Regulation Amending the Implementation and Supervision Regulation on Supporting Research, Development, and Design Activities (“Amendment”) was published in the Official Gazette and entered into force on August 25, 2022.
The Amendment makes significant changes to the Implementation and Supervision Regulation on Supporting Research, Development, and Design Activities (“Regulation”) published in the Official Gazette on 10 August 2016. An overview of those changes is as follows:
- Some phrases in the Regulation were amended. Accordingly, the Amendment replaces the phrase “The Ministry of Science, Industry, and Technology” in subparagraph (e) of the first paragraph of Article 4 in the Regulation with the phrase “Ministry of Industry and Technology”; the phrase “General Directorate of Science and Technology” in subparagraph (ğ) with the phrase “General Directorate of R&D Incentives”; the phrase “Council of Ministers’” in subparagraph (o) with “the President’s”; and the phrase “Ministry of Customs and Trade” in subparagraph (v) with “Ministry of Trade.”
- The end of paragraph 4 in Article 10, titled “Granting income tax withholding incentives, “of the Regulation now contains the following article:
“The tax to be paid by (1) R&D and support staff employed in (a) technology centers, (b) R&D centers, (c) public institutions & organizations, and (d) R&D and innovation projects and pre-competitive collaborations that are managed by TÜBİTAK, or supported by international funds or by foundations established by law or benefiting from the funds or loans of international institutions or public institutions and organizations that aim to support R&D, innovation or design projects under technology development project agreements, and (e) businesses benefiting from venture capital subsidies for technology-focused enterprises, as well as (2) design and support staff employed in design projects and design centers supported by the above-mentioned institutions and organizations pursuant to Law, due to their income arising from their relevant work, remaining after deducting the minimum living allowance regulated in article 32 of Law no. 193 before 1/1/2022 and the tax corresponding to the minimum wage exemption regulated in subparagraph (18) of the first paragraph of the 23rd article of Law no. 193 (valid as of 1/1/2022), shall be deducted from the tax accrued on the withholding tax return and abated in the rate of ninety-five percent for those with a PhD and those with at least a master’s degree in one of the supported programs, of ninety percent for graduates and holders of a bachelor’s degree in one of the supported programs, and of eighty percent for others.”
In addition, it is stated that the mentoring activities and lectures of Ph.D. graduate university staff working in R&D and design centers will be included in the income tax withholding incentive scope, provided that the total duration of such activities does not exceed 8 hours per week.
The Amendment also states that the staff at R&D or design centers will benefit from the income tax withholding incentive for their work outside those centers, except for the cases specified in the paragraph, provided that the duration does not exceed twenty percent of the total number of such staff or the total working hours subject to the incentive and that the relevant R&D or design center management notifies the situation to the Ministry. It is added that the President may increase that percentage (twenty percent) up to seventy-five percent or decrease it down to the legal rate in some regions and industries.
- Regarding the postgraduate training of R&D and design center staff, the Amendment annuls the requirement to be employed in R&D or design centers for at least one year or to obtain the Ministry’s approval.
- The phrase “clinical trials whose minimum two stages were not conducted domestically before obtaining the drug production permit, as well as clinical trials conducted after obtaining the drug production permit,” which are excluded from the scope of R&D and innovative activities, was replaced with the phrase “Phase-3 clinical trials without at least one of the Phase-1 or Phase-2 trials being conducted domestically before obtaining the drug production permit, as well as clinical trials conducted after obtaining the production permit.”
- The Evaluation and Audit Commission’s inspections planned to be held at R&D centers and design centers at least once every two years will now be owned every three years. There are also certain adjustments regarding the inspection and investigation of R&D and design center projects that the Managing Company can conduct.
- The Amendment contains detailed information on the monitoring and implementation processes of Pre-Competitive Collaborations, with the maximum support duration being increased from 36 months to 48 months for such collaborations.
- The Amendment replaces the title of article 15, “Incentive for Liberal Arts,” with “Incentives for the Supported Programs,” as well as the phrase “Design Registration Incentive” with the words “Design Incentive” to expand the scope of these concepts.
- The Amendment imposes the obligation to benefit from the incentives for the supported programs, the staff graduating from higher education institutions’ undergraduate programs of Mathematics, Physics, Chemistry, and Biology, and the team graduating from other programs to be determined by the Ministry, based on the opinion received from the Council of Higher Education, must be employed after 01.03.2016 and 03.02.2021, respectively, and for the first time in the relevant enterprise.
- The Amendment replaces the phrase “finalization procedures” in paragraph 2 of article 27 in the Regulation, which states, “Application, evaluation, monitoring and inspection, payment and finalization processes of pre-competitive collaborations, the relevant support items, as well as matters to be included in agreements, and operations & procedures relevant to the implementation shall be prescribed in the Implementation Procedures and Principles for Pre-Competitive Collaborations issued by the Ministry,” with the phrase “finalization, suspension, cancellation, and relevant processes.”
Additionally, the phrase “of businesses” in paragraph 3 of article 27 was replaced by the words “of project partners.”
- The Amendment adds an article to the Regulation titled “Granting venture capital.” Accordingly, corporate taxpayers benefit from tax relief of at least TRY1,000,000 under article 3 in “Law on Supporting Research, Development and Design Activities” and . They willsfer 2% of that amount to a temporary passive account in their annual corporate tax return to be provided after 01.01.2022. The maximum amount to be transferred will be TRY20,000,000 each year. Until the end of the year in which the temporary account is created, the amount must be used to purchase shares in venture capital mutual funds founded to invest in entrepreneurs in Türkiye or to provide capital to entrepreneurs operating in venture capital investment trusts or incubation centers defined in the “Law on Technology Development Zones.” If that amount is not transferred until the end of the year, 20% of the amount deducted from the annual tax return will be excluded from the scope of R&D relief granted that year.
The Amendment enters into force as of the date of publication, effective from 03.02.2021.
