R&D and Technology Development Zone Regulations
With the Law No. 7263 published in the Official Gazette No. 31384 on February 3rd, 2021; new regulations regarding Technology Development Zones and R&D activities have been announced.
The new regulations can be summarized as below:
Regulations regarding Technology Development Zones Law (No. 4691);
- With Article 7, the incentive period has been extended as below:
- The following regulation regarding the income tax calculation method has been announced in Article 7:
- With the below statement, the number of employees who will benefit from the incentives can be applied at a rate of 20% for companies have less than 15 employees:
- With the below statement, incentives can also be used for the periods spent outside, provided that they do not exceed 20% of the time spent in Technology Development Zones.
- According to Article 4 of Law No. 7263, "If the entrepreneurs operating in the zone do not submit a new project within the conditions determined by the regulation as of the date of completion of their projects and do not submit the information and documents they are obliged to convey to the managing company within the framework of the relevant legislation, the contract is deemed to have been terminated. Termination is the reason for release."
- The phrase "Basic sciences" in Article 8 of the Law No. 4691 has been changed to "the program to be supported". Accordingly, Incentives are also provided for fields other than mathematics, physics, chemistry and biology. What these areas will be clarified by the Ministry.
- With Article 5 of the new regulation, "Companies that employ interns within the scope of this Law can be supported within the framework of the conditions determined by the regulation by the Ministry, limited to the appropriation to be added to the Ministry budget. It has been decided that support will also be given to the interns.
The phrase "31/12/2023" in the first paragraph of the temporary article 2 of the Law No. 4691 has been changed to "31/12/2028".
"Until 31/12/2028, the income tax calculated after applying the minimum subsistence allowance over the wages of the R&D, design and support employee working in the region for these duties; are canceled by deducting from the tax accrued on the withholding tax and premium service declaration to be submitted. "
With this regulation, it has been clarified that the incentives are left to the employers. However, the taxation method has also changed and income tax will be calculated over the wages of the employees working within the scope of Law No. 4691. This should also be taken into consideration during the grossing up of the wages and may cause an increase in the earnings subject to social security premium (social security base).
"The papers regarding the wages in this scope is exempt from stamp duty. The number of support employees who will benefit from incentives regarding income tax withholding and employer's share of social security premium cannot exceed ten percent of the number of R&D and design employees. This rate is applied as 20 percent for Region companies with a total number of employees up to fifteen. "
"In addition to this, the periods spent by the relevant employees outside the Zone are also considered within the scope of the income tax withholding incentive, except for the situations specified in this paragraph, provided that they do not exceed twenty percent of the total working hours subject to income tax withholding incentive in the Zone."
Research, Development and Design Activities Support Law (No. 5746)
- As the same as above, the phrase "31/12/2023" has been changed to "31/12/2028" and its duration has been extended.
- As the same as above, the expressions of "basic sciences" have been changed to "the program to be supported" and incentives can be provided for fields other than basic sciences. (Ministry will share the details for these fields).
- With the Law No. 7263, Article 19; the condition of "working for at least 1 year" has been abolished from the incentive conditions of graduate / master and doctoral students.
- With the new regulation, "In the case that PhD graduate employees in R&D or design centers teach R&D and innovation at universities, or if R&D and design employees mentor entrepreneurs in technology development zones, these studies can be considered within the scope of this withholding tax incentive on condition not to exceed 8 hours per week."
- The time spent by the relevant employees outside these centers, provided that they do not exceed twenty percent of the total working hours subject to income tax withholding incentive in R&D region or design centers, can also be considered within the scope of income tax withholding incentive.
You can reach the relevant Law no 7263 via that link (In Turkish).