Key Funding Incentives
1 | R&D and Design Incentives
Türkiye offers robust tax incentives to encourage significant investment in research, development, and design activities.
R&D Deduction: Companies can deduct 100% of their eligible R&D and design expenditures from their corporate tax base.
→ Additional Deduction: An extra 50% deduction on the increase in R&D expenditure compared to the previous year is available when R&D Centres achieve at least a 20% increase in specific performance indicators (e.g., patent numbers, R&D share in total turnover, graduate degree researchers) compared to the previous year.
Income Tax Exemption for R&D Personnel: A substantial portion of the salaries of R&D, design, and support personnel is exempt from income tax, based on educational level:
→ 95% for personnel with a PhD or at least a Master’s degree in a supported programme.
→ 90% for personnel with a Master’s or Bachelor’s degree in a supported programme.
→ 80% for others.
Social Security Premium Support: The government covers 50% of the employer’s share of social security contributions for R&D, design, and support personnel.
Other Exemptions: VAT exemption for machinery and equipment used in R&D, and stamp duty exemption for R&D-related documents are also provided.
Impact: These incentives significantly reduce the cost of R&D for businesses, promoting innovation, fostering technological advancements, and encouraging the employment of skilled personnel in R&D roles.
2 | Technology Development Zones (Technoparks)
Technoparks are dedicated zones designed to foster R&D and software development by providing a supportive environment and numerous incentives, currently set to expire on 31 December 2028 (though likely to be extended).
Corporate and Income Tax Exemption: Profits derived from software development and R&D activities conducted within Technoparks are 100% exempt from corporate income tax. Wages of R&D and support personnel working in Technoparks are also exempt from income tax.
VAT and Customs Duty Exemptions: Sales of software and R&D products developed in Technoparks are exempt from VAT. Imported machinery and equipment used in Technoparks are exempt from customs duties.
Flexibility: Up to 75% of the time spent by R&D personnel working outside the Technopark (on approved project activities) is still eligible for the income tax exemption (this ratio is subject to Presidential decree).
Impact: Technoparks create concentrated hubs of innovation, facilitating collaboration between academia and industry, and providing a highly attractive tax and regulatory environment for technology-focused companies.
3 | Investment Incentive Program
Türkiye’s Investment Incentive Program encourages both domestic and foreign investments across various sectors and regions.
Certificates: Investors obtain an Investment Incentive Certificate (IIC) from the Ministry of Industry and Technology, which grants access to a range of benefits.
Benefits: These can include VAT exemptions on machinery and equipment, customs duty exemptions on imported equipment, reduced corporate tax rates (ranging from 15% to 55% of investment expenditures depending on the region), social security premium support, interest rate support on loans, and land allocation.
Project-Based Incentives: High-value, innovative, and technology-driven projects aligned with national development goals can receive extensive support, including qualified personnel support and capital contribution support.
Impact: This program plays a crucial role in attracting and retaining investment, particularly in manufacturing, energy, and technology sectors, fostering economic diversification and job creation.
4 | Public Funding Agencies (TÜBİTAK and KOSGEB)
Key government agencies provide direct financial support for R&D and innovation projects.
TÜBİTAK (The Scientific and Technological Research Council of Türkiye): TÜBİTAK is the leading agency for managing, funding, and conducting research. It offers a wide variety of grant-based support mechanisms for private and public sector researchers, entrepreneurs, and scholars. Programs include:
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- 1501 R&D Projects Support Program: Supports companies undertaking applied R&D to develop new products.
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- 1507 SME R&D Support Program: Provides financial support to SMEs for R&D.
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- 1512 Technological Entrepreneur Support Program (BiGG): Aims to support entrepreneurs and startups in technology and innovation.
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- International R&D Projects (1509 Program): Supports private sector participation in international R&D projects (e.g., EUREKA, Horizon Europe).
KOSGEB (Small and Medium Enterprises Development Organization): KOSGEB provides financial support, loans, and consulting services primarily to SMEs. Its “R&D, Innovation, and Industrial Application Support Program” encourages innovative projects, technology development, prototype production, and commercialisation. KOSGEB also offers entrepreneurship support programs with grants and loans for new businesses.
Impact: These agencies are vital for direct funding of R&D across various stages and sectors, fostering collaboration between academia and industry, and nurturing entrepreneurial activity.
5 | Venture Capital Landscape
Türkiye’s venture capital (VC) landscape is developing, reflecting a growing interest in innovative startups, particularly in technology-driven sectors.
Growth and Focus: The Turkish startup ecosystem has seen substantial growth, with increasing investment in technology, particularly in AI, energy, cleantech, and fintech.
Incentives for Start-up Shares: A new law (Law No. 7524, effective August 2024) exempts the value of shares granted to employees of technology start-ups from income tax (up to the employee’s gross salary for that year), aiming to help start-ups attract and retain talent via share incentive plans.
Venture Capital Funds Obligation: Companies in Technoparks whose exempted income exceeds a certain threshold (e.g., ₺1,000,000 annually) are obligated to invest 2% of this income into a domestic venture capital fund or a start-up in a Turkish incubation centre.
Impact: A maturing VC landscape, coupled with supportive government policies and the establishment of dedicated funds, is crucial for providing essential growth capital to Turkish startups and scale-ups.
Conclusion
Türkiye’s comprehensive approach to innovation funding is characterised by generous R&D and design tax incentives, the strategic establishment of Technoparks offering 100% corporate tax exemption, and a robust Investment Incentive Program. This multi-faceted public support, delivered through agencies like TÜBİTAK and KOSGEB, effectively reduces the financial burden and risk associated with R&D and entrepreneurship. Coupled with a developing venture capital landscape and initiatives to attract international talent via share incentive exemptions, Türkiye is actively fostering a dynamic ecosystem fundamental to its continued technological advancement, economic diversification, and global competitiveness.
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