Technology Development Zones (TDZ) are areas designed to support R&D activities and attract investments in high-technology fields. There are 84 TDZs, of which 63 are operational and 21 have been approved and are currently under construction.

The project is presented to the Teknokent EXECUTIVE COMPANY by renting an office located in the Teknokent region. Within the scope of this project, the managing company issues a letter stating that it can benefit from the incentives in accordance with the ARGE / TEKNOKENT laws numbered 4691 / 5746. These letters are reported to the tax office and social security institution (SGK). In this context, the incentives of software companies operating in the TEKNOKENT region benefit from the above incentives

The incentives are:
✓ A corporate tax exemption on the profits derived from software development and R&D activities in TDZ, until December 31, 2023.
✓ VAT exemption of the deliveries of application software produced exclusively in TDZ, until December 31, 2023.
✓ 100% income withholding tax exemption of the employees employed in R&D activities in TDZ, until December 31, 2023.
✓ Half of SSI Employer premiums
✓ Customs duty exemption – Stamp duty exemption

• Specialized Free Zones, which further increase the level of technology in free zones and encourage production with high added value, has been recently introduced in Turkey with the change of the status of Istanbul Airport Free Zone to Istanbul Specialized Free Zone. With the announcement of the first specialized free zone in Turkey for the software and informatics sectors, many software and IT companies operate in the region today. One third of the operating companies operate in the software and informatics sector.

• With the New Generation Specialized Free Zone model, it is aimed to attract foreign capital to the country and to offer attractive opportunities to exporters, and the practices in the world are also reviewed.

In addition to the free zone supports, the following incentive items are planned for users operating in Specialized Free Zones, valid for a period of 5 years:

• Supporting 10 qualified personnel at the rate of 50% of their monthly gross wages, up to 15 thousand dollars annually,
• Supporting the expenditures related to the leased land and buildings in the Specialized Free Zones up to a maximum of 75 thousand dollars per year,
• Supporting the interest or profit share expenses of the regional operators by 50% for the investment loans with a maximum maturity of 10 years and up to USD 10 million used at once, provided that they do not exceed 50% of the fixed investment amount they have committed during the investment phase.
• Certain conditions are sought in order to benefit from these additional supports in New Generation Specialized Free Zones. Companies established in the country or in other free zones with a certain export experience, which were established at least three years ago, may apply by moving their headquarters to the region, establishing branches or establishing a new company with majority shareholding.
• Companies located abroad are also required to have been established at least three years ago. Companies that meet this requirement may apply for activity by establishing a branch or establishing a new company by owning a majority share. The average of exports for the last three years must be at least 250 thousand dollars per year.
• New Generation Specialized Free Zones have become attractive for foreign investors with their foreign exchange earning service activities, and the incentives provided will be expanded to cover other high technology sectors in the future, and the number of these zones will be increased. In this way, it is aimed to increase the technologyintensive production capacity, which is of critical importance for Turkey.
• Free Zone Incentives – In case you reach a total export figure of 2.25m USD in the last 3 years.
• 75.000 USD rent support up to 50% – 5 years (provided that 1 M USD export per year and increasing rate)
• 150.000 USD total 10 Personnel Salary support – 5 Years (1 M USD per year export and increasing rate)
• 20 Years License Period
• 100% Corporate Tax Exemption
• 100% Personnel Income Tax Exemption (Includes all personnel working in the free zone)
• 100% VAT and Stamp Duty Exemption
• 100% Customs Duty Exemption
• 3 Years License Period
• Free Zone Incentives – In Case You Have Not Reached 2.250M USD Export Figure in the Last 3 Years :
• 100% Corporate Tax Exemption
• 100% Personnel Income Tax Exemption (Includes all personnel working in the free zone)
• 100% VAT and Stamp Duty Exemption
• 100% Customs Duty Exemption

At the end of 3 years, you can apply for rent and salary support along with a 17-year license if you show an increasing performance of not less than 1 M USD per year. You do not have the right to receive rent and salary support for first 3 years. The license application fee is 5,000 USD for one time only.

R&D CENTERS

• TECNOLOGY COMPANIES

R&D Centers and R&D Projects Granted by Government

Which Activities are accepted as R&D in Turkey?

• Obtaining new technical information for the development of science and technology with the aim of clarifying the ambiguities in scientific and technological fields,
• Developing new products, materials, supplies, devices, equipment, procedures and systems through new methods and producing new techniques and prototypes through design and drawing studies,
• Software activities based on new and original designs,
• Researching and developing new productions, methods, processes and procedures,
• Researching new techniques / technologies which decreases the costs.

Types of R&D Supports

1. Grants by TUBITAK, KOSGEB, Development Agencies, and Ministry of Science, Industry, Technology.

TUBITAK (Scientific and Technological Research Council of Turkey) has the most common use of supporting R&D and innovation expenditures by the companies. In order to benefit Grants from TUBITAK, companies should frame specific projects and should apply to TUBITAK for each project with necessary documentation, including detailed operational feasibility of the project and related financial expenses.

The application is evaluated by TUBITAK and approved as Granted R&D project if all requirements are satisfied. R&D projects approved by TUBITAK are benefitted 60% grant (at maximum) of the Project’s total expenses including personnel costs, materials to be used, outsource consultancy, travel and general expenses.

2. Code of R&D Activities Support numbered 5746 provides special incentives for R&D Centresin which minimum of 15full-time-equivalent R&D personnel are employed and R&D Projects granted by the Government Institutions. The applicable incentives are:

• %100 deduction of R&D expenditure from corporate tax base. (If the number of full-time-equivalent R&D personnel exceeds 500, in addition to the 100% deduction, half of the R&D expenditure increase incurred in the operational year compared to the previous year will also be deducted.)
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  Income withholding tax exemption for employees (80% or 90% of the employee income tax)

• %50 of social security premium exemption for employers during 5 years period.
• Stamp duty exemption for applicable documents.
• Techno-initiative capital for new scientists up to TRY 100K

SOFTWARE COMPANIES OUTSIDE TECHNO ZONES

• TECNOLOGY COMPANIES

Types of R&D Supports

Software Companies Operating Outside the Above Regions:

There is no incentive if the company carries out its activities anywhere other than the Technopolis zone or the Free zone. Only 50% of corporate income is exempt from corporate tax. In addition, there is VAT exemption for SOFTWARE services whose invoices are issued abroad. However, over the invoice it should clearly be stated as “software”. Apart from these, there are no incentives.

ORGANIZED INDUSTRIAL ZONES

TECNOLOGY COMPANIES

Organized Industrial Zones

Organized Industrial Zones (OIZ) are designed to allow companies to operate within an investor-friendly environment with ready-to-use infrastructure and social facilities. The existing infrastructure provided in OIZs includes roads, water, natural gas, electricity, communications, waste treatment and other services.

• There are 331 OIZs in 80 provinces, 234 of which are currently operational, while the remaining 97 OIZs are being constructed throughout Turkey.
• Investors operating in the OIZs may benefit from the following advantages:
• • Exemption from real estate duty for five years starting from the date of completion of the plant construction.
  • No VAT for land acquisitions.
  • Low water, natural gas, and telecommunication costs.
  • No tax is payable in cases of merging and/or separation of plots.
  • Exemption from municipality tax for the construction and usage of the plant.
  • Exemption from the municipality tax on solid waste if the OIZ does not avail of the municipality service.