Investment Obligation of R&D and Design Centers
The fourteenth paragraph of Article 3 of Law No. 5746 has been amended as follows.
“As of 1/1/2022, two percent of this amount shall be transferred to a temporary account in liabilities by corporate taxpayers whose deduction amount utilized over the annual declaration within the scope of Article 3 within the scope of Article 3 is 1.000.000 Turkish lira and above. The obligation of the amount to be transferred within the scope of this paragraph is limited to TL 20,000,000 on an annual basis. This amount shall be transferred to the temporary account until the end of the year in which the temporary account is established, provided that the shares of venture capital investment funds established to invest in entrepreneurs residing in Turkey are purchased or capitalized to entrepreneurs operating in venture capital investment trusts or incubation centers within the scope of Law No. 4691. If the said amount is not transferred until the end of the relevant year, twenty percent of the amount deducted on the annual declaration within the scope of this Law cannot be subject to the R&D discount utilized in the relevant year. Taxes not collected on time due to this amount are levied without applying tax loss penalty. The President of the Republic is authorized to reduce the amounts and rates in this paragraph together or separately up to zero and increase them up to five times. The procedures and principles regarding the implementation of this paragraph shall be determined by regulation.”
In accordance with the aforementioned article of the Law, 2% of the amount deducted from the annual corporate tax return is subject to investment liability. Detailed explanations regarding this obligation are provided below.[1]
1- In order for the investment obligation in question to occur, the amount of R&D and design discount deducted within the scope of Law No. 5746 must be 1.000.000 TL and above. If the amount deducted in the relevant year declaration is below 1.000.000 TL, the investment obligation will not occur. The amount that cannot be deducted in the corporate tax return due to insufficient earnings will be taken into account in the amount of the year in which it is made.
2- The investment obligation amount is 2% of the R&D and design allowance amount utilized within the scope of Law No. 5746 over the annual declaration. However, the amount obligation to be transferred is limited to 20.000.000 TL on an annual basis.
3- This 2% is transferred to a temporary account in liabilities and must be invested until the end of the year in which the temporary account is established.
4- The investment must be made through the purchase of venture capital investment fund shares established to invest in entrepreneurs residing in Turkey or as capital to entrepreneurs operating in venture capital investment trusts or incubation centers within the scope of Law No. 4691.
5- If the said amount is not transferred until the end of the relevant year, 20% of the amount deducted on the annual declaration within the scope of Law No. 5746 cannot be subject to the R&D and design discount utilized in the relevant year. Taxes not collected on time due to this amount are levied without applying tax loss penalty.
6- There is no obstacle for the taxpayers within the scope of this regulation to benefit from the advantages specified in Article 10/1-g of Law No. 5520 and provisional Article 4 of Law No. 4691 and Article 5/1-a of Law No. 5520, if they meet the conditions.
Example: The investment obligation of R&D/Design Center owner (A) Ltd. Şti. for the year 2022 in case of different corporate income is calculated as follows.
| Status | Status | |
| 2022 Corporate Income (A) | 3,000,000 (Profit) | -1,000,000 (Loss) |
| 2022 R&D and Design Deduction (B) | 1,500,000 | 1,500,000 |
| R&D and Design Deduction Transferred from the Previous Year (C) | 500,000 | 500,000 |
| Total R&D and Design Deduction Made in 2022 (D) | 2,000,000 | – |
| R&D and Design Deduction Transferred to the Next Year (E) | – | 2,000,000 |
| 2022 Corporate Tax Base (F) | 1,000,000 | – |
| 2022 Investment Liability Amount (G=D*%2) | 40,000 | – |
Accounting Records
(A) Ltd. Şti., the owner of R&D/Design Center, deducted R&D and design deduction amounting to TL 2.000.000 from its corporate income through its annual corporate tax return for the year 2022. In this context, the journal entries related to the 2% (40.000=2.000.000*2%) investment obligation of the enterprise will be as follows.
[1] In the Adana Tax Office’s Special Circular dated 02.05.2023 and numbered E-19341373-125[SPECIALIZATION-2022/16]-44120, it is stated that corporate taxpayers owning a Design Center are also subject to this investment obligation.
Sincerely,
BİLGENER
