Turkish Merchant Fleet Undergoes Renewal: Tonnage and Free Zone Adjustments in Scrapping Incentives

A recent amendment published in the Official Gazette signals a critical step towards modernizing the Turkish maritime trade fleet and enhancing operational efficiency. The new regulation, prepared by the Ministry of Transport and Infrastructure, expands the mechanism encouraging the construction of new ships to replace scrapped Turkish-flagged vessels, incorporating activities under the Free Zones Law while introducing tonnage and registry conditions that will accelerate structural transformation in the sector.

Contractor Definition Expanded to Free Zones

The most significant update in the regulation is the restructuring of the "contractor" definition responsible for undertaking new ship construction within the scope of incentives. With this change;

■Coastal facilities owned by real or legal persons holding activity permits under the Free Zones Law have become an integral part of the incentive system.

■The requirement for a separate coastal facility operation permit, previously mandatory for contractors operating in this scope, has been completely removed, thereby reducing bureaucratic processes.

New Tonnage Mechanism for Fleet Capacity

To ensure balance in sector capacity and elevate fleet quality, the articles added to the regulation clarify the limitations regarding the gross tonnage (GT) of new ships to be built. The newly applied rules stipulate the following:

■If the ship to be scrapped has a capacity of 12,000 GT or more, the new ship to be built in its place must be at least half the gross tonnage.

■If the scrapped vehicle is less than 12,000 GT, the new ship is required to have at least one-third of the gross tonnage.

Crucial Three-Month Registry Requirement

A new procedure regarding registry periods has entered into force for shipowners wishing to benefit from the incentives. Accordingly, for the ship to be scrapped;

■It is mandatory that it be registered in the National Ship Registry or the Turkish International Ship Registry in the beneficiary's name for at least three months as of the application date, preventing short-term speculative applications.

From a fiscal policy perspective, this regulation represents a structural step towards renewing worn-out assets in the maritime sector. In particular, the introduction of tonage limits aims to control fleet size and prevent inefficient capacity expansion, while the inclusion of coastal facilities in Free Zones into the system reduces private sector investment costs and enhances competitive power. The 3-month requirement in the registry serves as a crucial filter to ensure the financial sustainability of the incentive mechanism.