“Draft General Communiqué on 5746 Research, Development and Design Law: Opinions and Suggestions”
Law No. 5746 on Supporting Research, Development and Design Activities Draft General Communiqué (Serial No. 9) was published on the website of the Revenue Administration and it was stated that opinions and suggestions can be submitted to the Presidency in order to improve the Draft.
Pursuant to the provision introduced by Law No. 7346, employees working within the scope of Law No. 5746 and Law No. 4691 will be able to benefit from income tax withholding incentives by conducting part of their work outside the R&D/Design Center and Technology Development Zone. In practice, this arrangement is called flexible working.
The Draft Communiqué regulates the procedures and principles of the application regarding the inclusion of the periods worked outside the R&D/Design Center and Technology Development Zone (flexible working) within the scope of income tax withholding incentive by Law No. 7346.
In this context, our opinions and suggestions regarding the Draft Communiqué are set out below:
1- With the Law No. 7346 added to Laws No. 4691 and 5746 with the Law No. 7346, “……., working in R&D or design centers/region within the scope of income tax withholding incentive the total number of personnel or the total working hours subject to incentives Provided that it does not exceed fifty percent, the periods spent outside these centers, except for the situations specified in this paragraph, are also considered within the scope of income tax withholding incentive.” In the statement, taxpayers are given two optional rights in terms of flexible working. Accordingly, based on the authorization given by the Law, taxpayers have the opportunity to calculate the income tax withholding incentive wage calculation within the scope of flexible working in two ways:
– First optional right (based on total number of employees): The incentive will be available for the entire salary paid to the identified personnel, provided that it does not exceed half of the total number of personnel working within the scope of the incentive. If this option is selected, only half of the personnel will benefit from this incentive and the other half will not benefit from this incentive. Considering the article of the Law, it is considered that the employer can determine the personnel to be benefited every month.
– Second optional right (based on total working time): Provided that it does not exceed half of the working hours of all employees working within the scope of the incentive, the periods that the employees work outside the Center/Region will be covered by the income tax withholding incentive. In this option, half of the total working time of all personnel within the scope of income tax withholding incentive is calculated as flexible working time. Considering the article of the Law, it is considered that the employer can determine which personnel will benefit from the total flexible working time determined in this way and for how long.
However, when the Draft Communiqué is examined, it is seen that only the second right (based on total working time) is granted to taxpayers. Thus, it is evaluated that not allowing taxpayers to benefit from the first one (based on the total number of personnel) of the two optional rights explained above and granted to taxpayers by the article of the Law is not in compliance with the article of the Law.
2- According to the Draft Communiqué, in the calculation of the flexible working time within the scope of income tax withholding incentive, only the periods worked in the Center/Region have been taken into account. It is stated that the periods of project, postgraduate education, lecturing at universities and mentoring, which are within the scope of the incentive, will not be taken into account in the calculation of flexible working time. It is considered that this regulation in the draft text is contrary to the Law.
3- In the Draft Communiqué, “In cases where R&D, design and support personnel work in the center or region for less than half of the total working time or where less than half of the total R&D, design and support personnel spend the entire working time working in the center or region, the employer will determine the personnel whose wages will be incentivized by taking into account the time worked in the center or region and giving priority to the personnel working in the center or region.” In this regulation, it is stated that in the determination of the personnel who will benefit from the income tax withholding incentive within the scope of flexible working, priority will be given to the personnel working in the center/region. When the wording of the law is examined, it is seen that there is only one limitation in the calculation of flexible working based on working time. This is that the working time covered by the incentive due to flexible working should not exceed half of the total working time covered by the incentive. Provided that this limit is not exceeded, the employer can decide on the wages of the employees to whom the flexible working time will be applied. Therefore, this regulation in the Draft Communiqué is considered to be contrary to the Law.
4- The Draft Communiqué states that “In the event that a full-time employee working at the headquarters does not work on the weekends or weekends in enterprises that do not work on weekends and on the holidays specified in the Law No. 2429 and uses his/her annual paid leave, it will be accepted that this employee spends the entire working period, including these periods, at the headquarters.” First of all, weekly vacation is not a leave used within the working period. Pursuant to Labor Law No. 4857, it is a leave that must be granted to the personnel upon fulfillment of the weekly working period. For this reason, we cannot talk about working time on days when there is a week holiday. However, within the working period (day), there may be periods not worked on annual leave and holidays within the scope of Law No. 2429. For this reason, it is considered that the said regulation in the Draft should be expressed in a way to cover only the annual leave and the holidays specified in Law No. 2429.
