Unless otherwise stated, the legislation applied throughout the country will also be applied in free zones. On the other hand, in accordance with the Free Zones Law No. 3218, the legislation that will not be applied in the zones are as follows

Provisions of the legislation on customs and foreign exchange obligations,

• Law No. 4817 on Work Permits for Foreigners,
• Law No. 4875 on Foreign Direct Investment,
• Law No. 5393 on Municipalities, except for the provisions on death and fire, the construction and repair of sewers, the provision of drinking, domestic and industrial water and the supervision of gas, water and electricity consumption, Passport Law No. 5682,
• Law No. 5683 on the Residence and Travel of Foreigners in Türkiye,
• Provisions of other laws contrary to the Free Zones Law No. 3218,
• Transactions specified in the second paragraph of Article 5 of Law No. 3218,
• Provisions of the State Tender Law No. 2886

Goods shipped from Türkiye to the zone and goods shipped from the zone to Türkiye are subject to the foreign trade regime and are considered exported/imported according to this regime. Some goods that are brought to the zone with the approval of the Regional Directorate with a total invoice value not exceeding 5.000 US dollars or equivalent Turkish Lira as a batch, originating from Türkiye, without being a direct input of production, sent to be consumed or used in free zones, may optionally not be subject to the export process.

The foreign trade regime is not applied between free zones and other countries and free zones.

In free zones; all kinds of industrial, commercial and service-related activities to be deemed appropriate by the High Planning Council can be carried out.

Domestic or foreign real or legal persons may operate in free zones provided that they obtain a license from the Ministry of Trade.

The duration of the operating license of investor users is 45 years for production activities and 30 years for other activities. The duration of the operating license of tenant users is 20 years for production activities and 15 years for other activity subjects.

SBIF is a document issued by the users operating in the free zone in relation to all kinds of purchase and sale transactions made abroad, domestically or to users within the free zone. In intra-zone sales of goods, the SBIF is issued by both the buyer and the seller.

All payments related to the activities in free zones are made in foreign currency. The Council of Ministers may also decide to make payments in Turkish lira. However, the prices of goods and services, labor wages and rents during the investment in the zone may be paid in Turkish lira. All payments to the employees of the Regional Directorate and other public institutions and organizations in these zones shall be made in Turkish lira.

The scope of the corporate tax exemption in free zones varies according to the date of obtaining the operating license and the subject of activity.

The exemption is only related to the earnings derived from the activities carried out in free zones. Therefore, taxpayers having branches in free zones and taxpayers having their legal or business headquarters in free zones are not covered by the exemption for the income derived from the activities carried out outside these zones.

Corporate taxpayers operating in free zones are required to withhold tax on the interest accrued on deposit accounts in banks or other financial institutions in free zones and repo earnings in accordance with the provisions of the legislation in force. In the event that these earnings are considered within the scope of the exemption, the taxes paid through deduction will not be subject to offset and/or refund.

Foreign exchange and maturity difference income related to receivables arising from the activities carried out in free zones within the scope of the exemption are also considered within the scope of the exemption.

Likewise, the income obtained as a result of temporarily utilizing the revenues obtained within the framework of the activities carried out in free zones in deposit accounts or repo transactions in free zones until they are used in the payments to be made within the framework of the activities carried out in free zones can also benefit from the said exemption. Apart from this, it is not possible to extend the exemption to interest, repo and similar non-operating income, even if it is obtained in free zones, since this exemption is limited only to the earnings derived from the activities carried out in these zones.

In terms of labor law legislation, persons and institutions operating in free zones do not differ from other persons and institutions operating in Türkiye. The users, their workplaces in the zones and the employees working in these workplaces are subject to the provisions of the labor legislation of the Republic of Türkiye under the supervision and control of the Regional Directorates.

The minimum wage and overtime working principles stipulated for the workplaces within the borders of Türkiye shall also apply to the workplaces of the Zone Founder and operator or the operator and the users.

Users are obliged to obtain a Foreign Personnel Labor Certificate for foreign managers and qualified personnel they need to employ in the Zone.

Pursuant to the free zones legislation, the provisions of the Social Security Legislation of the Republic of Türkiye, including foreign nationals, shall apply to the users operating in the zone and the workers working with them according to an employment contract. However, if there are agreements between Türkiye and other countries on social security, the provisions of these agreements shall also be applied.

Except for the branches of full liability income or corporate taxpayers operating in the free zone and the branches of real or legal persons operating in the free zone outside the free zone but within the borders of Türkiye, it is possible for real or legal persons operating in the free zone to make their book records in any foreign currency other than Turkish currency (the exchange rate of which is determined daily by the Central Bank of the Republic of Türkiye)

In terms of determining the earnings that will benefit from the exemption, taxpayers are required to keep their records in a way that they can separately determine the earnings obtained from the activities that fall within the scope of the exemption and the activities that will not be considered within the scope of the exemption.

Taxpayers operating in free zones are obliged to submit Ba-Bs notifications. In terms of branches, these notifications will be submitted by the legal centers of these taxpayers by combining the headquarters and branch information. However, taxpayers whose legal and business headquarters are abroad and have a branch or representative office exclusively in the free zone will only report the purchases/sales of goods and/or services of the branches operating in the free zone without taking into account the headquarters information in the notification forms.

Taxpayers operating in free zones do not differ from other taxpayers operating in Türkiye in terms of tax inspections.

Goods sold from Türkiye to free zones are subject to the export regime and are exempt from VAT in accordance with the VAT Law.

The delivery of goods to which free zone provisions are applied is exempt from value added tax.

According to Article 17/4- (ı) of the Value Added Tax Law, services provided in free zones are exempt from value added tax.

Goods to which free zone provisions are applied are exempt from SCT. In general, it is possible to evaluate these goods as goods brought from abroad to the free zone and goods delivered within the free zone or from one free zone to another free zone.

Is there an Special Consumption Tax (SCT) application for the delivery of goods from free zones to domestic companies?

Trade between free zones and other parts of Türkiye is subject to the foreign trade regime. In other words, goods sold from free zones to Türkiye are generally within the scope of the import regime and are subject to SCT.

Pursuant to the last paragraph of Article 6 of the Free Zones Law No. 3218, operators and users may benefit from non-tax incentives to be determined by the Council of Ministers during the investment and production phases.

Until the end of the taxation period of the year that includes the date of full membership to the European Union, the transactions carried out by the taxpayers operating in free zones, provided that they are related to the activities carried out in these zones, are exempt from fees and the papers issued regarding these transactions are exempt from stamp tax. In the application of the stamp tax and fee exemption, the type of activity license and the date of obtaining the activity license have no effect.