The analysis and evaluation of the impacts of tax incentives on foreign direct investment decisions

This thesis aims to examine the relationship between tax policies including tax incentive policies and the increase in foreign direct investments (FDIs) in Turkey within the last 10 years. In the first part, the thesis examines the conceptual and institutional size and effects of FDIs, while in the second part of the thesis, determinants of FDIs and the effects of tax incentives on investment decisions are investigated. Subsequently the third part focuses on the examination of FDIs movements and investment incentives provided in Turkey and tax incentives with their efficiency and the measures to enhace the efficiency of those incentives in Turkey. Finally, the last part provides the results of our amprical study for the assertation or the determinants of the FDIs in Turkey with regards to the selected variables.As a result, it is concluded that the tax incentives supplied in Turkey do not effect the investment decisions of foreign investors in actuality. It is observed that the FDIs of last 10 years in Turkey are attracted by privatizations, speculative purchases on real estates, enhanced political an economic stability and new legal reforms. Also found out that the most important determinant of FDIs is massive privatizations took place in Turkey and the effect of the reduction in corporate tax rate is insignificant.