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Turkey: Cabinet of Turkey agrees to decrease the minimum requirement for establishing an R&D centre

10 September 2014   (0 Comments)
Posted by: Author: Kadir Bas
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Authors: Kadir Bas and Ozlem Elver Karacetin (PwC Turkey)

With the Law No. 5746 on Support for Research and Development (R&D) Activities, published onMarch 12, 2008, companies in Turkey are provided with tax incentives and supports including R&D deduction, income tax exemption, social security premium support, and stamp tax exemption.

To benefit from these incentives and supports, companies must either have an R&D centre licence and carry out the R&D and innovation activity in the R&D centre and/or have R&D and innovation projects supported by governmental institutions or foundations established by law or international funds.

To establish an R&D center and obtain an R&D centre licence, one of the main conditions set by the Turkish ministry of science, industry, and technology required the employment of 50 full-time equivalent R&D personnel. With the new decision taken on May 21, 2014, and entering into force as of July 1, 2014, the minimum R&D personnel number requirement has been decreased to allow companies with 30 full-time equivalent R&D personnel to establish an R&D Centre approved by the Ministry. Other conditions for holding an R&D licence remain unchanged such as carrying on R&D activities in Turkey; having sufficient asset, human resource, intellectual property, project and information sources, managerial skills and capacity; locating the R&D centre as a separate unit in a single physical area; having mechanisms to conduct the physical controls that the R&D and support personnel works inside the R&D centre; having R&D and innovation programmes and projects with a defined topic, duration, budget and human resource; and being established outside the technology development zones.

PwC observation:

Currently, there are 156 R&D centres established with the approval of the Ministry of the Science, Industry, and Technology in Turkey.The new change in legislation is well anticipated by companies resident in Turkey having difficulties in maintaining the minimum R&D personnel requirement in their R&D centre for keeping the licence and also for the companies employing at least 30 but less than 50 full time equivalent R&D personnel. Therefore, in the following periods this new decision seems to pave the way for a stimulation of the environment for R&D activities in Turkey by encouraging companies to establish a R&D centre and benefit from R&D tax incentives and supports in Turkey.

This article first appeared on pwc.com.



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