The most important advantage given to investors in the free trade zones was the exemption from all kinds of taxes. Profits derived from commercial activities in the zones were exempted from corporate and any other income tax. Furthermore, salaries paid to employees working in the zones are exempted from income tax.

However, limiting the incentives that are applicable to free trade zones had always been an issue on the agenda since many years. Finally, the expected changes have been introduced on 6 February 2004, eliminating the corporate income tax exemptions granted to FTZ. However, for the purpose protecting the gained rights, a transition mechanism has been introduced for a limited time for the taxpayers who are already operating in FTZ. Taxpayers possessing an operating license as of 6 February 2004 will benefit from the income tax exemptions for the duration of their licence. Furthermore, the salary income tax exemption will remain in effect until end of 2008.

The earnings from manufacturing activities of existing licence-holders in FTZ will be exempt from corporate income taxes until the end of year in which Turkey becomes a full member of the European Union. This exemption will also apply to the earnings of new investors from the sale of goods manufactured in FTZ. The earnings from the sale of the goods manufactured in FTZ to Turkey may also benefit from the exemption.

The VAT exemption provided to FTZ is still applicable with an indefinite term.

FTZ earnings can be transferred freely to any country, including Turkey, without any prior permission from a competent authority.

Free Trade Zones (FTZ), even though established within the political boundaries of Turkey, are considered and treated as outside of Turkish customs territory. Hence, sales from FTZ to Turkey are treated as imports and VAT and customs duty are charged depending on the country of origin of goods imported. The sales made from Turkey to zones are treated as exports.

Contrary to the applications of most free zones of other jurisdictions, there are no restrictions on import of goods from FTZ into domestic market.

There is a fee payable at a rate of 0.5% over the CIF values of goods that are brought into zones from abroad and CIF values of the goods imported to Turkey from FTZ.

Both local and foreign investors are required to obtain an operation license in order to operate in a FTZ, from the General Directorate of Free Trade Zones, Undersecratariat of Treasury. The application fee for obtaining the operation license is USD 5,000, which is refunded in case of refusal of the application.

The validity period of operation licenses are granted for 15-30 years, which can be extended further at the expiration of the license.

Investors who receive an operation license pay rental fees ranging between USD 5-11/m 2/month for office, warehouse, factory buildings and USD 4/m 2/month for open storage areas in the FTZ. It is possible for investors to build their own factories/premises in some FTZ.

Infrastructure of any FTZ is comparable with the international standards. Loading, unloading and transport services for goods coming to a zone are performed by the operator company of the FTZ. Loading/unloading fees are around USD 5/ton.