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VAT Exemption in the Investment Incentive System

🧾 What is VAT Exemption in the Investment Incentive System?

The investment incentive system offers many important supports to lighten the burden on investors. Among these supports, one of the most common and fastest to provide benefits is the Value Added Tax (VAT) exemption. This support offers a significant cost and cash flow advantage, especially for entrepreneurs making machinery and equipment investments.

Definition of VAT Exemption

VAT exemption means that Value Added Tax (at rates such as 10% or 20%) is not collected at all on purchases of goods and services within the scope of an investment incentive certificate. The investor does not pay VAT for items such as new machinery, equipment, and software purchased under the certificate. This provides a significant cash flow advantage and cost reduction during the investment process.

Which Expenses Are Covered and Who Can Benefit?

VAT-Exempt Expenditures

The following purchases are within the scope of the VAT exemption under the incentive certificate:

Expenditure Item Important Note / Scope
⚙️New Machinery and EquipmentAll new machines that are the main components of the investment are covered.
💻Software and Intangible RightsThe sale and leasing of rights such as licenses and patents are within the scope of the exemption.
🇹🇷Domestic PurchasesValid for investment goods purchased from a seller in Turkey.
🚢Import PurchasesVAT is not collected at customs for machinery and equipment imported from abroad.
🚫Used MachinerySecond-hand or used machinery and equipment cannot benefit from this support.

👥 Who Can Benefit? A Universal Support!

The VAT exemption is the most inclusive support of the investment incentive system:

  • ✅ It is valid for all investors who receive an investment incentive certificate.

  • ✅ It is automatically applied regardless of the investment system (Target, Priority, Strategic, Technology, Local).

  • ✅ It is valid in all provinces, including Istanbul; there is no regional limitation for this support.

How Does the Application Process Work?

Benefiting from the VAT exemption is a fairly simple and direct process:

  1. The Incentive Certificate is Obtained: The investor first obtains the investment incentive certificate from the Ministry of Industry and Technology.

  2. The Certificate is Presented: When purchasing machinery or services under the certificate, a copy of this certificate is presented to the seller.

  3. A VAT-Free Invoice is Issued: The seller issues an invoice with the note "Exempt from VAT under Article 13/d of the VAT Law No. 3065" without collecting VAT.

  4. Monitoring via the System: Purchase and sale documents are tracked and reported to the Ministry via the E-TUYS system.

  5. Application in Imports: In import transactions, the incentive certificate is presented to the relevant customs administration along with the customs declaration, and VAT is not collected.

Since no VAT payment is made in this process, the investor does not need to request a VAT refund later.

⚠️ Points to Consider

  • The VAT exemption is only valid for items in the machinery and equipment list that have been approved under the incentive certificate.

  • This right cannot be used for expenditures outside the scope of the certificate (e.g., raw materials, consumables).

  • For a VAT-free purchase to be made, the transaction must be completed within the validity period of the incentive certificate.

  • Used machinery or second-hand equipment cannot benefit from this support.

Instant Cash Advantage in Investment

VAT exemption is one of the most common and easily applied supports of the investment incentive system. It provides the investor with a significant tax advantage during the investment process, reducing costs and protecting working capital. For entrepreneurs making machinery and equipment investments in particular, benefiting from this support is of great importance in shortening the investment's payback period.

We are by your side with our expert consultancy to ensure you benefit fully and completely from the VAT exemption in your investment, and to ensure all your eligible machinery and software are within the scope of the certificate.