Turkey: Turkish Tech-Incentive Policy Moves On! The New Regulation On The Investment Support Program For Technological Products

Last Updated: 4 August 2014
Article by Dr. E. Seyfi Moroğlu, LL.M.


Turkish entrepreneurs, small-medium sized enterprises and start-ups which come up with ideas for projects for hi-tech products frequently give up and not even endeavor to follow up their ideas due to lack of financial support. In an emerging market with a confident new generation of innovators, an efficient techno-initiative and investment support policy and a defined program are always needed as a gate opener.

Turkish Ministry of Science, Industry and Technology (the "Ministry") answered the need of those, who are willing to realize their projects. On 29 April 2014, Regulation on the Investment Support Program for Technological Products ("Regulation") was published in the Official Gazette of Turkey. And recently, the procedures and principles of this program ("Procedures and Principles") were published on the web site of the Ministry. The Procedures and Principles are the instruments that will help implement the Regulation.

The main scope of this investment support program is for technological products (the "Program"). The Program brings a non-recourse financial support up to TRY 10.000.000 to the entities which qualify.

Who, Where and How

Application conditions which are regulated under Article 6 of the Regulation and Article 5 of the Procedures and Principles are as follows:

  • The product must fall under the technological categories which are counted in a list attached to the Procedures and Principles. These categories can also be observed as important sectors which are prioritized (the "Priority Sectors"). The product must be a first-comer in Turkey even if it was previously produced and marketed in other countries. The Priority Sectors include pharmaceuticals, electronic devices, transportation vehicles, media and broadcasting, telecommunications, computer programming, information services, scientific research and development, chemical products, metal manufacturing and electrical equipment.
  • The entities which apply for the investment support must have either (i) completed their innovative research and development project in Turkey or abroad not more than five years ago or (ii) obtained a product patent granted upon (substantive) examination (=incelemeli patent) as a result of research and development efforts resourced locally., or (iii) obtained an Investment Permit in the Technology Development Zones as per the Regulation on Technology Development Zones published on the Official Gazette of Turkey on 12 March 2014, or a report in favour of the product qualifying as a technological product.

It is only legal entities, i.e. corporate entities which may benefit from the Program. It would be beneficial to prepare ahead of time and establish a company prior to applying to the Ministry. The authorized department of the Ministry for processing these applications is the General Directorate of Science and Technology (the "General Directorate").

According to the information received from the web-site of the Ministry, the first application period has commenced on 17 July 2014 and the deadline for the applications is 3 October 2014. An immediate concern is that the time allowed is rather scarce when one thinks about the nice summer weather in Turkey and surrounding regions.

Processing of the applications

After the Directorate has pre-examined the applications, the ones which meet the conditions will be submitted to the consideration of the examination commission (the "Commission") which consists of five members who will execute a substantive review on these applications.

According to the Article 9 of the Regulation, the Commission shall finalize its review on the applications within 85 business days which is meant to start running from the application date. Naturally, the review results in either granting of the investment support or refusal. As this constitutes an administrative act, such decisions are open to administrative adjudication.

Consequences of granting the investment support

If the application is granted an investment support, an agreement covering the terms and conditions of the investment is executed by and between the Ministry and the application entity. The Ministry is not only entitled to monitor and audit the flow of the investment but also to intervene and impose its instruction, when it deems necessary. Reporting functions of the General Directorate are further detailed in Art. 19 of the Procedures and Principles. Considering the modern governance standards of the innovation incentives, the Regulation also demands from the innovators annual reports during a term of five years. Considering the maximum duration of support is 36 months running from the date of execution of the agreement, this gives the Ministry sufficient post-investment audit headroom.

Naturally and as per Art. 17 of the Regulation, a business plan must accompany the agreement and provides sufficient information as to how and when and for which support item the investment will be effected, to also help avoid utilization of the investment in a disproportionate, unprofessional or even unethical manner.

Furthermore, as per Article 19 of the Regulation, the machines and equipment which are purchased using the investment support may not be transferred, sold or leased for 5 years beginning from the date on which the (last tranche of) investment support is effected. Furthermore, it is not allowed to establish any kind of pledge over the property. Of course this does not prohibit third parties from attaching the invested property as a result of unpaid debts of the innovator or the invested property being placed under preliminary attachment or injunction. Such events shall immediately be reported to the Ministry within seven days of the enforcement measure.

In case the invested entities do not fulfill their contractual obligations or violate any provision of the Regulation, the investment support provided to the entities will be cancelled and restituted.

The Agreement, unlike the administrative decision refusing or granting the investment support, qualifies as a contract of private law as the subject of the agreement is not public service or utility. Consequently the procedural and substantive law to be applied to any disputes is principally Code on Civil Procedure numbered 6100 and Code on Obligations numbered 6098.

What are the investment support items ?

The main items of the investment support are as follows:

  • Machine and equipment support
  • Loan interest support
  • Operating costs

Naturally, whichever item is utilized, the investment support is effected upon presentation of sufficient documentation of acquisition of such item, for example, invoices for the machinery and equipment to be purchased (Art. 15 of the Procedures and Principles)

The upper monetary limits of the investment support for the small and medium sized enterprises are TRY 10.000.000 whilst the upper limit for the big-size enterprises is TRY 2.000.000.


It is for sure that the Program will increase the appetite for innovation for realization of an innovation and support efforts of the entities aiming to deliver new hi-tech products to the market. Moreover the Program looks like compact, defined and well-designed in order to encourage the entrepreneurs and start-ups and therefore improve the competitive skills of Turkey in the technology market. These points deserve praise.

However two additional approaches may be quite useful:

The hi-tech product is one that will not only affect or be beneficial for the national population, but probably and most hopefully be one that will be used in the global market. It is therefore entirely beneficial to look at other international hi-tech incentive systems to see where the competitive advantage is. As the research and development becomes more modular day-by-day, this may help detect whether further incentivizing an innovation of a sub-part of a product or a technological process may be more efficient.

Another point is that it would probably be best if the current formulated involvement of the government in substantive financial and production monitoring and monitoring activities within the Program is replaced with a more effective and expert-driven governance standard by engaging universities, scientific and even financial institutions and advisors, investment houses and angel-investment institutions. In that way the government can stand back, be guided by the expert institutions and have a much better bird's view for assessing the financial and scientific success of the incentive policy it introduces.

However these points should serve as an approach for enhancement and for long-term structuring of the investment programs on a more international and global scale to enwiden the customer base and interest groups for such innovations. For the time being however, it should be about "not taking the right decision, but taking the decision and making it right."

Dr. E. Seyfi Moroğlu, LL.M.

A. Kağan Uçar

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Dr. E. Seyfi Moroğlu, LL.M.
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions