GOVERNMENT INCENTIVES
R&D
Incentives
1-
R&D Law
The
R&D Law provides special incentives for R&D and design investment
projects in Turkey provided that a minimum of 30 personnel are employed in an
R&D center. This personnel requirement may be reduced to 15 employees in
sectors determined by the Council of Ministers to be a priority, such as
software, medicine and medical devices, agriculture, food, biotechnology, ICT,
and other high-tech sectors. The incentives within the new law will remain in
effect until 2024 and include:
100
percent deduction of R&D expenditure from the tax base
- Half of the R&D and design
expenditure increase incurred in the operational year compared to the
previous year will be deductible (criteria will be determined by Council
of Ministers)
- Income withholding tax
exemption for employees (until December 31, 2023.)
- 50 percent social security
premium exemption for employers (until December 31, 2023)
- Stamp duty exemption for
applicable documents
- Customs duty exemption for
imported products within the scope of R&D projects
- Techno-initiative capital for
new scientists up to TRY 500,000
- Deduction from the tax base of
certain funds granted by public bodies and international organizations
2-
Support for Technology Development Zones
The
advantages in Technology Development Zones are:
Profits
derived from software development, R&D, and design activities are exempt
from income and corporate taxes until December 31, 2023.
- Sales of application software
produced exclusively in TDZs are exempt from VAT until December 31, 2023.
Examples include software for systems management, data management,
business applications, different business sectors, the internet, mobile
phones, and military command control.
- Wages of R&D, design, and
support personnel employed in the zone are exempt from all taxes until
December 31, 2023. The number of the support personnel covered by the
exemption shall not exceed 10 percent of the number of the R&D personnel.
- Investments for the production
of the technological products obtained as a result of the R&D projects
conducted in the zone may be made in the TDZ if deemed suitable by the
operator company and allowed by the Ministry.
- 50 percent of the employer’s
share of the social security premium will be paid by the government until
December 31, 2023.
- Customs duty exemption for
imported products and stamp duty exemption for applicable documents within
the scope of R&D, design, and software development projects.
3-
Industrial Thesis (SANTEZ) Program
Direct
financial support for new technology adaptation, process development, quality
improvement, and environmental modification projects to be achieved via
university partnerships:
- Up to 85 percent of the project
budget could be supported by direct grants
- Project term is 2 years, with a
possible extension of 6 months
- Expenditure on staff, travel,
consumable materials, machinery equipment, consultancy, and relevant
service procurements, transportation, insurance, and customs are supported
- The application file could be
approved within 4 months, and the project supervision committee is
independent
4-
TUBITAK Support
TUBITAK
(Scientific and Technological Research Council of Turkey) compensates or grants
R&D related expenses and capital loans for R&D projects.
Projects
eligible for TUBITAK incentives:
Concept
development
- Technological research and
technical feasibility research
- Laboratory studies in the
translation of a concept into a design
- Design and sketching studies
- Prototype production
- Construction of pilot
facilities
- Test production
- Patent and license studies
- Activities concerning the
removal of post-sale problems arising from product design
TUBITAK
1515 – Frontier R&D Laboratory Support Program
The 1515
Program applies an integrated perspective that extends beyond a consideration
of the initial establishment phase of the R&D laboratory. The 1515 Program
offers an entirely grant-based financial model to cover up to 75 percent of the
operating expenses of the R&D laboratory in Turkey up to TRY 10 million for
each calendar year for a duration of 10 years at most.
The coverage of
the grant support consists of the following items:
Personnel
costs
- General operating costs
- Consultancy fees
For eligibility
to have personnel costs covered in the total grant amount, at least 50 percent
of the personnel must hold Turkish citizenship and at least 1/3 should have a
doctoral degree.
5-
TTGV Loans
The Technology
Development Foundation of Turkey (TTGV) offers long-term interest-free loans
for R&D projects on agriculture technologies, health technologies,
education technologies, and energy efficiency improvement.
The loans are
intended to provide financial support to those activities whose purpose is the
development of new products with commercial value in the aforementioned
technological areas, or for the promotion of competitiveness of current
products in these areas. The scope of the program includes:
The
duration of project support is at least 1 year and is at most 3 years.
- The upper and lower limits for
the amount of support to be provided are USD 3 million and USD 250,000,
respectively.
- Support shall be provided 50
percent by TTGV and 50 percent by the project coordinating company’s
contribution.
- The pay-back term is 4 years in
total after project execution, including a one-year grace period.
Export Support
Inward
Processing Regime
The aim of the
Inward Processing Regime is to enable exporters to procure inputs at world
market prices for the production of their exports without being subject to
customs duties, including VAT, as well as trade policy measures.
The Inward
Processing Regime includes two types of processing measures: Conditional
Exemption System and Reimbursement System.
1)
The Conditional Exemption System waives commercial policy measures and taxes
that arise during the importation of non-freely circulating raw materials,
auxiliary materials, packages, and operating equipment used in production of
the export product subject to Inward Processing Regime.
It is called conditional as the exporter has to guarantee through
collateralization of the imported materials and equipment that they will only
be used for the production and exportation of the product subject to Inward
Processing Regime. The guarantee given for the collateralized materials and
equipment will be released upon exporting of the final product.
2)
The Reimbursement System is the reimbursement of taxes that were paid during
the importation of freely circulating raw materials, auxiliary materials,
packages, and operating equipment used for the production of the exported
product subject to Inward Processing Regime. These taxes are reimbursed upon
the exporting of the final product subject to Inward Processing Regime.
Commercial policy measures are applied to the imported materials and equipment
and the all the import procedures such as technical regulations in foreign
trade and standardization legislation must have been completed.
Evaluation
of Applications
It should
be possible to determine whether the imported raw materials are used to produce
exported products.
- The activity should not have a
negative impact on the economic interests of the producers in the customs
territory.
- Activities should create
added-value and the final product should not have a negative impact of the
competitiveness in the sector.
- The company should be built in
the customs territory in Turkey
Benefits of
Inward Processing Regime
- 100 percent Customs Duty Refund
- 100 percent VAT Refund
- 100 percent Special Consumption
Tax Refund
- 100 percent Resource
Utilization Support Fund Refund
- 100 percent Stamp Tax Refund
- Exemption from quotas and
surveillance measures: There are import quotas determined by the
government for a number of goods, and inward processing regime certificate
holders will not be affected by these quotas. The government also
determines market prices for some products and imposes excise taxes to
these products based on the determined market price, irrespective of the
price paid by the importer. Participants in the Inward Processing Regime
would also be exempt from such surveillance measures.
- It is permitted for domestic
sales and delivery
Sectoral
Incentives
Incentives
for Renewable Energy
In
addition to the General, Regional, Priority, and Strategic Investment Incentive
schemes that apply to investments in the energy sector, the government provides
specific incentives for electricity production investments that are based on
renewable energy sources.
100
percent exemption from Customs Duty and VAT
- Feed-in-Tariff (FiT) scheme for
10 years
§
Differentiated FiT scheme based on resource type
§ Extra
premiums for domestic components
- Grid connection priorities
- Lower license fees
§ Only 1
percent of licensing fee
§
Exemption from the annual license fee for the first eight years of operation
- License exemptions in
exceptional circumstances
- Various practical conveniences
in project preparation and land acquisition
|
Renewable Energy FiT Rates
|
|
Type of
production facility based on renewable energy resources
|
Feed-in-tariff Prices Applicable
(US Dollar cent/kWh)
|
|
Hydroelectric
production facility
|
7.3
|
|
Wind
power-based production facility
|
7.3
|
|
Geothermal
power-based production facility
|
10.5
|
|
Biomass-based
production facility (including landfill gas)
|
13.3
|
|
Solar power
based production facility
|
13.3
|
|
Additional FiT rates for Local Content Support
|
|
Type of
facility
|
Domestic
production
|
Domestic Contribution
(US Dollar cent/kWh)
|
|
A-Hydroelectric
production facility
|
1- Turbine
|
1.3
|
|
2- Generator
and power electronics
|
1.0
|
|
Wind power
based production facility
|
1- Blade
|
0.8
|
|
2- Generator
and power electronics
|
1,0
|
|
3- Turbine
tower
|
0.6
|
|
4- All of the
mechanical equipment in rotor and nacelle groups (excluding payments made for
the blade group and the generator and power electronics.)
|
1.3
|
|
Photovoltaic
solar power based production facility
|
1- PV panel
integration and solar structural mechanics production
|
0.8
|
|
2- PV modules
|
1.3
|
|
3- Cells
forming the PV module
|
3.5
|
|
4- Invertor
|
0,6
|
|
5- Material
focusing the solar rays onto the PV module
|
0.5
|
|
Intensified
solar power-based production facility
|
1- Radiation
collection tube
|
2.4
|
|
2- Reflective
surface plate
|
0.6
|
|
3- Sun
tracking system
|
0.6
|
|
4- Mechanical
accessories of the heat energy storage system
|
1.3
|
|
5- Mechanical
accessories of steam production system that collects the sun rays on the
tower
|
2.4
|
|
6- Stirling
engine
|
1.3
|
|
7- Panel
integration and solar panel structural mechanics
|
0.6
|
|
Biomass
power-based production facility
|
1- Fluid bed
steam tank
|
0.8
|
|
2- Liquid or
gas fuel steam tank
|
0.4
|
|
3-
Gasification and gas cleaning group
|
0.6
|
|
4- Steam or
gas turbine
|
2.0
|
|
5- Internal
combustion engine or stirling engine
|
0.9
|
|
6- Generator
and power electronics
|
0.5
|
|
7-
Cogeneration system
|
0.4
|
|
Geothermal
power-based production facility
|
1- Steam or
gas turbine
|
1.3
|
|
2- Generator
and power electronics
|
0.7
|
|
3- Steam
injector or vacuum compressor
|
0.7
|
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