Insurance Premium Support Provided to R&D and Design Centers
Pursuant to the third paragraph of Article 3 of the Law No. 5746 on Supporting Research, Development and Design Activities, half of the employer’s share of the insurance premium calculated over the wages of R&D, design and support personnel working in R&D, innovation and design activities carried out in R&D/Design Centers is covered from the appropriation to be placed in the budget of the Ministry of Treasury and Finance.
Article 11 of the Implementation and Supervision Regulation on Supporting Research, Development and Design Activities (hereinafter referred to as the Regulation) sets forth the regulations regarding the implementation of the insurance premium support under Law No. 5746. In the light of these Regulation regulations, detailed explanations are made below, including the similarities and differences between insurance premium support and income tax withholding incentive and the issues to be considered in the application of the Social Security and General Health Insurance Law No. 5510:
1- Pursuant to Law No. 5746, the scope of the insurance premium support is half of the employer’s share of the insurance premium calculated over the salary paid to the R&D/design and support personnel working in the R&D/Design Center in return for their work in R&D, innovation/design activities. However, additional payments such as bonuses and premiums paid in return for such work are within the scope of income tax withholding incentive, but not within the scope of insurance premium support. Regarding this issue; In the fifteenth paragraph of Article 11 of the Regulation; “Payments made to the insured within the scope of 5746 Law, other than wages, are not included in the earnings based on the premium in the monthly premium and service document issued within the scope of the Law. These payments are reported to the Social Security Institution with the monthly premium and service document that does not fall within the scope of support.” In the same vein, in the section titled “14- Payments made to the insured covered but not covered” of the SSI Circular No. 2008-85 on Supporting Research and Development Activities, it is stated that “Payments other than wages (bonuses, premiums, etc.) made to the insured covered.b) payments made to the covered insured and the wages earned by the covered insured due to their work other than R&D and innovation activities are not included in the scope of support, payments of this nature will be reported to the Institution with the monthly premium and service document to be issued without selecting the type of law.” and the following sample application is included.
“Example 1: Assuming that the (D) Limited Company, which is entitled to benefit from the employer’s share insurance premium support, paid a gross salary of YTL 2.500,00 and a bonus of YTL 1.500,00 to the insured (A), who is an R&D personnel, for his/her work in November 2008, the said insured’s 2.500,00 YTL will be reported to the Institution with the monthly premium and service document to be issued by selecting the type of Law No. 5746 by specifying the number of premium payment days, and the bonus of 1.500,00 YTL will be reported to the Institution with the monthly premium and service document to be issued without selecting the type of Law by writing the number of premium payment days as 0 (zero).”
2- The number of full-time equivalent support personnel who will benefit from the employer’s share of insurance premium support cannot exceed ten percent of the total number of full-time equivalent R&D or design personnel. Fractional numbers are converted to whole. If the number of support personnel exceeds ten percent of the total number of full-time equivalent R&D or design personnel, the insurance premium employer share incentive is applied starting from the wage of the support personnel with the lowest gross wage. If the gross wages are the same, the support personnel to whom the insurance premium employer’s share incentive will be applied is determined by the employer (The same limitation also exists in the application of income tax withholding incentive).
3- Insurance premium employer share support cannot be utilized for public personnel, employees subject to social security support premium, candidate apprentices, apprentices and students undergoing vocational training in enterprises and students subject to internship as specified in the Vocational Education Law dated 5/6/1986 and numbered 3308.
4- Insurance premium employer share support is not applied for unemployment insurance premiums accrued due to monthly premium and service documents issued within the scope of Law No. 5746.
5- In order for employers to benefit from the insurance premium employer’s share support, it is obligatory for them to submit the monthly premium and service documents regarding the work of the insured within the legal period to the Provincial Directorate of Social Security or Social Security Center. If the said document is submitted outside the legal period, the insurance premium employer share support specified in Law No. 5746 cannot be utilized. In case the monthly premium and service documents for the insured persons covered are submitted within the legal period, half of the employer’s share of the accrued insurance premium and the other half of the employer’s share of the insurance premium, regardless of whether the insured’s share is paid by the employers or not, shall be covered from the appropriation to be placed in the budget of the Ministry of Treasury and Finance.
6- In order to benefit from the insurance premium employer’s share support, it is necessary to apply in writing to the Social Security Provincial Directorate or Social Security Center to which the workplace is affiliated.
7- Insurance premium employer’s share support is benefited from the beginning of the month following the date of receipt of the R&D or design center certificate.
8- In the application of insurance premium employer’s share support, the ratio of the time allocated by the personnel within this scope to R&D, innovation or design activities to the total working time is taken into account. In the event that the work of the personnel within the scope of R&D, innovation or design activities fills forty-five hours per week, the week holiday for the week worked is taken into account in the application of insurance premium employer’s share support. If all of the work of the covered personnel during the month is related to R&D, innovation or design activities, the annual paid leave periods and the wages corresponding to the holidays specified in the Law No. 2429 are also evaluated within the scope of this support.
According to this regulation in the seventh and eighth paragraphs of Article 11 of the Regulation, if the work of the covered personnel related to R&D, innovation or design activities fills forty-five hours per week, the week holiday related to the week worked can be taken into account in the application of insurance premium employer’s share support. However, as seen in the third paragraph of Article 3 of the Law No. 5746, “Half of the employer’s share of the insurance premium calculated over the wages of R&D and support personnel working in R&D centers, design and support personnel working in design centers; half of the employer’s share of the insurance premium calculated over the wages they receive in return for this work is covered from the appropriation to be placed in the budget of the Ministry of Treasury and Finance.” There is no provision regarding the condition of filling forty-five hours per week, and this condition is introduced by the Regulation (regulatory act). Article 124 of the Constitution titled “Regulations” states that the President of the Republic, ministries and public legal entities may issue regulations in order to ensure the implementation of laws and Presidential decrees concerning their respective fields of duty and provided that they are not contrary to them. In this respect, it is considered that the regulation on the condition of completing forty-five hours per week (a condition that does not exist in the Law) in the said Regulation issued to ensure the implementation of the provisions of Law No. 5746 constitutes a violation of Article 124 of the Constitution.
In addition, Article 11 of the Regulation on Implementation and Supervision Regarding the Support of Research and Development Activities, which was published in the Official Gazette dated 31/7/2008 and numbered 26953 and subsequently repealed, did not contain any limitation on the forty-five-hour working requirement in the explanations regarding the application of insurance premium support.1 Thus, while there was no change in the provision of Law No. 5746, the new Regulation introduced a forty-five-hour weekly working requirement.
Finally, Article 63 of the Labor Law No. 4857 stipulates that, in general terms, the maximum working time is forty-five hours per week. Pursuant to this provision, considering the fact that the working time can be determined by the parties under forty-five hours per week, it is considered that the forty-five-hour working condition introduced by the Regulation is not in compliance with the Labor Law No. 4857.
9- In Article 10 of the Regulation, within the scope of the Council of Ministers Decision dated 1/8/2016 and numbered 2016/9091, it is stated that the activities carried out outside the R&D or design centers and the periods spent outside within the scope of postgraduate education will also benefit from the discount, support and incentive elements provided under this Regulation. Accordingly, provided that the conditions specified in the said Decree are complied with, the wages corresponding to the activities carried out outside the R&D or design center and the periods spent outside within the scope of postgraduate education can be evaluated within the scope of insurance premium support. On the other hand, although the Regulation on flexible working (income tax withholding incentive) introduced by Law No. 7346 has not yet been issued, considering the systematic of the legislation, it is considered that these works will also be subject to insurance premium employer share support.
10- There is no obstacle to benefit from the insurance premium employer share support stipulated in Law No. 5746 and the 5-point discount in the insurance premium employer share rate in Article 81 of Law No. 5510 (provided that the conditions listed in Article 81 of Law No. 5510 are fulfilled). However, in accordance with the provision in Article 81 of the Law No. 5510, it is stated that if the 5-point discount support and the insurance premium supports provided by other relevant legislation are applied together for the same period, this support will be applied first. Accordingly, after the 5-point discount is applied, the insurance premium employer share support under Law No. 5746 will be utilized. On the other hand, as stated in the explanation no. 1 above, while the elements other than wages (additional payments such as bonuses, premiums, etc.) are not covered by Law No. 5746 in the insurance premium employer’s share support stipulated in Law No. 5746, all of the elements of earnings based on premium (including additional payments) are covered by the incentive in the 5-point discount support specified in Article 81 of Law No. 5510.
11- Law No. 5746 stipulates that wages over 45 hours per week and additional working hours cannot benefit from income tax withholding incentives. However, it is seen that there is no such limitation for the insurance premium employer share support in the same Law.
12- The base on which the insurance premium is calculated has a lower and upper limit. Article 82 of the Social Insurance and General Health Insurance Law No. 5510 states that the lower limit of the daily earnings taken as the basis for the calculation of the premiums to be received in accordance with this law is one thirtieth of the minimum wage and the upper limit is 7.5 times this amount. There is no such floor or ceiling for the wage base within the scope of income tax withholding incentive.
13- The base of the wage subject to income tax withholding incentive and the base of the earnings subject to insurance premium may differ. For example; according to the Income Tax Law No. 193, the entire cash meal allowance paid to the personnel is taxed as wages, while in the application of Law No. 5510, a certain amount of this cash allowance is not taken into account in determining the earnings subject to insurance premium.
