Understanding Tax Benefits for Innovation Projects 📊
In Türkiye, comprehensive tax deductions are available for R&D and innovation expenses carried out in:
• Technology center enterprises
• R&D centers
• Public institutions
• Projects supported by international funds
• Pre-competition cooperation projects
• Techno-entrepreneurship capital support projects
Key Points About Tax Deductions 💡
The full amount of R&D and innovation expenditures can be deducted from income and corporate tax calculations when conducted in approved facilities or under supported projects. This includes design projects supported under Law No. 5746.
Qualification Requirements ✅
For R&D Centers:
• Expenses must be within R&D, innovation, or design activities scope
For Design Centers:
• Expenses must be exclusively for design activities
Important Note on Inflation Adjustment ⚠️
The inflation adjustment differences arising from the capitalized expenses in “Account 263 – Research and Development Expenses” cannot be subject to R&D and design deductions.
Practical Example 📝
Case Study: (AB) Inc. R&D Center
• Received an R&D project order on 11/4/2024
• Project approved under Law No. 5746
• Total expenditure: 5,000,000 TL
• Inflation adjustment difference: 1,000,000 TL
• Eligible deduction amount: 5,000,000 TL (excluding inflation adjustment)
10 Essential Q&As About R&D Tax Deductions 🤔
-
Which projects qualify?
➡️ Projects in approved centers and internationally funded initiatives -
When can deductions be claimed?
➡️ When expenses are actually incurred and activities are performed -
Are inflation adjustment differences deductible?
➡️ No, these differences are excluded -
What are design expense requirements?
➡️ Must be exclusively for design activities in approved centers -
Do ordered R&D projects qualify?
➡️ Yes, if approved under Law No. 5746 -
How are R&D expenses recorded?
➡️ In Account 263 – Research and Development Expenses -
How is inflation adjustment calculated?
➡️ Based on month-end dates of expenses -
How are adjustment differences recorded?
➡️ In sub-accounts of Account 263 -
How is the deductible amount determined?
➡️ Based on actual expenses excluding inflation adjustments -
What law governs these deductions?
➡️ Law No. 5746 on Supporting Research, Development and Design Activities
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither Karen Audit nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.
