Strategic Investment Incentives: Turkish Case

Abstract

The three main instruments of fiscal policy are tax, expenditure and debt. An example of fiscal policy in terms of expenditure is state aids, which is frequently used by an intervention of the state. State aid is a concept that includes expressions such as the incentive and support measure, which is common in daily language.The state aid is determined support given to the production of certain goods and services to a specific region, sector, business or group of enterprises by using public resources. In Turkey, in addition to the support given in previous years, strategic investment incentives started to be implemented in 2012 with 3305 No. “Decisions About State Aid for Investment”. Strategic investment incentives are a spending policy aimed at reducing the current account deficit and eliminating import dependency in the long run, which is applied to products with high import dependency. This study aims to explore the impact of strategic investment incentive system on investments by examining the strategic investment practices regarding 3305 No. “Decisions About State Aid for Investment”.66.503 incentive certificates were issued between 2012 and 2015, of which only 48 are strategic investment incentives. On the other hand, 13%(138.8 billion TL) of the total capital incentive of 1 trillion TL is strategic investmnet incentives. In this context, within the scope of strategic investment incentives(2012-2018), a survey will be carried out with 48 enterprises. The survey included effects of incentives on investors, operation and result of strategic investment incentive system, suggestions. As a result, policy implication will be presented about the applicability of the strategic investment incentive system and whether the tax advantages have reached their goal.