Communique Regarding The R&D and Design Support Law

Communique Regarding The R&D and Design Support Law has been published on the 27.05.2022 dated and 31848 numbered Official Gazette.

Regarding The Income Tax Withholding Incentive

With the Law no: 7346, the regulations in force as of 12.10.2021 are as below:

The amendments on the Law no: 5746 (article 3) and Law no: 4691(temporary article 2) can be summarized as below:

The periods spent outside these centers or Zones are also considered within the scope of income tax withholding incentive, provided that

• It does not exceed twenty percent of the total number of personnel working in R&D or design centers or Zones or
• The total working time subject to the incentive, except for the cases specified in this paragraph.

Income Tax Withholding Incentive Application for Periods Spent Outside the R&D Region or Design Center

1. The periods spent outside these centers or Zones are also considered within the scope of income tax withholding incentive, provided that
• It does not exceed twenty percent of the total number of personnel working in R&D or design centers or Zones or
• The total working time subject to the incentive, except for the cases specified in this paragraph.
2. The twenty percent rate will be applied as fifty percent until 31.12.2022 per the Presidential decision published on 17.10.2021.
3. During the periods when the fifty percent rate is valid, the total salary amount would be considered within the scope of the incentive if the R&D, design or support personnel have spent half of their working time working in the center or the region and half working outside the center or the region.
4. If the R&D, design or support personnel have spent their entire working time working in the center or the region, the entire wage paid to these personnel will be considered within the scope of the incentive.

In addition, there might be other personnel spent their time outside the center or the region due from the abovementioned personnel is located in the region. And if the is the case, the total salaries paid to other R&D, design or support personnel who spent their entire working time outside the center or the region could also be subject to the incentive.

5. The fifty percent rate would be applicable for the working hours outside the center or the region, and the time worked in the center or the region, within the scope of the incentive.
6. The weekend holiday entitlement of a personnel full time works in the center, or the weekend holidays of the companies do not work at the weekends and the annual leave periods are also within the scope of the incentive.
7. Within the scope of Law no: 5746 article 3 and Law no: 4691 temporary article 2, the below periods would also be considered as the time spent in the center or region in the calculation of 50% of the time worked outside the center and the region:
   • The time spent within the R&D or design centers and mandatory activities that are deemed appropriate to be carried out outside the zone,
   • The time spent by the R&D or design personnel, not exceeding one and a half years for postgraduate students and two years for doctoral students (up to monthly lecture hours),
   • The time spent by the doctoral graduates working in R&D or design centers by giving lectures at universities in the field of R&D and innovation, not exceeding 8 hours per week,
   • The time spent by R&D and design personnel working in R&D or design centers by mentoring entrepreneurs in technology development zones, not exceeding 8 hours per week,
8. Since the incentive is applied on monthly basis, monthly working hours not exceeding 45 hours per week will be taken into account in calculating the time spent inside and outside the center or the region.
9. All salaries would be considered within the scope of the incentives for the below conditions:
   • Each R&D, design and support personnel spend half of their working time in the center or region or,
   • Half of the total number of personnel spend their entire working time in the center or in the region
10. All salaries would be considered within the scope of the incentives for the below condition without checking which personnel or how much time spent for work:

    In case half of the total time required to be worked in the center or the region by the R&D, design and support personnel, spent as working in the center or the region.

11. Considering the time worked in the center or the region, the employer will determine the personnel whom the incentives will be applied for the time spent outside the center or the region if the conditions on item 9 above are not met.
12. If all personnel work outside the center or region or if there is no personnel, the incentive will not be applicable.
13. In cases the incentive is benefited unduly, the extra incentive amounts are collected from the employer together with tax penalty and interest.

This Communique would be effective as of 12/10/2021.

You can review the related Communique via the link. (In Turkish).

You can review the Law no: 7263 via the link. (In Turkish).

You can review the Law no: 4691 via the link. (In Turkish).

You can review the Law no: 5746 via the link. (In Turkish).

You can review the other regulations with regards to the technology zones and R&D regions via the link.

Should you have any queries or need further details, please contact your customer representative.