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Financing, investment and government support

Government support

Does the government provide any incentives or support programmes to promote fintech innovation in your jurisdiction (eg, tax incentives, grants and regulatory sandboxes)?

Yes, the Turkish government provides some incentives and support programmes to promote fintech innovation. The main ones are outlined below:

  • Law 4691 on Technology Development Zones – under this law, fintech companies located in techno parks can benefit from numerous tax incentives including exemption of corporate tax, income tax and value added tax. In addition, fintech companies that are essentially research and development companies may deduct 50% of the social security premium exemption for their employees for a period of five years.
  • the Regulation on Individual Participation Capital – under this regulation 75% of the value of the participation shares of fintech companies established under Turkish law or held by business angels/individual investors can be deducted from the individual investors/business angel’s income tax for the next tax year.
  • Decree 2012/3305 of the Turkish Counsel of Minister – this decree sets forth the procedures of general investment incentive systems. Communiqué 2012/1 of the Turkish Ministry of Economy (amended by Communiqué 2017/1) provides further details. These investment incentives are explained in the section below titled “Financing and investment”.
  • the 10th Development Plan of the Ministry of Development – the plan provides that payment systems will be strengthened in line with technological developments and needs in the country. Moreover, investment into fintech companies will be increasingly supported by Stock Exchange Istanbul or by the Turkish government to make Turkey a regional investment hub in the fintech sector.

Has the government concluded any international cooperation agreements to promote and facilitate the cross-border expansion of fintech businesses?

The government has not concluded any international cooperation agreements yet; however, in practice the main payment service providers have been trying to take steps in the direction of cross-border expansion of fintech businesses. For example, the company behind the Turkish payment method TROY signed a successful cooperation agreement with a global institution in December 2017. Under this agreement, TROY has become valid worldwide and the TROY logo will be used for international transactions.

Financing and investment

What private financing and investment schemes are available and commonly used for fintech start-ups in your jurisdiction?

There are no specific private financing and investment schemes for fintech businesses in Turkey. However, five different general investment incentive schemes are detailed in Communiqué 2012/1 of the Turkish Ministry of Economy:

  • the General Investment Incentive Scheme;
  • the Regional Investment Incentive Scheme;
  • the Priority Investment Incentive Scheme;
  • the Large Scale Investment Incentive Scheme; and
  • the Strategic Investment Incentive Scheme.

According to these schemes, several different support measures can be provided such as value added tax exemption, custom duty exemption and tax deduction.

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