Turkey set new rules for the deduction of research and development, innovation and design expenditures with the Supplementary Decision of the Presidential Decree numbered 6652 and dated January 9, 2023 (“Decree”) published in the Official Gazette numbered 32069 and dated January 10, 2023, the deduction of Research and Development (“R&D”), innovation, and design expenditures in determining the income of R&D or design centers was regulated to be effective as of January 10, 2023.
With the Decree, the Decree of the Council of Ministers dated August 1, 2016, and numbered 2016/9092 on the deduction of R&D, innovation, and design expenditures in determining the income has been repealed and additional indicators to be considered for deduction have been stipulated in addition to the indicators stipulated under the previous legislation.
According to the Decree, in the determination of the corporate income in accordance with the Corporate Tax Law numbered 5520 and dated June 13, 2006, of R&D or design centers established within the scope of the Law on Supporting Research, Development, and Design Activities numbered 5746, and dated February 28, 2008, provided that they fulfill the below criteria, fifty percent of the increase in R&D and innovation or design expenditures made annually compared to the previous year is to be deducted.
With this regard, R&D or design centers that provide at least a twenty percent increase in any of the below indicators compared to the previous year would be suitable for a deduction of expenditures in determining their corporate income: :
- The share of R&D or design expenditure in total turnover
- Number of registered national or international patents
- Number of internationally supported projects
- The ratio of the number of postgraduate researchers to the total number of R&D personnel in R&D centers
- The ratio of the number of designers with graduate degrees to the total number of design personnel in design centers
- The ratio of the total number of researchers to the total number of R&D personnel in R&D centers
- The ratio of the total number of designers to the total number of design personnel in design centers
- Ratio of turnover obtained from new products resulting from R&D or design activities to total turnover
Lastly, the deduction of R&D, innovation, and design expenditures in determining the corporate income of R&D and design centers stipulated under the Decree would be applicable until the end of the year 2028.