R&D LAW

The Law no. 5746 on Enhancing Research and Development Activities(Official Gazette 03.12.2008/26814) which came into force in March 2008, aims to accelerate R&D investments and develop innovation for products and production methods by producing technological knowledge aimed to:

• Increase the share of R&D expenditures in GDP,
• Increase the production of high value added products and services,
• Decrease costs by facilitating efficiency,
• Support the employment of researchers and qualified labor force,
• Increase the amount of foreign direct investment in R&D,
• Support the employment of Turkish researches in foreign countries in Turkey,
• Develop and support cooperation projects.

Within the context of this new Law, without any sectoral or regional distinction, investors will be supported in technology centers, R&D centers, R&D and innovation projects by several incentive instruments including R&D allowances, incentives on income tax withholding, insurance premiums, stamp duties and funds for techno-entrepreneurship until 2023:

• All R&D expenditures shall be capitalized and registered as an expense through depreciation. 100% of the capitalized R&D expenditures (as well as half of the increase in R&D expenditures of the year according to the last year in the R&D Centers employing 500 or more R&D workers) shall be deducted from the tax base. Nondeductible amount will be carried forward to following years. Transferred amounts will be deducted by being increased at the revaluation rate in the following years.
• 90% of those having a PhD degree and 80% of other R&D employees shall be free from income taxes.
• Half of the R&D employer's social security contribution shall be covered by an allocation from the Ministry of Finance for 5 years. R&D and Support staff operating in Technology Development Areas, whose income is exempted from income tax of the enterprises, is also included in this regulation.
• Capital support up to TRY 100,000 shall be granted without assurance by the General Management Public Institutions to those who meet the conditions stipulated by the Law.
• The papers arranged for R&D activities shall be exempted from stamp duty.
• The rate of investment allowance for R&D investments which is still applied at 40% according to Personnel Income Tax and Corporate Income Tax Laws is increased to 100% by the new Law.