Research and Development ("R&D") is a general term for an activities related to the enterprise of corporate or governmental innovation. According to the working area of companies, R&D is a common term to obtain new information, to create processes, to produce products and tools. R&D includes a creative works which increases human, society and culture's knowledge. Related to the subject, Law on Supporting Research and Development Activities ("Law") numbered 5746 is published on the Official Gazette on 28.02.2008 and Enforcement and Audit Regulation on Supporting the Research and Development Activities ("Regulation") is published on the Official Gazette on 31.07.2008. This Regulation regulates the procedures and principles regarding the enforcement and audit of the Law.
R&D allowance; in technology centers, R&D centers, public institutions and bodies and innovation projects supported by foundations established by law or international funds, in pre-competition cooperation projects; all innovation and R&D centers which employ full time equivalent of 500 or more R&D personnel, and also half of the increase in current year's R&D and innovation expenditures compared to previous years, are deemed as matters of allowance in the identification of public body earnings as per Article 10 of the Cooperation Tax Law numbered 5520 and in the identification of commercial earnings as per Article 89 of the Income Tax Law numbered 193.
Income Tax Withholding Incentive;
except public sector personnel; wages of personnel as a result of
their working in the technology centers, R&D centers, public
bodies and entities and foundations established by the law or the
R&D and innovation projects supported by international funds or
conducted by the Scientific and Technological Research Council of
Turkey, the enterprises benefiting from techno-initiative capital
supports and as R&D and support personnel in pre-competition
cooperation projects are exempted from income tax, which is 90% for
those having a PhD degree and 80% for the others.
Insurance Premium Support; except the
public sector personnel; in the technology centers, R&D
centers, public bodies and entities and foundations established by
the law or the R&D and innovation projects supported by
international funds or conducted by the Scientific and
Technological Research Council of Turkey (TÜBİTAK), the
enterprises benefiting from techno-initiative capital supports and
R&D and support personnel in the pre-competition cooperation
projects and the personnel whose wages are exempted from the income
tax as per temporary Article 2 of the Technology Development
Regions Law numbered 4691; the insurance premium of half share of
the employer, which is calculated through their wages as a result
of their working, is to be paid by the appropriation which is put
on the budget of the Ministry of Finance for 5 years for each
Stamp Duty Exemption; the stamp duty
tax is not levied on the papers arranged on all sorts of R&D
and innovation activities within the scope of the Law.
Techno-Initiative Capital Subsidy; techno-initiative capital subsidy up to 100.000 Turkish Liras is granted for once only to those who meet the conditions defined in the Article 2 of the Law, by the public administrations under the central government. As per this paragraph, the total payment of the all public administrations at the central government, which have appropriations in the relevant year to support the R&D projects, cannot exceed 10.000.000 Turkish Liras for each calendar year. These amounts are applied in the following years with an increase calculated by the re-valuation ratio which is determined in each year according to Law numbered 213.
The expenditure to be subject to the R&D discount should be made within the framework of an R&D and innovation activity. The expenditures considered being within the scope of the R&D and innovation activities shall be as follows:
- Raw materials expenses
- Personnel costs
- Overall expenses
- Outsourced benefits and services
- Taxes, levies and charges
The enterprises who get benefit from the R&D discount shall submit the document which below mentioned.
- "R&D Center License" shall be requested from the R&D centers that will benefit from the R&D discount for the first time, "R&D and Innovation Project Evaluation Report" issued by the technical institutions or "Pre-Competition Cooperation Project Evolution and Audit Commission Decision" or the project contract shall be requested from those who who will benefit from project-based R&D discount,
- Documents demonstrating at what stages are the R&D and innovation project or projects as well as the pre-competition cooperation project or projects, project contracts and the annexed work plan approved by the public institutions and documents demonstrating the implementation status of such projects or work plans,
- The list presenting the annual amounts of the expenditures subject to R&D discount in main groups and detailed breakdown of such expenditures,
- The list indicating the number and quality of the employees working at the R&D centers, technology center enterprises, R&D and innovation projects as well as pre-competition cooperation projects and enterprises benefiting from the techno-initiative capital support, the terms of service and wages such personnel as well as the deducted and exempted tax amounts of such personnel,
- Regarding the outsourced consultancy enterprise and similar services, the list showing the name, Republic of Turkey identity card number/tax identity number of the person/institution providing the service, the cost of the service received, date and number of invoice, withholding tax and VAT amounts.
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.