When doing trade with abroad, one of the concepts we frequently encounter is free trade zones. So, what exactly is a free trade zone? What is its purpose? What are its advantages? And more importantly; let’s explore answers to confusing questions like “Which one is not a free trade zone?” together.
What is a Free Trade Zone?
Free trade zone (shortly FTZ) refers to special areas within the country borders where, despite being inside the country, customs clearance is not applied, and export and import transactions are carried out with certain facilitation. In these zones, trade is enabled to occur more freely and quickly. The customs duties, VAT, or certain trade restrictions normally applied do not apply here. This situation helps businesses reduce costs and gain a competitive advantage. The aim of free trade zones is to promote production, increase exports, and attract foreign investors to the country. Thus, economic growth is achieved, and employment opportunities increase.
What Activities Can Be Done in Free Trade Zones?
Free trade zones are not just places where goods are imported and exported; they are also areas where many activities such as production, packaging, assembly, maintenance, repair, and even software development can be carried out. Moreover, profits earned in these zones are provided with certain tax advantages under specific conditions. For example, a textile company can establish a factory in a free zone, import fabrics, produce products here, and directly sell abroad. And throughout this process, many taxes and procedures are exempted.
What Are the Advantages of Free Trade Zones?
Free trade zones offer many advantages that make them attractive to investors. The most notable of these is 100% tax exemption; in some cases, exemption from income and corporate taxes is also possible. The exemption from customs duties and VAT provides a significant reduction in costs, offering a competitive edge. Free trade zones facilitate free entry for foreign capital, encouraging international investments. These zones allow the free transfer of income; this makes it easier for investors to transfer their profits abroad in foreign currency. Additionally, offering long-term lease guarantees (30 years or more) enables investors to plan long-term. Another important factor that simplifies business processes for investors is the minimal bureaucratic procedures. This speeds up operations and makes investment implementation easier. Lastly, free trade zones increase financial flexibility for investors by allowing transactions in Turkish Lira or foreign currency.
Free Trade Zones in Turkey
Turkey has various free trade zones serving different sectors and strategically located. Some of these are:
- İzmir Aegean Free Zone
- Mersin Free Zone
- Istanbul Leather Free Zone
- Istanbul Atatürk Airport Free Zone
- Antalya Free Zone
- Bursa Free Zone
- Kayseri Free Zone
Which is Not a Free Trade Zone?
Now, let’s move on to one of the frequently asked questions: Which is not a free trade zone? This question often appears in exams or official documents. The point to pay attention to is this: Not every port or industrial zone is a free trade zone. For example, an OSB (Organized Industrial Zone) or a technology development zone does not fall under the scope of FTZ. Because these areas are not independent of customs, and even if they have tax advantages, they are not classified as free zones.
- Organized Industrial Zones
- Technology parks
- In-port storage areas
- are not free trade zones.
Who Are Free Trade Zones Suitable For?
If you are engaged in production, have export targets, or plan international investments; free trade zones can offer serious opportunities for you. These zones provide a competitive advantage to businesses through customs duty exemptions and other financial benefits. However, there are some legal requirements and application processes to benefit from these advantages. The processes may seem complex at times, but the long-term benefits far outweigh these. In trade, knowledge is power. Especially if you want to operate in such special areas, getting good consultancy can give you a step ahead. Experts can inform you about the opportunities and advantages offered by free trade zones and help you develop the most suitable strategies. With the right information and guidance, you can maximize your potential.
Is Export Counted as a Free Trade Zone?
Yes, sales made from the free trade zone to abroad are considered direct exports. Additionally, sales made from Turkey to the free trade zone are also evaluated as exports. Therefore, these zones are very attractive for exporting companies.
Differences Between Free Trade Zones and Other Zones
The table below helps you see the differences between free trade zones and other types of zones more clearly:
| Feature | Free Trade Zone | Organized Industrial Zone | Technology Development Zone (TGB) |
| Customs Exemption | ✅ Yes | ❌ No | ❌ No |
| VAT Exemption | ✅ Yes | ❌ No | ❌ No |
| Export-Oriented | ✅ Yes | Partially | Partially |
| Right to Conduct Transactions in Foreign Currency | ✅ Yes | ❌ No | ❌ No |
| Income/Corporate Tax Advantages | ✅ In some activities | Regional support | ✅ For R&D |
| Establishment of Foreign Company | ✅ Allowed | ❌ Restricted | ❌ Restricted |
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