Income Tax Withholding Incentive

For the wage obtained by R&D and support personnel working in R&D centers, with the exception of public personnel,
•     95% for those with a doctorate and at least a master's degree in one of the basic sciences,
•     90% for those with a master’s and at least an undergraduate degree in one of the basic sciences,
•     80% for others,
is cancelled by deducting the tax accrued on the withholding tax return.

The supported programs refer to the mathematics, physics, chemistry and biology undergraduate programs of higher education institutions and other programs with the opinion of the Council of Higher Education. 

The incentive is determined as 95% for individuals who completed graduate programs and 90% for individuals who completed undergraduate programs in these departments.

Until 31/12/2028 

95% for those with a doctorate and at least a master's degree in one of the basic sciences, 90% for those with a master’s and at least an undergraduate degree in one of the basic sciences, 
80% for others, 
is cancelled by deducting the tax accrued on the withholding tax return. 

1.    Researcher: Experts with at least a bachelor's degree, who are involved in the design or creation of new information, products, processes, methods and systems, and the management of related projects in projects within the scope of R&D activities 

2.    Technician: Individuals who have graduated from design, technical, science or health departments of vocational high schools or vocational schools and have technical knowledge and experience
In addition to that: 
•     Without exceeding 10% of full-time R&D personnel 
•     The wages of support personnel who participate in R&D and innovation activities and are  directly related to these activities are also within the scope of withholding tax incentives. 
The support personnel represent the manager, technical staff, laboratory worker, secretary, worker and similar personnel involved in R&D activities or directly related to these activities. 
All amounts paid to personnel for services are subjected to income tax. Under Law No 5746, additional wage payments to R&D personnel other than the monthly wage such as
•     Bonus
•     Fuel allowance
•     Religious holiday allowance
•     Food allowance
•     Rent allowance 
are considered within the scope of income tax withholding incentives granted to R&D personnel. 
The wages above 45 hours per week and overtime cannot benefit from the incentive.
R&D or design personnel working in R&D and design centers are covered by 100% (per the BKK) when approved by the R&D or design center management and the Ministry when these personnel are directly related to projects by these centers and when these personnel have to conduct some of the activities in this project outside the R&D or design center.
This subject must be monitored and documented with written permits by the company.
The payroll of the personnel employed in R&D activities is exempt from stamp tax due to wage payment solely for these duties. 
R&D or design personnel working in the R&D and design centers can spend time outside the zone without exceeding 20% of the total R&D, design and support personnel working hours. The employer can benefit from income tax withholding incentives for the time outside the zone. 
This legislation shows that each person can be evaluated separately for not exceeding 20% (BKK 50%) of the total working hours.
The employees can spend 9 hours of 45 hours outside the center.
The half of social security employer share of the R&D or design center personnel is paid by the state and 50% of the social security employer share is under the exemption until 31/12/2028.

THE EMPLOYER COST IS DECREASED AND THE EMPLOYER IS INCENTIVIZED.

Payroll Incentive Example FOR COMPARISON 

When the R&D or design graduate personnel wage working in R&D and design center is considered as 5000TL in the example:

NORMAL PAYROLL
a) Social Security worker share: Gross wage x %14 5000*0.14=700
b) Unemployment insurance worker share: Gross wage x %1 5000*0.01=50
c) Income tax: [Income tax basis x %15 (progressive) – MLA] 637,50
d) Stamp tax: Gross wage x %0.759 5000*0.759=37.95
e) Social Security employer share: Gross wage x %20.5      1,025
f) Unemployment insurance employer share: Gross wage x 2%   100 
MLA for single and unemployed individual 268.31 
 

NET PAYABLE= 3,842.86 MLA included
TOTAL COST=6,125 TL

R&D CENTRE EMPLOYEE PAYROLL

When the R&D or design graduate personnel wage working in R&D and design center is considered as 5000TL in the example:
Income tax: [Income tax basis x %15 (progressive) – MLA] 
(637.50-268.31) *0.90 = 332.27 TL EXCEMPT FROM INCOME TAX
Stamp tax: Gross wage x %0.759  
5000*0.759=37.95 ENTIRE SUM IS EXEMPT
Social Security employer share: Gross wage x %20.5  
1,025/2=512.50TL EXCEMPT
Unpaid tax due to R&D center
332.27+37.95+512.50=882.72TL
 

TOTAL COST=6,125 TL
R&D CENTRE EMPLOYEE TOTAL COST=5,242.28 TL