Newly Introduced Investment Incentive Regulation

The main features of the new investment incentive regulation

have officially started to rise to the surface with the press

conference held on 4 June 2009 by the Prime Minister.

Below, we will summarize the main features of the presentation

made by the Prime Minister related to "Subsidies on

Investment, Empowerment of Active Labor Force and Loan Guarantee

Support" in accordance with the recent information reflected

in the press in connection with the new investment incentive

regulation.

Please note that, the below information and explanations have

been totally gathered from the presentation made in the press

conference of the Prime Minster and the recent information

reflected in the press related to the aforesaid regulation. Please

be informed that no legal arrangement has been made in relation to

the subject and along with that, the draft regulation has not been

introduced to the public yet.

1. Overview and The Expected Regulation

   According to the explanations and the points stated in the

   presentation made by the Prime minister, it is understood that the

   regulation related to Subsidies on Investments is totally being

   renewed.

   In this respect in the following period the legislation related

   to Subsidies on Investment is expected to change substantially.

2. The Components of New Incentive Regulation

   According to the explanations made, it is anticipated that there

   will be 6 main components of the new investment regulation which

   are:

   Reduced Corporate Tax Rate

   VAT exemption

   Exemption on Social Security Premium (Employer's

   Portion)

   Customs duty Exemption

   Interest support

   Allocation of land for investments.

3. The Main Elements on Application

   Vat and customs duty exemption, out of the six main components

   are defined as common incentive components and are foreseen for all

   the investments regardless of sector and region under the framework

   of general conditions (with the updates on the limits and

   restrictions in the current legislation).

   The other components in the new investment incentive regime;

   Shall differ depending on the region and sector of

   investment

   and increased rates of incentive shall be applied on

   investments made on big projects on 12 areas of operation

   It is anticipated from the explanations that the investments

   that exceed a predetermined size are regarded as "Big Project

   Investment" and some increased incentive rates shall be

   applied for these "Big Project Investments".

   The following are regarded as Big Project Investments:

   Production of Chemical Materials

   Production of Refined Petroleum Products

   Transportation Services made through transit pipeline

   Production of Motor Vehicles (only for those function on land

   )

   Production of railway and tramway locomotive or carriage

   Port and port services

   Electronics Industry investments

   Production of medical equipment and sensitive and optical

   equipments

   Medicine Production

   Production of Air and Space Vehicles

   Investments related to Machine Investment

   Mining Investments

   In order to qualify an investment as "Big Project

   Investment", the investment amount should be higher than the

   predetermined investment threshold amounts which shall be

   determined by the council of Ministers. The relevant thresholds

   have been provided in the presentation of the Prime Minister

   however the exact amounts shall be official after the decision of

   the Council of Ministers.

   Below, the incentive rates and the...