SECTION TWO

Principles related to the Organization of the Zone

Article 5: Land and facilities needed within the declared free zones can be acquired pursuant to the provisions of the Expropriation Law.

Domestic or foreign real persons or legal entities may be active within the free zones on the condition that an operating license has been granted to them by the Prime Ministry, Undersecretariat of Foreign Trade (General Directorate of Free Zones). All other permits and licenses regarding the use of land as well as the design, construction and utilization of buildings and installations within the free trade zones shall be issued and supervised by the regional directorate.

Security services for the free zones shall be provided by the police.

Exemptions and State aid

Article 6: The free zones are deemed to be outside of the customs borders.

Legislative provisions pertaining to taxes, levies, duties and to customs and foreign exchange obligations are not applicable in these zones.

During the investment and production stages of their activities, operators and users can be qualified for state aid to be determined by the Council of Ministers.

Income and revenues generated in the free zones through activities of real persons and legal entities with full or limited tax liability in Turkey, are exempt from income and corporate taxes, provided that the transfer of such income and revenues into Turkey is documented pursuant to foreign exchange regulations.

The FZ's Fund

Article 7: In order to establish, develop and maintain the free zones, to support research and training activities, to construct social facilities, to provide state aid for users and to promote the purchase of goods from Turkey, a "Free Zones Establishment and Development Fund" has been established at the Central Bank of Republic of Turkey.

Fund resources are as follows:

a) Fees paid for operating licences and permits

b) Fees paid in advance amounting to 0.5 percent of the CIF value and the FOB value, respectively, of goods entering and leaving the zone.

c) Payments specified in the contracts made with real persons and legal entities managing the free trade zone.

d) Other income

Goods destined to the free zone that originate from Turkey and goods utilized during the investments and construction stages, as well as instruments, tools and equipment brought into the free zone for repair and maintenance purposes, are exempt from the payments specified in paragraph (b) of this Article.

Procedures and principles governing Fund collection and disbursements are specified by regulations. This Fund is administered by the Prime Ministry. The Fund is audited by the Superior Audit Council of the Prime Ministry.