Patent Box, Super Deduction, Tax Exemptions and R&D Grants
A variety of incentives are offered in support of research and development activities, including a patent box regime, super deduction, tax exemption and grants.
Description of Incentive
The following incentives are offered by the Turkish government:
- R&D and Design Deduction – all costs related to design and innovation in R&D projects are deductible. Qualifying projects contain activities with the main purpose of reach technological innovation.
- Income tax withholding incentive – Wages given to R&D, design and support personnel are exempt from income tax. Rates vary from 80% – 95% depending on the education level of the personnel.
- Super Deduction – If a company incurs more R&D costs than they did the previous year, they are eligible for an additional 50% deduction of the R&D cost increase over the previous year.
- Stamp duty exemption – Papers created for R&D activities or for R&D personnel may be exempt from stamp duty.
- Income tax exemption – Grants given for the purpose of assisting R&D activities and projects are not subject to income tax.
- Patent Box – Profits generated from inventions and software development that are a result of R&D conducted in Turkey by corporate taxpayers may be reduced by 50%.
Turkey has a broad eligibility criteria and all industries may qualify for the R&D incentives. Qualified expenditure must be incurred within Turkey. Eligibility is determined by the type of activities conducted within Turkey. Qualified activities include:
- Activities performed to develop technological innovation
- Software activities performed to create new products and ideas
- Design work in support of R&D activities
Typical eligible costs include:
- Gross wage of R&D/marketing staff
- Cost of new equipment and materials relating to R&D
- Cost of goods/materials/R&D services purchased from third parties
- Depreciation of equipment used in R&D projects
The amount of the R&D benefit is capped, but the benefit can be carried forward until fully utilized. The activities claimed as R&D must be certified by a sworn fiscal consultant to be eligible.
Swanson Reed offers the following services:
- Advice on tax preparation relevant to claiming the R&D tax credits incentive
- Preparation of documents relating to filing and substantiating a R&D taxation claim
- R&D tax advice and consultations
- R&D tax claim planning and preparation
For a full range of services in relation to the credit, please click here.