Research & Development in Turkey
Turkey offers generous incentives for R&D activities. In order to obtain significant operational and fiscal benefits from R&D activities, it is important to create clear idea of which activities in Turkey are deemed as R&D activity.
- Which activities are accepted as R&D activity in Turkey?
- Grants by TUBITAK, KOSGEB, Development Agencies, and Ministry of Science, Industry, Technology.
- Tax deductions and exemptions by Special Laws
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Which activities are accepted as R&D activity in Turkey?
- Obtaining new technical information for the development of science and technology with the aim of clarifying the ambiguities in scientific and technological fields,
- Developing new products, materials, supplies, devices, equipment, procedures and systems through new methods and producing new techniques and prototypes through design and drawing studies,
- Software activities based on new and original designs,
- Researching and developing new productions, methods, processes and procedures,
- Researching new techniques/technologies decreasing the cost of a product while increasing its quality, standard or performance.
R&D Supports in Turkey
It is possible to classify R&D supports in Turkey mainly in 2 groups as monetary grants and tax deductions/exemptions.
Grants by TUBITAK, KOSGEB, Development Agencies, and Ministry of Science, Industry, Technology.
TUBITAK (Scientific and Technological Research Council of Turkey) has the most common use for supporting R&D and innovation expenditures of the companies. In order to benefit Grants from TUBITAK, companies should frame specific projects and should apply to TUBITAK for each project with necessary documentation including detailed operational feasibility of the project and related financial expenses.
The application is evaluated by TUBITAK and approved as Granted R&D project if all requirements are satisfied. R&D projects approved by TUBITAK are benefitted 60% grant (at maximum) of the Project’s total expenses including personnel costs, materials to be used, outsource consultancy, travel and general expenses.
Tax deductions and exemptions by Special Laws
R&D Centres and R&D Projects Granted by the Government Institutions
Code of R&D Activities Support numbered 5746 provides special incentives for R&D Centres in which minimum of 30 full-time-equivalent R&D personnel are employed and R&D Projects granted by the Government Institutions. The applicable incentives are:
- %100 deduction of R&D expenditure from corporate tax base. (If the number of full-time-equivalent R&D personnel exceeds 500, in addition to the 100% deduction, half of the R&D expenditure increase incurred in the operational year compared to the previous year will also be deducted.)
- Income withholding tax exemption for employees (80% or 90% of the employee income tax)
- %50 of social security premium exemption for employers during 5 years period.
- Stamp duty exemption for applicable documents.
- Techno-initiative capital for new scientists up to TRY 100K
Technology Development Zones
Code of Technology Development Zones (TDZ) numbered 4691 provides special incentives for the companies operating in special zones designed to attract investments in high technology fields and support R&D activities in these zones. The incentives are:
- Corporate tax exemption of the profits derived from software development and R&D activities in TDZ, until December 31, 2023.
- VAT exemption of the deliveries of application software produced exclusively in TDZ, until December 31, 2023.
- 100% income withholding tax exemption of the employees employed in R&D activities in TDZ, until December 31, 2023.
- 0% social security exemption of the employer’s share of the social security premium during a period of 5 years, until December 31, 2024.
Deloitte’s R&D and Government Incentives professionals are highly experienced in the practices of preparing, negotiating and agreeing necessary applications from initial feasibility reviews to document submission to the related institution. Our knowledge and experience in this specialized area provides clients with the confidence of knowing the incentives which can impact their cost of business have been considered and evaluated.
With the tax technical knowledge of our professionals, we can help companies analyse R&D activities and manage the whole R&D process.
As Deloitte Turkey, we provide services;
- Helping to design a strategy about R&D projects and consulting applicable incentives and grants for existing business,
- Assisting on the whole application process; document preparation, communication with related institutions and formal application,
- Preparation of periodical fiscal reports which should be submitted to the related institutions,
- Audit of exemption amounts, tax declarations and other relevant fiscal calculations and consulting on accounting principles special for the grants and incentives applicable within related Codes,
- Training employees working for R&D activities and reorganizing in-house structure,
- Leading R&D activities for future objectives,
- Keeping companies informed and updated about potential developments.
To learn more details about the services of Deloitte Turkey, please contact us.