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Turkey has extended R&D and design centers incentive program

March 29, 2021

According to data provided on the Ministry of Industry and Technology’s website, there are currently more than 1,500 research and development (R&D) and design centers employing more than 70,000 people in Turkey.

R&D activities are defined as creative activities undertaken to enhance existing know-how and which provide original, experimental, scientific and technical output. Design activities aim to increase and improve the functionality of products capable of creating added value and competitiveness in industry and other relevant fields.

Passed in 2008, Law No. 5746 on Supporting Research, Development and Design Activities (“Law No. 5746”) regulates activities and tax benefits granted to R&D and design centers. On February 3, 2021, the Law on Technology Development Zones and Amending Certain Laws amended Law No. 5746 and extended its applicability from 2023 until the end of 2028.

Below is a brief summary of the major incentives and exemptions granted to R&D and design centers under Law No. 5746:

  • R&D and design expenditures are wholly deductible from the corporate tax base. These expenditures include, among others, raw material and material expenses (e.g. operating material, intermediate product, spare parts expenses), staff expenses, general expenses (e.g. public utility, rental, communication, logistics expenses) and depreciation of assets purchased in relation to R&D, innovation and design activities.
  • R&D, design and related support personnel are exempted from personal income tax at rates of 80%, 90% and 95% depending on the education level of the employee, with PhD holders receiving the highest exemption.
  • The employer’s share of employee social security contribution1 is covered by the government.
  • Documents/agreements issued or executed for R&D, innovation and design activities are exempt from stamp tax.
  • Imported goods to be used in R&D research, innovation and design projects are exempt from customs duty.

To be eligible for the above-mentioned incentives and exemptions, R&D centers must have at least 50 full-time employees, while design centers must have at least 10 full-time employees. Additional criteria that must also be met to qualify for the R&D or design center incentive program include: (i) R&D and design activities must be conducted in Turkey, (ii) the center must show sufficient assets, human resources, intellectual property rights, project and information resources, management skills and capacity to conduct the related R&D or design activities, and (iii) the R&D or design center must be organized as a separate unit in a single campus or physical space.

*Special thanks to our intern lawyer, Yavuz İskit, for his assistance in the preparation of this content.


1 Under Turkish Law, social security contributions are calculated on the basis of monthly wages and are paid jointly by the employer and the employee. As of the date of this publication, the employer’s share is 22.5 percent and the employee’s share is 15 percent of monthly gross earnings, including salaries and bonuses, where gross earnings are capped at a monthly amount (currently 22,072.50 Turkish Lira).