ADEM ORHUN / ISTANBUL COMMERCE
While Turkey has been promoting itself on the global stage through its good quality products, it has also been drawing attention through its R&D activities. Enacting many incentivizing and support mechanisms, the Turkish state is also supporting R&D activities through a Special Law in order to commercialize technological knowledge, establish competitive advantage, and support entrepreneurship.
SPECIAL LAW
The “Support of Research, Development, and Design Activities Law,” numbered 5746, aims to speed up the entry of foreign capital investments directed towards technology-concentrated R&D, innovation, and design, as well as encourage employment of R&D and design personnel and skilled labor.
Turkey has witnessed the establishment of R&D centers nearly every week, encouraged through support to new set-ups and tax exemptions; there are now
934 centers. The support provided to foreign investors has had a positive effect in this area as well – while the number of R&D centers established by foreign firms was 42 in 2016, this number has risen to 126 this year.
GERMANY IN THE LEAD
German firms are in the lead when it comes to foreign companies establishing R&D centers in Turkey. Italy, Luxembourg, the Netherlands, France, and the US are also among the foremost countries in the list.
Many German, American, Dutch, and Finnish companies working in partnership with Turkish companies have also been establishing R&D centers through the support they receive.
SUPPORT LAW
There are various ways in which support is being provided to R&D activities which help in gaining advantages on the global markets. The “Law 5746 in Support of Research, Development, and Design Activities,” enacted in order to support the establishment of R&D centers and the employment of skilled labor, provides myriad support for firms and entrepreneurs. The main incentives are as follows:
TAX AND PREMIUM ADVANTAGES
R&D centers can deduct the full costs incurred due to project activities from their corporate tax base. Half of the insurance premiums of R&D and support personnel and employer’s share are met. Expenses such as rent, water, energy, maintenance and repair, communications, transport, insurance costs, as well as costs associated with books, journals and other scientific publications are covered by the state. Additionally, there is a 80-95% income tax withholding for R&D personnel.
WHICH SECTOR HAS THE MOST R&D CENTERS?
According to data from the Ministry of Industry, and Technology, machine and equipment manufacturing, automotive supply industry, software, communications technology, and textile are the top five industries with the most R&D centers. A third of these centers are located in Istanbul; Kocaeli and Bursa are also among the top three.
CRITERIA FOR R&D CENTERS
The basic criteria for R&D centers wanting to receive the support provided by thelaw are as follows:
HOW TO APPLY
R&D center operations are fully conducted by electronic signature (e-signature). The necessary information and documents are logged in at https://biltek.sanayi.gov.tr.
Following a preliminary examination by the Ministry, the center is visited and a report sent to the ministry. The relevant commission from the ministry comes to a decision, keeping in mind all of the activities conducted at the center.
COMPANIES WITH R&D CENTERS IN TURKEY
Huawei (China)
Jotun (Norway)
Ford (US)
MAN (Germany)
MS Pharma (Luxembourg)
Fiat (Italy)
Mercedes-Benz (Germany)
Procter&Gamble (Italy)
Unilever (UK)
Valeo (France)
Toyota (Japan)
Bosch (Germany)
Panasonic (Japan)