A free zone meaning refers to a designated area that offers unique incentives for businesses. The benefits of free zone include tax exemptions, full foreign ownership, and simplified processes, making them attractive for investors. Free Zones are special sites within a country that are deemed to be outside of the customs territory, offering businesses tax exemptions, full foreign ownership, simplified setup processes, profit repatriation, and state-of-the-art infrastructure. These fenced-in areas provide special regulatory treatment to promote free zone trade of goods free zone and services, creating a more convenient and flexible business climate compared to other parts of the country.
What is Free Zone?
Although free zones are located within the
political borders of the country in which they are located, they are regions
that are considered outside the customs line in terms of foreign trade,
taxation, and customs legislation. In these regions, legal and administrative
regulations in financial, commercial, and economic fields are not applied or
partially applied. A commercial free zone, which is physically separated from other parts
of the country they are in, are given wider incentives and exemptions for industrial
and commercial activities compared to other regions.
Free zone area are generally located close to an
international port or airport, but they are processed separately from the
customs area. Goods that are not subject to customs procedures at the entrance
to the zone can be stored, processed, and used in production in free zones. As
long as they do not enter the customs borders, there is no need to pay taxes on
these goods.
Free zone company generally cover activities such as production,
packaging, storage, research and development, banking, insurance, sorting,
loading, consultancy, architecture, engineering, leasing, software,
maintenance, and repair.
Free zones are generally established for the
following purposes:
· To
encourage export-oriented investment and production,
· To
accelerate foreign direct investment and technology entry,
· Directing
businesses to export,
· To
develop international trade.
What are Free Zone Incentives?
Companies located in free zones can obtain
various incentives and benefits according to the countries in which they are
located. These incentives and advantages, which vary for each country, can be
summarized as follows for Turkiye:
· Tax
advantages for producers
· Opportunity
to obtain medium and long-term operating license
· Profit
transfer opportunity
· Facilitation
of trade free zone
· Trade
opportunity free from customs duty procedures
· Possibility
of obtaining free movement documents required by EU and Customs Union criteria
· Interest
support on loans
· Equality
principle
· No
time restrictions
· Access
to domestic and foreign markets
· Reduced
bureaucracy
· Strategic
advantages of free zones due to their location
· Affordable
infrastructure opportunities
· Rental
support
What are Advantages of Free Zone?
Free zone advantages offer
numerous benefits for businesses, including 100% foreign ownership, allowing
business owners to retain full control without local partnerships. Tax
incentives such as exemptions on corporate income, import/export duties, and
VAT provide significant financial relief. Companies benefit from streamlined
business setup processes, unrestricted profit repatriation, and access to
global markets with no trade barriers, attracting foreign businesses through
proximity to ports and airports. Combined with flexible regulatory
environments, skilled labor, and strong legal protection, Free Zones present an
ideal environment for businesses to grow, innovate, and expand globally while
enjoying operational and financial benefits.
Contribution of Free Zones to the Country's Economy
· Free
zones not only increase the foreign exchange inflows of the country in which
they are established, but also contribute to the increase in the export
revenues of the country and the expansion of the export markets with the
exports to be made from the region.
· Thanks
to the raw materials, semi-processed and finished goods exported from the
domestic market of the country in order to use in the production activities of
the users in the free zones, a contribution is made to the country's
production.
· Free
zone users, who have tax advantages, will have the opportunity to produce
under the same conditions as their competitors abroad.
· Thanks
to the economic activities in the free zones, the country's employment is
contributed.
· Foreign
capital investments in the free zones, where production is made, bring along
technological developments, and provide technology transfer to the country.
· Goods
brought to free zones in large quantities can be imported into the country in
small batches when necessary, thereby reducing production costs.
· They
act as a steppingstone in facilitating and accelerating the export of export
products.
· The
sale of goods coming from abroad can be carried out through cross trade.
How TradeAtlas Supports Free Zone Trade
TradeAtlas plays a crucial role in enhancing
trade activities in free zones by providing comprehensive trade data and market
intelligence. With TradeAtlas, businesses in free zones can easily identify
potential markets, track competitor activities, and find reliable suppliers or
buyers globally. TradeAtlas serves as a bridge between free zone businesses and
international trade opportunities, driving growth and competitiveness in the
global market.
For detailed information on the
subject of export import ratio, you can review the content “The
Ratio of Exports to Imports”.