Free Trade Zones Law

Section One

General Provisions

Free Trade Zones Law:

Law No: 3218

Approved: 6 June 1985

Issued: 15 June 1985

Objectives and Content

General Provisions

Article 1 : This law encompasses the matters related to the establishment of free trade zones; the determination of their location and boundaries; their operation; and the establishment of the installations and facilities with in the zone; with the objective of increasing export-oriented investment and production in Turkey accelerating the entry of foreign capital and technology; procuring the inputs the economy in an economic and orderly fashion; and increasing the utilization of external finance and trade possibilities.

Authority

Article 2 : The Council of Ministers is empowered with the authority to determine the location and the boundaries of the free trade zones. The Council of Ministers grants permission for the establishment and operation of free trade zones to public institutions and agencies, resident or non-resident real persons or legal entities.

Definitions

Article 3 : In the implementation of this Law:

a) "Operator" signifies the public institution and agency; the resident and nonresident real persons or legal entities operating the trade zone.

b) "User" signifies the real and legal person bearing an Operating License and having a specific place of business within the free trade zone.

c) "Foreign Exchange" refers to all currencies, or all types of accounts or bills, considered as being convertible by the Central Bank of the Republic of Turkey.

Activities

Article 4 : All kinds of industrial, and commercial and service activities approved by the Economic Affairs Supreme Coordination Council may be carried on within the free trade zones.

Any authority regarding prices, quality and standards granted to public institutions and agencies by laws or other legislation will not be valid in free trade zones.

Section Two

Organization of the Free Trade Zones

Principles of The Free Trade Zones

Article 5 : Land and facilities needed within the declared free trade zones can be acquired pursuant to the provisions of the Expropriation Law.

Domestic or foreign real persons or legal entities may be active within the free trade zones on the condition that an operating license has been granted to them by the Prime Ministry, Undersecretariat for Treasury and Foreign Trade (General Directorate of Free Trade Zones). All other permits and licenses regarding the use of land as well as the design, construction and utilization of buildings and installations within the free trade zones shall be issued and supervised by the regional directorate.

Security services for the free trade zones shall be provided by the police.

Exemptions and Incentives

Article 6 : The free trade zones are deemed to be outside of the customs borders.

Legislative provisions pertaining to taxes, levies, duties and to customs and foreign exchange obligations are not applicable in these zones.

During the investment and production stages of their activities, operators and users can be qualified for incentives to be determined by the Council of Ministers.

Income and revenues generated in the free trade zones through activities of real persons and legal entities with full or limited tax liability in Turkey, are exempt from income and corporate taxes, provided that the transfer of such income and revenues into Turkey is documented pursuant to foreign exchange regulations.

The FTZ Fund

Article 7 : In order to establish, develop and maintain the free trade zones, to support research and training activities, to construct social facilities, to provide incentives for users and to promote the purchase of goods from Turkey, a "Free Trade Zones Establishment and Development Fund" has been established at the Central Bank of Republic of Turkey.

Fund resources are as follows :

a) Fees paid for operating licenses and permits

b) Fees paid in advance amounting to 0.5 percent of the CIF value and the FOB value, respectively, of goods entering and leaving the zone.

c) Payments specified in the contracts made with real persons and entities managing the free trade zone.

d) Other income.

Goods destined to the free trade zone that originate from Turkey and goods utilized during the investments and construction stages, as well as instruments, tools and equipment brought into the free trade zone for repair and maintenance purposes, are exempt from the payments specified in paragraph (b) of this Article.

Procedures and principles governing Fund collection and disbursements are specified by regulations. This Fund is administered by the Prime Ministry. The Fund is audited by the Superior Audit Council of the Prime Ministry.

Section Three

Goods and Services

Goods in the Free Trade Zones

Article 8 : Trade conducted between the free trade zones and other regions of Turkey is subject to the foreign trade regime. Upon request, goods originating from Turkey of less than 500 US Dollars value may be exempted from export procedures. The foreign trade regime is not applicable for trade conducted between the free trade zones and other countries or free trade zones.

Foreign Exchange and Services

Article 9 : All payments related to free trade zone activities are made in the form of foreign exchange. The Council of Ministers may decide that payments be also made in the form of Turkish Lira.

Shipping and port services in the free trade zones are provided either by the operator or assigned to public institutions and agencies or to real or legal persons.

Section Four

Labor and Social Security, Repealed and Inapplicable Provisions, Regulations

Labor and Social Security Provisions

Article 10 : Foreign managers and qualified personnel can be employed by firms operating in the free trade zones.

Related principles are specified by the governing statutes.

The provisions of the social security regulations of the Republic of Turkey re applied in the free trade zones.

Repealed Provisions

Article 11 : The Free Trade Zones Law No. 6209 dated December 21, 1953, is hereby repealed.

Inapplicable Provisions

Article 12 : In the free trade zones, all provisions of Municipality Law No. 1580 except paragraphs 5,22,25,32 and 47 of Article 15; Passport Law No. 5682; Law No. 5683 for Foreigners Traveling and Residing in Turkey and Law No. 2007 on Professions and Services Allocated for Turkish Citizens including its Annexes and Amendments; Foreign Investment and Encouragement Law No. 6224; Law No. 2677 on the Implementation of Duties and Services of at the Civil Airports, Ports and Border Gates, General Accounting Law No. 1050; Supreme Court of Finance Law No. 832 provisions the State Bidding Law No. 2886 and provisions of other laws contrary to this Law shall not be applicable.

Governing Statutes Regarding Implementation

Article 13 : Matters in this Law of which regulation has been left to the governing statutes as well as the organization, duties, authority and responsibilities of those operators who will be active in the free trade zones, and the granting and cancellation of the operating licenses that will provided to these operators and users; the maintenance of their industrial and commercial registers; the payments they will make to the Fund; the principles governing the conduct of activities in the free trade zone, the zone entry permits and identity cards permission for residence; and work principles and other matters pertaining to the operation of the free trade zones will be determined by the governing statutes.

Provisional Article 1 : For a period of 10 years following the commencement of operations in the free trade zones, the strike, lockout and mediation provisions of Law No. 2822, dated May 5, 1983, shall not be applicable in the zones.

However, any disputes arising within the context of collective bargaining during this period shall be resolved by the Supreme Arbitration Council.

Provisional Article 2 : This Law will be effective for each free trade zone upon the commencement of that free trade zone operations.

The date of commencement of operations shall be when the construction of the perimeter fence tower and gate have been completed and the regional directorate, police and customs units have assumed their duties.

Article 14 : This Law shall come into effect on the date of its publication.

Enforcement

Article 15 : The provisions of this Law shall be enforced by the Council of Ministers.