February 22, 2022 – Tuesday
R&D software and design incentives and supports
Within the scope of the exception in the Technology Development Zones Law, income and corporate taxpayers operating in technology development zones (Technoparks) are exempt from income and corporate tax until 31 December / 2023, only the earnings from software, design and R&D activities in this zone. .
The wages of the R&D, design and support personnel employed in the approved R&D projects of the companies working in the region are also exempt from all kinds of taxes until 31 December 2023.
The number of support personnel who will benefit from incentives regarding income tax withholding and employer’s insurance premium cannot exceed ten percent of the number of R&D and design personnel.
In the implementation of the exception, the week holidays and annual paid leave periods and the wages corresponding to the holidays specified in the Law on National Holidays and General Holidays are also within the scope of this exception. Accordingly, the wages of the R&D and support personnel, who work fully on normal working days of the week (45 hours per week), for the week holidays and public holidays they are entitled to, will also be evaluated within the scope of income tax withholding and SSI premium employer share incentive.
In the calculation of income tax and SSI incentive, wages over forty-five hours per week and additional working hours will not benefit from this exception.
Taxpayers operating in the region cannot benefit from the exemption, even if they are derived from software design and R&D activities.
In case the companies engaged in software and R&D activities in technoparks market the products they find as a result of these activities by subjecting them to mass production, the portion of the revenues obtained from the marketing of these products corresponding to intangible rights such as licenses and patents will be able to benefit from the exception by separating them according to transfer pricing principles. However, earnings from activities such as adaptation, placement, development, revision, additional software, although not bound to intangible rights such as licenses and patents, can be considered within the scope of exception. In addition, taxpayers who market the products they find as a result of design activities in Technoparks by subjecting them to mass production will be able to benefit from the exemption by separating the portion of their earnings from the marketing of these products corresponding to the design according to the principles of transfer pricing. The other part of the income arising from the production and marketing organization will not be considered within the scope of the exception.
E.g; Incomes from the software company operating in the technology development zone from the license sale or rental of the software it produces will benefit from the exception, but the earnings from the marketing of the said software on disc, CD or electronic media (except for the part of the license) will not benefit from the exception.
Likewise, the income to be obtained from the rental or transfer of the royalties of the cancer drug that is generated as a result of the R&D activities carried out in the region by a pharmaceutical company will benefit from the exemption.
In the application of exception, the taxpayer is a full taxpayer established in Turkey, or both legal and business centers are not located in Turkey, but are taxed only on their earnings in Turkey.
Limited liability has no importance in the application of the exception. Both will be able to benefit from the exception.
In the event that the activities that are exempted within the scope of the law, result in losses, it is not possible to deduct these losses from the earnings related to other activities that are not within the scope of the exemption.
Income and extraordinary income of taxpayers operating in the region from their commercial transactions outside the scope of Law No. 4691 will be subject to corporate tax. For example, interest incomes arising from the evaluation of cash, exchange differences arising from foreign currency assets and incomes arising from the disposal of economic assets will not be considered within the scope of R&D exemption.
The aid provided to the companies in the region as capital support on the condition of repayment from other institutions, since these aids are in the nature of debt, these aids will not be included in the commercial income.
Regarding the R&D and design projects benefiting from the exemption, the amount of support given by TÜBİTAK and similar institutions in the form of grants and any donations and aids of this nature from other institutions will be included in the corporate income and benefit from the exception.
In the event that the works that are and are not included in the scope of the exemption are carried out together, the common general expenses are the goods incurred in the current year related to these activities.
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