STATE INCENTIVES 1. The Investment Incentive System in Turkey The investment incentives scheme was amended in 2006 to promote investment in manufacturing services and the energy sector as well as to encourage exports. Local and foreign investors have equal access to these incentives.     1.a. General Investment Incentive Regime The general incentive regime is mainly a tax benefit program yet in certain cases there are credit possibilities. It is applied varyingly according to the location, scale, and subject of the investment.     The Major Incentives Instruments • Exemption from Customs Duties and Fund Levies;     • Custom Tax exemption for locally purchased or imported machinery and equipment     • VAT Exemption for Imported or Locally Purchased Machinery and Equipment;     • VAT exemption for locally purchased or imported machinery and equipment for projects     Interest Support: The Treasury covers selected parts of the investment credits’ interest rate.  Interest support is provided for     • SME’s     • R&D Projects     • Environmental Projects     • Projects in 50 Prioritized Development Provinces     1.b Incentives for Priority Development Regions Incentives are provided in 50 provinces Incentives provided are as below;     • Free Land     • Income Tax Relief     • Employer’s Share for Social Security Relief     • Energy Support Free land allocation provided in 4 provinces INCENTIVE TYPE FOR COMPANIES OIZ’s AND INDUSTRIAL ZONES OTHERS INCOME TAX RELIEF 100 % 80 % COMPANSATION FOR THE EMPLOYERS SOCIAL SECURITY CONTRIBIUTION 100 % 80 % ENERGY SUPPORT VARIES MIN. 20% - 50% VARIES MIN. 20% - 50% FREE LAND ALLOCATION AVAILABLE AVAILABLE   1.c Incentives Granted to Small and Medium Sized Enterprises (SME Incentives) • Custom Duties Exemption • VAT Exemption • Interest Support KOSGEB support of SME’s; The Small and Medium Industry Development Organization (KOSGEB) makes significant contributions to strengthen SME’s by various support instruments in financing, R&D, common facilities, market research, investment site, marketing, export and training.     1.d Research and Development Supports TÜBITAK (Scientific and Technological Research Council of Turkey) and TTGV (Turkish Technology Development Foundation) both reimburse and/or grant R&D related expenses and capital loans for R&D projects. Projects eligible for TÜBITAK Incentives cover: • Concept Development • Technological Research and Technical Feasibility Research • Laboratory Studies in the transformation of a concept to a design • Design and Sketching Studies • Prototype Production • Construction of pilot facilities • Test production • Patent and License studies • Activities related to post-sale problems stemming from product design     1.e Technology Development Zones’ Supports • Infrastructure facilities are provided. • Profits derived out software and R&D activities are exempt from income and corporate taxes until 31.12.2013. • The wages of researchers, software and R&D personnel employed in the zone are exempt from all taxes until 31.12.2013. • VAT exemption during the exemption period of income and corporate taxes is provided for IT specific sectors. • Exemption from customs and duties as well as fund levies.     1.f State Incentives for Export The principle aims of this scheme are to encourage export and to increase the competitiveness of firms in international markets. This specific package covers mainly R&D activities, market research, participation in exhibitions and international fairs, expenditures for patents, trademarks and industrial design.