ISTANBUL, Feb 14 (Reuters) - Turkey will offer tax breaks of up to 60 percent and incentives including deductions on employee costs for investment in its automotive sector under an extended investment promotion scheme, a senior industry official said on Thursday.
Turkey's automotive industry, a key export sector, was hit hard by a weak domestic market and shrinking export demand from debt-choked Europe last year, when sales fell 10 percent to 818,000 units and exports dropped 8 percent.
The investment scheme, an extension of a programme launched by the government last year, is expected to be announced on Friday. Government officials declined to comment.
Manufacturers in Turkey including Ford Otosan, Oyak Renault, Tofas, Hyundai and Toyota could all benefit from the government scheme, the source who is familiar with the plans said.
Eligible projects will include motor vehicle investments of more than 300 million lira ($170 million), engine investments of more than 75 million lira and spare parts projects of more than 20 million lira.
The government divides Turkey's 81 provinces into six bands along criteria including their contribution to national output and per capita income. The incentive scheme aims partly to boost investment in the country's less developed regions.
Incentives in the lowest bands under the scheme will include VAT and customs rebates, employee cost contributions and subsidies on land purchases, the source said.
($1 = 1.7635 Turkish liras)
(Reporting by Evrim Ballim and Birsen Altayli; Writing by Daren Butler; Editing by Nick Tattersall) Keywords: TURKEY AUTOMOTIVE/
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