EXEMPTIONS, TAXES AND CHANGES FOR TECHNOPOLIS AND R&D CENTERS FOR 2023 AND 2024
Within the scope of Law No. 5746, the investment requirement (fund allocation) for taxpayers who benefit from R&D discount and technopolis exemption within the scope of Law No. 4691; the requirement to invest & capitalize (fund allocation) for taxpayers who declare a discount / exemption below two million TL has been abolished. The investment rate, in other words, the amount of funds to be set aside, has been increased to three percent of the deduction/exemption amount, and the upper limit of investment has been set as one hundred million TL. The amendments will enter into force as of 01.01.2024 and will be applied for the discount / exemption amounts to be declared in the 2023 accounting period declarations.
A) Investment (Fund) Application within the Scope of R&D Discount / Technopolis Exception:
As it is known, with the amendments made to the 'Law No. 5746 on Supporting Research, Development and Design Activities' (R&D Law) and 'Law No. 4691 on Technology Development Zones' (Technopolis Law); as of 01.01.2022, for taxpayers whose R&D and design discount and technopolis exemption amount is over 1.000. 000.00 TL, a fund of 2 percent of this discount/exemption amount must be set aside and this fund amount must be allocated for the purchase of venture capital investment fund shares or as capital to entrepreneurs operating in venture capital investment trusts or incubation centers; the amount obligation to be transferred to the fund was limited to 20.000.000,000,00 TL on an annual basis.
In other words, those who benefit from R&D discount or technopolis exemption amounting to at least TRY 1,000,000.00 in the declaration were required to allocate a fund in liabilities equal to two percent of this amount and to invest this amount, limited to TRY 20,000,000.00.
B) Amendments Regarding Investment (Fund) Application:
With the Presidential Decree No. 7953 published in the Official Gazette dated 16.12.2023 and numbered 32401 and published in the Official Gazette dated 16.12.2023 and numbered 32401, three important amendments have been made to be applied as of 01.01.2024.
According to the first of these amendments, the lower limit for fund allocation has been increased from 1.000.000,00 TL to 2.000.000,00 TL. In other words, the obligation to set aside funds for taxpayers with a deduction/exemption amount of TL 2,000,000.00 and above shown on the declaration continues, and the obligation to set aside funds and invest in this context has been abolished for taxpayers with a deduction/exemption amount below TL 2,000,000.00 shown on the declaration.
According to another amendment, the fund rate to be set aside has been increased from two percent to three percent. Prior to the amendment, the amount of the fund to be set aside was limited to two percent of the discount/exemption amount shown on the declaration. However, with the amendment made, those whose discount / exemption amount shown on the declaration is 2.000.000,00 TL and above are required to set aside funds equal to three percent of this discount / exemption amount and make the specified investment up to this fund amount. Otherwise, it is not possible to benefit from the discount / exemption application.
One of the important amendments is related to the upper limit of fund allocation. Prior to the amendment, the amount obligation to be transferred to the fund account was limited to TL 20,000,000.00 on an annual basis. However, with the amendment, this is the upper limit amount and accordingly, even if three percent of the discount / exemption amount exceeds this limit, the excess amount does not need to be taken into the fund account and invested.
C) Activities within the Scope of Exemption
The exemptions granted to enterprises operating in technopolis are applied to the revenue earned from research, development and software activities in the region. The concepts of R&D and software are defined as follows in the Technology Development Law Implementation Regulation published in the Official Gazette dated 12.03.2014 and numbered 28939.
Research and Development (R&D): Research and development is the creative work carried out on a systematic basis to increase the body of knowledge of culture, people and society and to use it to design new processes, systems and applications, including software.
Software: A set of commands or programs that enable a computer, communication device or other device based on information technologies to operate and perform the necessary operations related to the data given to it, and all documents and services, including their code list, operating and user manuals.
In Article 37 of the relevant regulation, exemptions and principles are reported and some of the exemptions provided are as follows: Income and corporate taxpayers who continue their activities in Technoparks are exempt from income and corporate tax until 31.12.2023 on the earnings from software and/or R&D activities obtained from the region.
Companies wishing to benefit from this exemption must apply to the tax offices to which they are affiliated, and prior to the application, companies must also obtain a document from the managing company in the region that they are operating in the region.
The management company is exempt from corporate and stamp taxes and fees until 31.12.2023. In order to benefit from this exemption, the management company must apply to the tax office to which it is affiliated.
The salaries of R&D support personnel working in the zone are exempt from all kinds of taxes until 31.12.2023. In order to apply this exemption, the relevant entrepreneur is required to have the list showing all R&D and support personnel working in the zone and defined according to the Regulation, their job descriptions in R&D projects, qualifications and working hours approved by the management company on a monthly basis.
Working hours exceeding 45 hours per week are excluded from this exemption, and earned week and annual paid leaves and national public holidays are taken into account in the income tax incentive application.
Taxpayers that continue their activities in Technoparks can benefit from tax incentives for research, development and software activities as a whole. If the entrepreneur companies want to benefit from the tax incentives of the Corporate Tax Law No. 5520 and Income Tax Law No. 193 for the same projects, they should apply to the management company and the ministry simultaneously.
D) Incentives Provided in terms of Corporate Tax
With Law No. 4691, the Managing Company is exempted from corporate tax for the earnings obtained until 31.12.2023. However, these exempted earnings are limited to the earnings obtained from the establishment, management and operation of the Technopolis within the scope of Law No. 4691.
In addition, taxpayers operating in Technoparks are exempt from corporate tax until 31.12.2023 for the earnings obtained within the scope of software and R&D in accordance with the first paragraph of the provisional article 2 of Law No. 4691 amended by Law No. 6170.
In order to benefit from the exemption, taxpayers are required to register or register for patents or patent equivalent documents for R&D activities carried out within the framework of the legislation. The declarations for the taxation period in which the income is obtained must be applied to the relevant institutions until the end of the deadline.
E) Incentives Provided in terms of Income Tax
The exemptions on earnings provided to corporate tax legal entity taxpayers are also provided to income tax real person taxpayers. In this context, the income and corporate taxpayer must carry out activities based on advanced technology in the Technopark and the source of the earnings must be earned from the activities carried out within the scope of R&D and software. The exemptions and incentives applied are only related to income and corporate tax and no exemptions for other taxes, duties and fees are granted to the enterprises operating in the Technopark. In order to benefit from tax exemptions, enterprises in Technoparks must apply to the ministry. For the application, the enterprises must first obtain a document from the management company stating that they are located in the Technopark, including their activity areas.
In addition, the attendance fees (salaries) of board members or company partners are also included in this exemption. The salary received by the members of the company's board of directors is called the attendance fee and becomes valid after it is notarized by the decision of the members. This practice is subject to income tax in non-technopark companies and there is no insurance premium. For companies operating in technoparks, attendance fees paid to company partners or board members who actually participate in project development are exempt from income tax.
F) Incentives Provided in terms of Value Added Tax
According to Article 11 of the Value Added Tax Law No. 5035, deliveries and services in the form of system management, data management, business applications, sectoral, internet, mobile and military command and control software applications produced by taxpayers operating in technocities until 31.12.2023 are exempt from value added tax. While organizations whose field of activity in the zone is software, licenses and programs can benefit from the VAT exemption, the management company in the zone is excluded from VAT exemption.
Special areas located within the borders of Turkey but outside the scope of customs zones are called 'free zones' and technoparks located in these free zones established to encourage export-oriented investments are also within the scope of VAT exemption.
G) Incentives Provided in terms of Social Security Payments
Firms operating in technopolis increase their labor costs due to the taxes they are obliged to pay to the state on behalf of their personnel. Especially for entrepreneurial firms that pay high wages for employees with a certain qualification and equipment in R&D activities, insurance premium support is provided within the scope of Law No. 5746 on Supporting Research and Development Activities. The relevant insurance premium support is regulated in Article 3 of the law as follows:
"Except for public personnel, employees working in technology center enterprises, R&D centers, R&D and innovation projects and pre-competitive cooperation projects established by law with public institutions and organizations or foundations that use funds or loans to support R&D projects from international institutions or public institutions and organizations within the scope of technology development project agreements, or R&D and innovation projects supported by international funds or carried out by TÜBİTAK, and enterprises benefiting from techno-venture capital supports R&D and support personnel and the personnel whose wages are exempt from income tax pursuant to the provisional Article 2 of the Technology Development Zones Law No. 4691 dated 26.06.2001 and numbered 4691; half of the employer's share of the insurance premium calculated over the wages they earn for this work is covered from the appropriation to be placed in the budget of the Ministry of Finance for each employee for five years."
The personnel who can benefit from this exemption are specified in Law No. 4691 and the Implementing Regulation, and R&D personnel, researchers, technicians, software developers and support personnel will benefit from the exemption.
Ğ) Incentives Provided for Stamp Duty and Fees
Article 3 of the Law No. 5746 on Supporting Research, Development and Design Activities stipulates that stamp tax will not be collected from the papers issued in relation to all kinds of R&D and innovation activities within the scope of the law. Businesses that operate in technopolis and are exempt from stamp tax have a notification obligation.
For R&D and software projects supported by other organizations, enterprises wishing to benefit from the exemption of stamp tax and fees must submit a letter confirming that the project is supported, showing that it is a project that meets the criteria specified in the law, and the project grant agreement or project information form must be documented by submitting it to institutions such as notaries, other relevant official institutions, etc.
H) Final Regulations for 2024
According to the Provisional Article 2 of the Technology Development Zones Law, the income and corporate taxpayers operating in the zone are exempt from income and corporate tax until 31.12.2028, exclusively (only) from R&D, software and design activities in these zones. All taxpayers will benefit from the Technopark exemption without any distinction between full and limited taxpayers .