-order approach (because scope changes can jeopardise equipment eligibility).

For foreign investors, the “bankability” of an incentive is directly tied to whether the project contracts (EPC, supply, installation, commissioning, and acceptance documentation) produce an audit-ready narrative.

7) Transitional considerations for pipeline projects and acquisitions

Foreign investors acquiring projects or entering a JV mid-stream should treat incentives as a due diligence workstream. The value of an incentive certificate can depend on:

• which regime applies to the certificate,
• whether the certificate can be adapted to a revised project scope,
• the compliance history (notifications, progress reports, deviations), and
• whether any non-qualifying spend has already occurred.

This is particularly important in M&A, because incentive value can be priced into the acquisition yet later lost due to compliance defects.

8) Practical checklist for foreign investors

To reduce “incentive execution risk,” investors should implement a structured workflow:

1. Classification memo: determine the correct incentive track and confirm key conditions.
2. Threshold verification: validate minimum investment amounts and any caps affecting your spend profile.
3. Location strategy: model regional differences (labour supports, site allocation feasibility, operational constraints).
4. Document architecture: design a digital evidence file from day one (procurement, invoices, customs, acceptance).
5. Contract alignment: ensure EPC and procurement contracts mirror incentive-critical definitions (equipment lists, delivery terms, commissioning, acceptance, variations).
6. Ongoing compliance calendar: build reminders and internal approvals for reporting, changes, and milestone submissions.
7. Exit-readiness: if the project may be refinanced or sold, maintain a diligence-ready incentive file to preserve value.

Conclusion

Decree No. 9903 reorganises Türkiye’s incentive landscape in a way that rewards early classification discipline and high-quality compliance execution. For foreign investors, the incentives are best approached as a structured programme: align the business plan, procurement strategy, and contract package with the certificate scope, and manage compliance as a core governance function rather than an administrative afterthought.