Tuesday, 23 August 2016

Turkey: New R&D incentives aim to increase investment/production

A package of measures that enhances the incentives for research and development (R&D) in Turkey applies as from 1 March 2016. The rules are designed to facilitate investment, increase production and stimulate innovation.
Turkey provides for a 100% deduction of R&D expenditure for qualifying R&D projects, as well as an additional deduction of 50% of the R&D expenditure increase over the prior year (a “super deduction”). The Council of Ministers will prescribe the conditions that must be satisfied to qualify for the super deduction.
The measures provide as follows:

  • Design activities and employment expenditure related to such activities are included within the scope of the incentives.
  • To qualify for the additional 50% deduction, the company must increase its R&D and design expenditure, as compared with the previous year. To ensure that smaller businesses with increasing levels of R&D activity can qualify for the incentive, companies meeting this requirement no longer need to have at least 500 full-time equivalent R&D personnel to benefit from the super deduction.
  • The government will finance the salaries of qualifying employees for a two-year period by paying an amount corresponding to the monthly minimum wage for each employee who holds at least an undergraduate degree in fundamental sciences.
  • The income tax exemption rate applicable to wages of employees is increased to 95% for personnel with a Ph.D., 90% for personnel with a masters’ degree and 80% for other personnel.
  • Goods imported for qualifying R&D projects are exempt from customs duties, and documents relating to R&D projects (including documents relating to the import of goods) are exempt from stamp duty and fees.
  • Order-based R&D and design project expenditure incurred in R&D or design centers falls within the scope of the 50% corporate income tax deduction for the R&D or design centers, and the company issuing the order also can benefit from the deduction.
  • The Council of Ministers is authorized to reduce the minimum number of R&D personnel required to set up an R&D center from 30 to 15. 

Source: Deloitte