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Ministry of Finance, R & D Deductions

R&D DEDUCTIONS OF THE MINISTRY OF THE FINANCE OF THE TURKISH REPUBLIC

1. R&D DEDUCTIONS
All R&D and innovation expenditures realized by private foundations, which use or loan funding to be supported R&D projects by public institutions and international organizations established by law or under the projects of technology development, are deducted. In R&D centers, which employ more than 500 full-time equivalent R&D personnel, the half of R&D and innovation expenditures in that year compared to the previous year are also deducted, according to Article 10 of the Corporate Tax Act and the Income Tax Law. In addition, these expenses are redeemed through amortization by being activated, and in the event that there is no an economic asset, they are written as expenditures. The amount not be subjected to deduction due to insufficient earnings during the period is transferred to the next accounting period. According to the Tax Procedure Law, amounts transferred in the following years shall be increased in the revaluation rate determined each year. (5746p. Law Art. 3/1)

2. PROMOTION OF INCOME TAX WITHOLDING
With the exception of public personnel, %90 of the wages of R&D and support staff, working in R&D and innovation projects outlined above and pre-competitive cooperation projects, is exempted from income tax. On the other hand, %80 of the wages others get in return from these works is also exempted from income tax. (5746p. Law Art.3/2)

3. INSURANCE PREMIUM SUPPORT
With the exception of public personnel, the half of the employer’s share of the insurance premium, calculated on their wages in exchange for these activities of R&D and support staff working in R&D, innovation and pre-competitive cooperation projects, are met for each employee from the appropriation in the budget of the Ministry of the Finance for a period of five years. With article 2 of the Technology Development Zones Law No.4691 and dated 06.26.2001, the temporary staff who are exempt from the income tax charge are in the same situation. (5746p. Law Art.3/3)

4. EXEMPTION OF STAMP DUTY
Under this law, any kind paper, with respect to R&D and innovation activities, is not levied stamp duty. (5746p. Law Art.3/4)

5. SUPPORT FOR TECHNO VENTURE CAPITAL
The students who are expected to graduate from an undergraduate program of universities are given a one-time tech venture capital up to 100.000 Turkish Liras as a grant without assurance in order to be transformed their business idea focused on technology and innovation into enterprises creating value added and qualified employment creation. The same situation applies to undergraduate, graduate students and those who have doctorate degrees or had one of the doctorate degrees five years before deadline. (5746p. Law Art.3/5)

• INFORMATION NOTE
Under the Income Tax of No.193, the Corporate Tax Act of No.5520 and the Law on the Promotion of Research and Development Activities of No.5746, %100 of the expenditures spent by taxpayers from 2008 accounting period, exclusively for the research and development of new technologies and knowledge, are taken into a reduction of R&D in determining the profit.
Under Law No.5746, people benefiting from R&D discount don’t also benefit from R&D discount involved in Income Tax Law and Corporate Tax Law. In other words, taxpayers can not benefit from R&D discounts in both Law No.5746 and No.193 of the Income Tax or No.5520 of the Corporation Tax at the same time.
Income taxpayers will benefit from R&D deduction within the scope of Law No.5746 or from R&D deduction paragraph number 9 of article 89 of the Income Tax Law.
On the other hand, corporate taxpayers benefit from R&D discount under Law No.5746 or R&D discount in item a) in the first paragraph of article 10 of the Corporate Tax Law.