Manufacturing in Türkiye for Chinese Firms

Chinese manufacturers usually look at Türkiye for three markets at once: a home market of about 86 million people (end of 2025), duty-free access to the EU for industrial goods in free circulation, and nearby markets in the Middle East, North Africa and Central Asia. As of November 2026, a new plant can apply for an investment incentive certificate under Presidential Decision No. 9903 (in force since 30 May 2025), can sit on an ordinary site, in an organised industrial zone (OSB) or in a free zone, pays 25% corporate tax in 2026 and, under Law No. 7582, 12.5% on manufacturing income from 2027 if it holds an industrial registry certificate. None of this is automatic. Each benefit depends on the product, the location and conditions checked case by case, so treat this page as general information, not legal or tax advice, and have the figures confirmed for your project.

Key facts

How do an ordinary site, an OSB and a free zone differ for a plant?

The first structural decision is the legal location of the factory, because it decides how imported inputs are taxed, how output is sold and which tax rules apply.

No location is better in general. The answer depends on where the output will be sold, how much of the bill of materials is imported, and how the incentive, free zone and corporate tax rules interact, so it is worth modelling with your accountant and customs broker before land or machinery is committed. The major cities guide describes the main industrial provinces.

What incentives can a plant apply for under Decision No. 9903?

Presidential Decision No. 9903 on State Aid in Investments was published in the Official Gazette on 30 May 2025. It replaced the 2012 incentive decision (No. 2012/3305) and the 2018 attraction-centres decision, and Communiqué No. 2025/1, published on 21 June 2025, sets out the application procedure. Certificates issued under the old decisions are generally handled under the rules they were issued under.

Programmes

As of November 2026, Invest in Türkiye groups the schemes as follows:

• Türkiye Century Development Move (Türkiye Yüzyılı Kalkınma Hamlesi): a technology programme for medium-high and high-tech products on the Ministry of Industry and Technology's priority list, a local development programme for sectors the Ministry designates for each province, and a strategic programme for high value-added projects that reduce dependence on critical imported products.
• Sectoral and regional incentives: priority investments, for products on the Ministry's priority list, and target investments, regional support based on sector and local characteristics across Türkiye's six development regions.

Support instruments

• VAT exemption on machinery and equipment bought in Türkiye or imported under the certificate, and on some construction spending under certain programmes.
• Customs duty exemption on imported machinery and equipment listed in the certificate.
• Tax reduction: income from the investment is taxed at a reduced corporate tax rate until the tax saved reaches a set share of the investment (the "investment contribution rate"). Tax advisers' summaries of the decision put that share at about 20% to 50%, depending on the programme. The tax-law side of the reduction was also amended in July 2025 (Law No. 7555).
• SGK employer premium support: the state covers the employer's share of social security premiums on the additional jobs, calculated on the minimum wage, for a period that depends on the region and programme.
• Interest or profit-share support on investment loans under some programmes, within caps set in the decision.
• Land allocation on state-owned land, subject to availability, and under some programmes a machinery support payment.

Applying as a foreign-owned company

The certificate is issued to a Turkish taxpayer, so a Chinese group usually applies through its Turkish subsidiary, on the same terms as a Turkish-owned company. The application is filed online through E-TUYS, the Ministry of Industry and Technology's electronic incentive system, with an electronic signature. It describes the project: the products and capacity, the machinery list (imported and local), the planned jobs, the budget and the location. Spending made before the application is generally not covered, so the file should be in before machinery is ordered. When the investment is finished, a completion visa (tamamlama vizesi) closes the certificate and fixes the supported employment. An independent accountant or incentive specialist usually prepares the file; our market entry and business investment support coordinates the information from the Chinese side and explains each step in Mandarin. Filing does not mean approval: the Ministry decides on each project.

What do Türkiye's free zones offer a manufacturer?

Free zones (serbest bölge) are areas regulated by Free Zones Law No. 3218 that lie inside Türkiye but outside its customs territory. In 2026, 19 zones were operating, according to Ministry of Trade figures reported in the press. As of November 2026, the Ministry of Trade lists these main points for manufacturers:

• Corporate tax: manufacturers' income from selling goods made in the zone abroad is exempt from income and corporate tax. Under Law No. 7577 (published 17 April 2026), sales within the same zone and to other free zones are also exempt from 1 January 2026. Since 1 January 2025 (Law No. 7524), manufacturing income from sales into Türkiye is taxed at the standard rate, and income from trading and other non-production activities under operating licences issued after 6 February 2004 carries no exemption.
• Wages: wages paid by manufacturers that export at least 85% of the FOB value of the goods they make in the zone are exempt from income tax. If the ratio is not met, the withholding tax becomes payable.
• Other points: manufacturers' transactions are exempt from stamp duty, no real estate tax is charged on buildings or land in the zones, goods can stay without a time limit, profits can be transferred abroad or into Türkiye freely, and goods sold from Türkiye into a zone are treated as exports.

The exemptions run until the end of the tax year in which Türkiye becomes a full EU member. Goods inside a free zone are not in free circulation in Türkiye. A sale into Türkiye is an import, and for sales to the EU, whether an A.TR can be used depends on the goods first being released for free circulation; a customs broker should confirm the route at the design stage. To set up, a company applies to the Ministry of Trade for an operating licence (faaliyet ruhsatı) for a specific zone and activity, then leases space from the zone operator or builds its own facility. Domestic and foreign companies can apply.

What are the advantages of an organised industrial zone (OSB)?

Organised industrial zones (organize sanayi bölgesi, OSB) are planned industrial parks under Law No. 4562, run by their own management, with roads, power, natural gas, water and waste treatment in place. The zone management, rather than the municipality, generally issues building and occupancy permits inside the zone. Kocaeli (around Gebze) and Gaziantep, for example, have large OSB clusters. As of November 2026, Invest in Türkiye lists these advantages:

• no VAT on land acquisitions in the zone;
• an exemption from real estate tax for five years from the completion of the plant;
• an exemption from the municipal solid waste tax where the zone does not use the municipality's service.

Under the incentive rules, an investment in an OSB can, for some supports, be treated as if it were in the next less-developed region. Land is bought or leased from the zone management, and price, plot size and waiting times vary widely between zones, so checking several is normal.

What does the EU Customs Union cover, and where are its limits?

The EU-Türkiye Customs Union rests on Association Council Decision No. 1/95 and has applied since 31 December 1995. As of November 2026, it covers industrial goods and the industrial component of processed agricultural products. Basic agricultural products (a separate preferential regime), coal and steel (a separate free trade agreement), services and public procurement are outside it.

Free circulation and the A.TR

Goods move between Türkiye and the EU without customs duties if they are produced in Türkiye or, when imported from a third country, are in free circulation there: the import formalities have been completed and the Turkish duties paid. Türkiye applies the EU's common external tariff to most industrial goods. The proof is the A.TR movement certificate, and EU and Turkish customs have accepted electronically issued A.TRs since 8 July 2024. For a factory that uses Chinese components, this means the Turkish duty on those components is paid when they are released for free circulation. If they enter under a suspension regime such as inward processing, the A.TR position of the finished goods needs to be checked separately.

The limits

• Trade defence follows origin. EU anti-dumping and anti-subsidy duties on Chinese products apply to goods of Chinese origin even when they are shipped from Türkiye, and minor processing does not change origin. The EU has extended China anti-dumping duties to goods consigned from Türkiye, for example glass-fibre fabrics (Regulation (EU) 2022/1477), and it can apply its own trade defence measures to goods of Turkish origin.
• Anti-circumvention. Under Article 13 of Regulation (EU) 2016/1036, assembly in a third country can be caught where parts from the country subject to duties make up 60% or more of the total value of the parts and the value added is below 25% of the manufacturing cost. Documented local value added is what these tests look at.
• Third-country trade. The A.TR works only between Türkiye and the EU. Exports under Türkiye's own free trade agreements need preferential origin under those agreements, shown with documents such as EUR.1 or EUR-MED, and Türkiye has no free trade agreement with China.
• Product rules. The Customs Union removes duties, not conformity requirements. Products placed on the EU market must meet EU product legislation and carry CE marking where it is required, and the technical file has to support it.

What duties does Türkiye charge on Chinese inputs and goods?

Türkiye has no free trade agreement with China, so Chinese-origin goods pay the standard tariff and, on many lines, additional customs duty (ilave gümrük vergisi, İGV); some products also carry anti-dumping duty, and import VAT is charged on top. Vehicles are a visible example: a presidential decision published in June 2024 added a 40% additional customs duty, with a minimum of USD 7,000 per vehicle, on passenger cars imported from China, in force from 7 July 2024, as reported by Anadolu Agency and Bloomberg. Rates, minimums and exemptions change by decree, so the classification and landed cost of each input should be checked per HS code with a licensed customs broker before the sourcing plan is fixed. Our China-Türkiye import and export guide explains the duty layers in more detail.

How is manufacturing income taxed in Türkiye in 2026 and 2027?

• 2026: the general corporate tax rate is 25%, and exporters' export income is taxed 5 points lower.
• From 2027: Law No. 7582, published in the Official Gazette on 4 June 2026 (No. 33270), amended Article 32 of Corporate Tax Law No. 5520. Companies that hold an industrial registry certificate (sanayi sicil belgesi) and actually carry on production pay 12.5% on income derived exclusively from that production, for income earned in 2027 and later periods. The 5-point export reduction is not added on top of the 12.5% rate, and export income from goods bought from others is not production income. Implementing rules are in Corporate Tax General Communiqué No. 26 (July 2026).
• Dividends: profits paid to a non-resident parent carry 15% withholding, capped at 10% under the mainland China treaty.

How the 12.5% rate interacts with an incentive certificate's tax reduction, the domestic minimum corporate tax and the free zone exemption is a question for your accountant to model on real numbers. The tax basics guide covers the wider system.

How are Chinese manufacturing projects in Türkiye progressing?

The best-known example is BYD. In July 2024 the company signed an agreement with the Turkish government for an electric vehicle plant in Manisa, reported by Reuters at about USD 1 billion, with a planned annual capacity of about 150,000 vehicles, a research and development centre, and production then planned to start by the end of 2026. Construction was reported to have started in January 2026 (Turkish Minute), but in June 2026 Reuters reported that BYD had put the project on hold, citing EU tariffs, as relayed by AGBI. Check current reports for the plant's status before relying on it. More generally, a signed agreement is not a running plant, and announcements are worth reading with that in mind. Our article on Türkiye as an Asia-Europe bridge for Chinese businesses sets out the wider logic.

What are the steps to set up a plant in Türkiye?

1. Define the market and the bill of materials. Where the output will be sold (Türkiye, the EU, third countries) and which inputs come from China decide the customs and tax structure.
2. Set up the Turkish company. A limited company (Ltd. Şti.) or joint stock company (A.Ş.) typically takes about 2 to 3 weeks to register once apostilled documents are ready, and about 3 to 4 weeks to be operating with a bank account. Filings are made by an independent lawyer and the accounting by a mali müşavir; see company registration in Türkiye and our registration article.
3. Apply for the incentive certificate through E-TUYS before ordering machinery or starting construction.
4. Choose the site. Compare ordinary sites, OSBs and free zones; check zoning, utilities and whether the project needs an environmental impact assessment (ÇED) decision.
5. Obtain the industrial registry certificate once production starts; it is also the condition for the 12.5% rate from 2027.
6. Hire and register staff with SGK before each person starts work. Our article on hiring local staff covers contracts, payroll and social security.
7. Get work permits for Chinese managers and technicians. The visa exemption for mainland Chinese ordinary passports (since 2 January 2026) covers tourism and transit only. Work needs a work permit from the Ministry of Labour, and the employer must meet conditions such as the general ratio of five Turkish employees per foreign employee; see the work permit service and our work permit article.
8. Prepare export documentation. Commercial invoice, packing list, A.TR for the EU, EUR.1 or EUR-MED where preferential origin applies, and the CE technical file; declarations are filed by a licensed customs broker. Our import and export consulting coordinates this.

Turchina Group coordinates market entry and company set-up in Mandarin and English. Lawyers, accountants (SMMM or YMM) and customs brokers are independent professionals you engage directly, and no incentive, approval, timeline or tax saving can be promised in advance. To map your project against these rules, contact us.

Frequently asked questions

Can a Chinese-owned company get a Turkish investment incentive certificate?

Yes, through its Turkish company. The certificate is issued to a Turkish taxpayer, and a foreign-owned company applies through E-TUYS on the same terms as a Turkish-owned one; the Ministry of Industry and Technology decides each project on its merits.

Do goods made in Türkiye with Chinese components enter the EU duty-free?

Usually, if they are industrial goods in free circulation in Türkiye with an A.TR, which means the Turkish duty on the Chinese components has been paid. EU anti-dumping and anti-subsidy duties still follow the goods' origin, and assembly with little local value added can fall under the EU's anti-circumvention rules.

Is a free zone or an organised industrial zone better for a factory?

Neither is better in general. A free zone suits output that is mostly exported, because income from sales into Türkiye has been taxed at the standard rate since 2025, while an OSB sits inside the customs territory and combines its land and real estate tax advantages with the incentive system.

What corporate tax will a manufacturing company pay?

25% in 2026, with export income taxed 5 points lower. From 2027, Law No. 7582 sets 12.5% on income derived exclusively from production for companies holding an industrial registry certificate.

How long does it take to start production?

It depends on the project. Registering the company takes about 2 to 3 weeks once documents are ready, but the incentive certificate, site, permits and hiring usually take months, and no timeline can be promised.