Turkish Labor Law
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Turkey is planning to widen its supports on R&D activities to achieve innovative technology and higher value-added products by increasing and attracting new investment in such areas, in order to get a sustainable economic growth rate, which is seen as the only way to promote the competitive capacity of the country’s enterprises.
As parts of a reform package many extensive arrangements has been introduced during 2016, first of which is the Law No. 6676 “Amending the Law on Supporting Research and Development Activities and Some Other Laws and Statutory Decrees,” published in the Official Gazette on 26 February 2016. In this respect, also some “statuary decrees” and “regulations” has been issued to form an integrated package, the main points of which are provided below.
- Title of Law numbered 5746 has been changed as “Law on Supporting Research and Development and Designing Activities.”
- Design Activities and Centers: Design activities and personnel employed in design centers have been taken into scope of Law No. 5746. The companies in the field will benefit from the incentives and supports, such as stamp tax, and property tax exemption along with the exemption on legal fee.
- Design Center Certificate: First time benefiting companies from the discounts must obtain a Design Centre Certificate.
- Number of equivalent personnel: the minimum number of employed full-time equivalent personnel required for benefiting from the R&D incentives has been decreased to 15, from 50.
- Tax Exemption: Income earned from the R&D, innovation and designing activities will be exempt from income tax and corporate tax until December 31, 2023;
- Designing services with strategic importance: The earnings acquired from designing services that have strategic importance for the country will be exempt from the income tax and corporate tax until 31 December 2023, as is the case with software and R&D services.
- Developing and institutionalizing the collaboration between universities and industry: Qualified and experienced academicians will be encouraged to participate in R&D or design centers to create collaboration between universities and industry.
- The salaries of the design personnel working in the Specialized Technology Development Zones will be exempt from every kind of taxes until 31 December 2023. R&D software and design personnel’s wages that belong to weekend breaks and national and general public holidays will be regarded as exceptional, and these personnel will be provided flexible working times.
- Tax Exemptions on Wages:
- In order to promote the quality of personnel, different rates of tax exemptions will be introduced for the employees with doctorate diploma, master’s degree and bachelor’s degree.
- The exemption rates on wages will be increased by 5 points.
- Academicians, who are employed to conduct projects under university–industry cooperation programs, will be exempt from income tax.
- Undergraduates of basic sciences (mathematics, physics, chemistry and biology) will also be benefiting from wage incentives.
- Even the wages earned by R&D and design centers’ personnel for the works conducted out of these centers will be subjected to withholding tax incentive provided that these works are related to the activities conducted in such centers.
- Purchase order: Enterprises that are established to conduct their R&D and design activities based on purchase order contracts will be deemed as R&D centers.
- Subsidy: 50 % of the cost of the machinery and equipment of R&D companies will be subsidized by the government.
- Design exhibition: Government will pay the designs registration expenses exhibited at the design exhibitions through Turkish Design Advisory Council non-refundable.
- Scholarships: Successful students will be granted scholarships by Scientific and Technological Research Council of Turkey (TUBİTAK).
- Overseas purchases: For ensuring the completions of R&D projects in shortest time and with lowest cost possible, overseas purchases within the scope of the project will be free of duty, and exempt from stamp tax and legal fee.
- Activities out of Scope: Activities that are not deemed as R&D and innovation, and designing activities are determined in the Regulation published in the Official Gazette numbered 29797, dated 10 August 2016 (detailed information is provided in the next article of the bulletin.)
- Permanent work permit for foreign R&D personnel: According to recently enacted International Workforce Law No. 6735 Article 8, paragraph 6; “Work permit applications lodged by foreign nationals who wish to work as R&D personnel in the companies that own R&D Center Certificate in the scope of Law on Supporting Research and Development Services, No. 5746, may be accepted upon favorable opinion of Ministry of Science, Industry And Technology
