GENERAL

VAT Exemption for Manufacturing Industry Investors in Rural Development

Share

In addition to 50 percent grant support in projects within the scope of the Rural Development Investments Support Program (KKYDP), the opportunity to benefit from VAT exemption was brought to the manufacturing industry investors.

The attractiveness of rural investments has been increased with the amendment made in the Decision on the Support of Agricultural-Based Economic Investments and Rural Economic Infrastructure Investments within the Scope of Rural Development Supports, which came into force with the decision of the President.

Within the scope of the program, 50 percent grant support was provided for economic investment projects such as agricultural product processing, storage and packaging, and VAT exemption was introduced until 31 December 2022 for the purchase of new machinery and equipment to be used in the manufacturing industry by VAT taxpayers with industrial registration certificates.

Among the manufacturing industry investors, for which 50 percent grant support was provided within the scope of KKYDP, those with industrial registration certificate could not benefit from VAT exemption and grievances occurred. With the amendment made, it was possible for these investors to benefit from the VAT exemption.

With the regulation, within the scope of KKYDP economic investment projects, manufacturing industry investors, those with industrial registration certificate, will benefit from 50 percent VAT exemption in addition to 18 percent grant support in the delivery of machinery and equipment to be included in the project.

The regulation, which is expected to increase the attractiveness of rural development investments, will be an important support tool, especially in provinces that cannot benefit from the rural development funds (IPARD) of the European Union.

There will be no change in terms of the resources provided by the Ministry of Agriculture and Forestry, but since the investors will not pay VAT, they will be able to complete their project with less in-kind contribution/equity.